The agency blamed the losses on the recession that began in December 2007 and significant declines in mail volume as a result of changes in the way Americans communicate in the age of the Internet. Up until this point, the post office added to and removed from its retiree pension and healthcare accounts on an ongoing basis, putting money in as needed, based on its current retirees. The agency said on Monday that it lost $2 billion from April to June, compared with a net loss of $740 million in the same period last year, and a $1.9 billion loss in its first quarter. The USPS loses money, but cash flow has been more stable. The postal service has lost money for 11 straight years, mostly because of pension and health care costs. It survived the Civil War, two world wars, the Great Depression, and the upheaval brought by the internet and email. Get the latest coronavirus business & economic impact analysis from Business Insider Intelligence on how COVID-19 is affecting industries. In 2017, the service lost $800 million on $69.7 billion operating revenue. There are several key reasons that the USPS is hemorrhaging money. On April 3, Trump said, "the post office is losing billions of dollars," at U.S. taxpayers' expense. Postal Service lost money in six out of the 10 years from 2001 through 2010, according to its financial reports. In 2006, prior to the new bill, this was $1.6 billion for those who were already retired. In 2007, USPS had to put away 625% more, about $10 billion, to cover both current and future retirees. Narrator: The act eliminated the post office from the president's cabinet and made the post office its own federal agency. The post office is losing a fortune, but Trump is wrong to blame Amazon. No Wonder the Post Office Is Losing Money! ... the Postal Service wouldn't be losing money if it charged more to Amazon and ... the post office … USPS just hired FedEx to haul mail for it for the next seven years... for $10.5 billion. Which brings us to today. 0 0. By 1923, all houses were required to have a mail slot. US Postal Service Announces $5-Billion Loss – 2015. Reuters. Competition from UPS and FedEx made the post office innovate on its offerings, like introducing express mail. Democrats and ethics watchdogs see the appointment as purely political, not just because of Trump's desire to reshape the post office, but also because millions of Americans may be forced to vote by mail this year, which means the future of the post office is likely to become a political issue this spring and summer, especially if its cash flow starts running dry. "The Postal Service is not losing money because of Amazon," the post says. Subscriber President Trump has repeatedly attacked Amazon and the U.S. Naturally, the post office is not exempt from that impact, and it didn’t take long to feel its effects. The Postal Service said it had made "significant cost reductions in areas within its control" by 2011 but claimed it needed Congress to approve several other measures to boost its financial outlook. THEY LOSE A FORTUNE, and this will be changed. Although the Postal Service lost money in the early part of the decade, in 2001 and 2003, the most significant losses came after the passage of a 2006 law requiring the agency to refund retiree health benefits. The Post Office’s mission has changed. How did this happen? As with many other industries, the coronavirus has taken its toll on the post office. Despite the dire warnings, however, the USPS received no additional funding in the $2 trillion coronavirus stimulus and relief package legislation signed by President Trump on March 27, 2020. “The Postal Service needs America's help, and we must answer this call,” said leaders of the Committee on Oversight and Reform. Parcels are key. The arrangement has … In fact, the post office has partnered with both companies in the past, like when it signed a deal in 2000 that contracted its air delivery of first-class, priority, and express mail to FedEx. The Post Office card account provides a simple way to receive pensions, tax credits or benefits, and withdraw them as cash at a local branch – with no overdraft, fees or charges to worry about. As you can plainly see, just five little numbers, quick as can be. The U.S. Its most popular product, first-class mail, has plunged 45 percent since 2000. 1847 saw the first issued stamps. But mail volume is way down, and the USPS is losing billions of dollars. It's true that the post office is losing money. “Based on a number of briefings and warnings this week about a critical fall-off in mail across the country, it has become clear that the Postal Service will not survive the summer without immediate help from Congress and the White House. The timing for this was not ideal, either. Is the post office making or losing money delivering Amazon packages? There is much criticism of the Postal Service for losing money. This was not regular mail, but certified with a return receipt and the shortage was on the certified fee. The initial bailout bill Congress passed in March provided $13 billion for the post office, far less than the $25 billion the organization was seeking in the bill. Isn’t the post office losing money? The reason the postal service is losing money is because of a congressionally mandated retirement healthcare funding program that no other government agency is required to observe. Reuters/Brian Snyder. “It’s a moment of crisis that brings us … It also set up the elimination of the post office's direct