Postmaster General Louis DeJoy and the USPS revealed a new ten-year plan on March 21, 2021 aimed at reinvigorating the postal service. Parts of the plan are ready to be implemented, including increasing the cost of stamps, slowing down first-class mail delivery in favor of more lucrative package delivery, closing selected facilities, and cutting back post office hours and staffing. Such changes are subject to approval by the Postal Regulatory Commission, an independent Federal agency.
First-class mail volume has decreased by 28% over the past 10 years, one of the primary reasons for ongoing budget deficits. Mail volume in general is undergoing a steep decline as advertisers turn to online rather than mail ads. The plan would have the financially strapped postal service break even by 2023. The goal, according to a USPS press release, is to “achieve financial sustainability and service excellence.” The main objectives of the plan aim at cost cutting, eliminating the current budget deficit, and using excess funds to upgrade vehicles and equipment and other improvements.
One key bullet point in the ten-year plan is to “(to ask) for bipartisan legislation in Congress to repeal the retiree health benefit pre-funding mandate and to maximize future retiree participation in Medicare.” The retiree health benefit legislation has been controversial. Prior to the pandemic, another high contributing factor to postal deficits was the requirement that the USPS fund retirement and health care for employees 70 years into the future. No other entity, public or private, has such an onerous requirement.
A bipartisan Senate bill, known as the Postal Service Reform Act of 2021, echoing one in the House, currently is advancing to the floor. It would repeal $5 billion a year in mandatory retiree health-care expenses and require future postal retirees to enroll in Medicare. Advocates say the measures would save the agency $30 billion over the next decade.
The ten-year plan also would “adjust select delivery standards to improve efficiency and reliability.” Most of us have had recent experience with mail delays. This plan will codify longer delivery times. Currently, the on-time delivery goal of first-class mail is three days. In the first quarter of 2021, about 78% of first-class mail was delivered “on time;” in 2020, more than 92% of first-class mail was delivered within the proscribed time frame. Under the new plan, the delivery window of first-class mail would vary, depending on where the mail is going. The three-day projected delivery time would not change for mail sent up to 930 miles. However, by eliminating air mail delivery, mail being sent coast to coast would take 5-6 delivery days.
Mail price increases, should they be approved by the Postal Regulatory Commission, will become effective on Aug. 29. The cost of a first-class stamp will increase to 58 cents from 55 cents. Postcard stamp prices will increase from 36 cents to 40 cents. The cost of an international letter stamp will increase by 10 cents, from $1.20 to $1.30. And media and library mail would jump from $3.71 to $4.11, a forty-cent jump.
Raising postal prices is not without controversy. Future cost increases on first-class mail and package delivery could drive business away from the USPS to competitors, further reducing revenue. In light of other cuts in postal services, such increases may be unaffordable to small businesses and individuals who count on reliability, timeliness, and cost in making marketing decisions. Unfunded or underfunded liabilities, such as the need to upgrade and replace the nation-wide fleet of postal vehicles, could have serious consequences to future financial stability.
While the future operations of the USPS remain in flux, let us hope that some good things will come out of the ten-year plan.
Sources
House committee moves ahead with USPS reform act by Jory Heckman. Federal News Network, May 11, 2021
On-time delivery plunges at U.S. Postal Service, with 1 in 5 pieces of mail arriving late by Aimee Picchi. CBS News, May 20, 2021
A plan for a better post office. Finally. Editorial, The New York Times, May 29, 2021
Postal Service, facing red ink, seeks to raise prices by Michael Levenson. The New York Times, May 28, 2021
Senators reach bipartisan deal to overhaul USPS finances, tighten accountability requirements by Jason Bogage. The Washington Post, May 19, 2021
USPS News, March 23, 2021
USPS raises stamp price to 58 cents as part of DeJoy’s 10-year plan by Jason Bogage. The Washington Post, May 28, 2021.
What’s in Louis DeJoy’s 10-year plan for the USPS by Jason Bogage. The Washington Post, May 24, 2021
