Why the USPS Crisis Stems From Inside and Out, Explained
By Rachel CurryFeb. 8 2021, Updated 2:09 p.m. ET
The USPS (United States Postal Service) is big. In fact, its more than 600,000 employees are topped only by private companies Amazon and Walmart. If the USPS wasn't a governmental department, it would have been number 44 on the 2019 Fortune 500 list.
Despite this success, the USPS is in some deep water. The troubles stem from issues with executive leadership as well as unwelcome pressure from the U.S. government.
The U.S. Postal Service financial crisis, explained
The financial trouble for the USPS is two-fold. First, Postmaster General Louis DeJoy took office in June 2020 and made some changes that led to serious backlogs and delays in mail delivery. The issue became obvious ahead of the presidential election when 46 percent of voters used mail-in or absentee ballots to cast their vote. The pressure only added to the already fragile freight that the USPS was riding on.
Even before he became Postmaster General, DeJoy was a public Trump campaign mega donor. He had no prior experience in the USPS before taking his role.
Immediately, DeJoy started instituting changes like banning overtime and extra mail delivery trips to cut costs. After this caused serious mail delays, he decided to postpone the changes until after the election. Other changes included leadership reorganization and blue mail box removal (the latter of which has been ongoing for years to help trim expenditure).
The USPS pension issue dates back 15 years—and dates forward 75 years
The real reason why the USPS runs on deficit doesn't have to do with poor leadership—although I'd be hard-pressed to say that poor leadership wasn't a contributor. In 2006, the government passed a law saying that the USPS had to pay pensioners' health benefits a full 75 years ahead of time. The regulation is unique to the USPS. No other government agency (or private company) is subject to such fiscal pressure.
This strange regulation is a Bush-era one and it was required for the PAEA (Postal Accountability and Enhancement Act) to pass. The funding goes toward the federal deficit. While it might be biased, it seems duly unfair for any organization to have to answer to the federal deficit—let alone an organization that provides a crucial service for Americans.
What is the outlook for USPS financial trouble?
Since DeJoy waited until after the November 2020 election to reinstate many of the changes, issues for the USPS might very well experience renewed force as 2021 rolls forth. Meanwhile, the PAEA continues to weigh on the organization. Last year, before the COVID-19 pandemic got to the U.S., the House passed the USPS Fairness Act in an attempt to remove the 75-year prefunding law, but it has yet to go all the way through.
With issues for the USPS stemming from organizational leadership as well as governmental regulation, the hundreds of thousands of USPS workers—and the hundreds of millions of people they serve—have a big fight ahead. Many say DeJoy must go, while others are focusing their efforts on repealing the PAEA. With the Trump administration behind us, DeJoy might not hold so much weight in the USPS should President Biden choose to change the game.