government subsidies, which were completely phased out in 1982. Not only do many of these restrictions not make sense, they directly undermine the success of the USPS. "The Post Office has been losing billions of dollars a year for many, many years." Under a … The Postal Service Lost $3.9 Billion Last Year Despite a $1 billion increase in revenue, unsustainable personnel costs pushed USPS' losses to such great heights. Those measures include eliminating mandated retiree health benefit pre-payments; forcing the federal government to return Civil Service Retirement System and Federal Employee Retirement System overpayments to the Postal Service and allowing the Postal Service to determine the frequency of mail delivery. Clip: What matter if it took two weeks to go from New York to Atlanta, over a month to St. Louis? Postal Service (USPS) had largely completed Post Office Structure Plan's (POStPlan) implementation prior to a 2014 POStPlan arbitration decision and expected millions in cost savings. Postal Service Loses Almost $2 Billion – 2014. The money to pay those claims came out of the Treasury Department. Without these burdensome requirements, the USPS would neither be losing money nor experiencing its … The reason is simple: more than 90 percent of mail is sent by … Post Office Has Boom Year, Loses More Money Than Ever Craig Eyermann • Tuesday November 27, 2018 12:30 PM PST • For the U.S. government’s 2018 fiscal year, the U.S. May 11, 2018 This article is more than 2 years old. The US government demands that the post office lose a lot of money. Account active “ The Post Office has lost money for years, though advocates emphasize it’s a subsidized government service rather than a profit-maximizing business like FedEx or … In addition, the post office must cover its costs in its commercial package delivery business under the … Where do we go from here? At the time, Postmaster General Megan Brennan bluntly declared that the agency "cannot generate revenue or cut enough costs to pay our bills" and predicted that the … Email, texting, and online payments had begun to chip away at the post office's main business, first-class mail, which had slowly been declining since its 2001 peak. In fact, from 2003 through 2006, USPS recorded a total $9.3 billion profit. The Post Office’s Problem Isn’t Trump Democrats cry sabotage. And those at risk? This model is similar to the way many other companies and corporations fund their own healthcare pensions. There are several key reasons that the USPS is hemorrhaging money. The Post Office has come under fire for its deal with Amazon, where it charges the company prices below its own costs. Tom Murse is a former political reporter and current Managing Editor of daily paper "LNP," and weekly political paper "The Caucus," both published by LNP Media in Lancaster, Pennsylvania. The postmaster general has told Congress she expects the USPS to be completely out of cash by September. Is End of Saturday Mail Delivery Such a Good Idea? The U.S. USPS just hired FedEx to haul mail for it for the next seven years... for $10.5 billion. Medicines are going into people's homes through the post office," he says. Under the Postal Accountability and Enhancement Act of 2006, the USPS is required to pay $5.4 billion to $5.8 billion annually, through 2016, to pay for future retiree health benefits. A leading-edge research firm focused on digital transformation. If it needs to go from point A to point B anywhere in the US, the post office can do it. If not for the 75-year pension and healthcare obligation, the USPS would have reported operating profits for the last six years. The Next Bailout? Parcels are growing the Postal Service The Postal Service reported a … Official site of The Week Magazine, offering commentary and analysis of the day's breaking news and current events as well as arts, entertainment, people and gossip, and political cartoons. This gave the post office an annual loss of more than $5 billion for the year. It was set up more like a corporation than a government agency and had an official monopoly on the delivery of letter mail in the US. Fact Check: Is The Post Office Losing Money By Delivering Packages For Amazon? However, without unreasonably burdensome restrictions, it would likely be a different story. The post office has been operating without any taxpayer money since. The modern innovations of email, texts and the internet helped turn this into a money-losing business. Every community in America relies on the Postal Service to deliver vital goods and services, including life-saving medications.”. The first one that comes to mind is — you guessed it — the coronavirus pandemic. The first one that comes to mind is — you guessed it — the coronavirus pandemic. Official site of The Week Magazine, offering commentary and analysis of the day's breaking news and current events as well as arts, entertainment, … Narrator: Every year, the United States Postal Service takes and delivers 142 billion mailed items. The results marked the 13th consecutive year the mailing agency lost money, although USPS did post a slight uptick in revenue to $71.3 billion. Although the Postal Service lost money in the early part of the decade, in 2001 and 2003, the most significant losses came after the passage of a … “The Postal Service is in need of urgent help as a direct result of the coronavirus crisis,” said the House Committee on Oversight and Reform. First-class mail, marketing mail, and other products the post office does not have a large competition for were all tied to the consumer price index, meaning it couldn't increase rates for those products above the rate of inflation. This would make it unable to pay its employees and could quickly cause disaster in mail delivery across the country, especially in rural areas not serviced by UPS and FedEx. Also, our fully tax paying retailers are closing stores all over the country…not a level playing field! In 1775, Benjamin Franklin was appointed postmaster general, and it was Franklin who handled the distribution of letters from Congress to its armies during the Revolutionary War. Figure 1: Mail volume is down 60 billion pieces since 2007 (Billions of pieces) [4] Mail volume plunged not long after the Great Recession hit in late 2007. Some post offices could also be closed—I think a third of them lose money. Combined with a postal worker strike in March of 1970, led to the Postal Reorganization Act and established the United States Postal Service as we know it today. However, with fewer people and businesses because of the COVID-19 outbreak, the quasi-governmental Postal Service—which relies on user fees rather than taxes—could be forced to close its doors as early as June 2020, lawmakers warned. Postal Service reports that it successfully boosted its annual revenue by $1 billion over the previous year to $70.7 billion, marking a … The US Postal Service has been delivering mail since before the Declaration of Independence was even signed. A … By using ThoughtCo, you accept our, COVID-19 Pandemic Threatens Postal Service Survival. Lawmakers on Capitol Hill had tried to work aid for the Postal Service into the $2.2 trillion coronavirus relief packaged passed in March. There is much criticism of the Postal Service for losing money. The postal service has lost money for 11 straight years, mostly because of pension and health care costs. First-class mail volume peaked in 2001 at 103.6 billion pieces of mail. Fewer mail pieces means lower revenue ($1B) [5] Figure 2 tells the tale; between 2007 and 2012, the … So, can it be saved? No Wonder the Post Office Is Losing Money! Postal Service continued to bleed money during its second quarter, despite an increase in package revenues and an emergency price hike that took effect in January. Unlike the last three postmaster generals, DeJoy is not a career employee; he is a large GOP donor and the former CEO of a logistics company. Many would have us do away with the Postal Service altogether. Parcels are key. It reported a $2.7 billion net loss in 2017 . However, President Trump threatened to veto any bill that bailed out the post office, so the bill was changed before signing to a $10 billion loan, 13% of the $75 billion it had originally asked for and another $10 billion to add to its debt. According to the Times, the real financial problem facing the Post Office may have been created by Congress in the first place through the 2006 Postal Accountability and Enhancement Act. In its most recent annual report, the post office said it had incurred almost $78 billion in losses from 2007 to 2019. This established routes and made it illegal to open anyone's mail. said it doesn’t lose money on the agreement. The Post Office Lost $2 Billion In Just 3 Months. It's also faced increased competition from private companies that has hurt its more profitable services. But it’s saddled by larger and longer-running issues than its work for Amazon. And without that revenue, the Postal Service would lose a lot more money than it is already losing. The Larry Doby Post Office is located at 194 Ward Street in Paterson, New Jersey, across the street from my congressional office. “These negative effects could be even more dire in rural areas, where millions of Americans are sheltering in place and rely on the Postal Service to deliver essential staples,” the lawmakers warned. COVID-19 has hit businesses and institutions across the country and around the world. So, basically, the USPS was fine. Additionally, the new bill restricted the post office's ability to set prices. By Letter to the Editor. The Post Office Has Lost Nearly $20 Billion In Four Years – 2011. Though the Postal Service is bleeding money, it receives no tax dollars for operating expenses and relies on the sale of postage, products, and services to fund its operations. May … Many would have us do away with the Postal Service altogether. COVID-19 has hit businesses and institutions across the country and around the world. By Elvina Nawaguna. The Postal Service Lost $3.9 Billion Last Year Despite a $1 billion increase in revenue, unsustainable personnel costs pushed USPS' losses to such great heights. Post Office Pensions: Some Key Myths And Facts. Postal Service reported yet another quarterly loss, a total net loss of $1.3 billion during its second quarter from January to March. Postal Service Losing $42,335,766 Per Day – 2012. The Postal Service is losing money and needs to make changes. It required the post office to calculate all of its retiree pension and healthcare costs for the next 75 years, including for people it hadn't even hired yet, and put away enough over the next 10 years to cover them. In April 2020, lawmakers warned that losses related the novel coronavirus COVID-19 flu pandemic could threaten the Postal Service’s very existence. Narrator: In 1823, it started using waterways to deliver mail, then began using railroads. But nothing changed. 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