Government Mandate Puts Profitable Post Office In The Red

Every single day, except for Sundays, we can go out to our mailbox and receive just about any form of correspondence or package that anyone in the world has chosen to send us. All they need is our address. Let’s think about that for a second. Someone on the opposite side of the world can go to their local post office and, with just our address, have that postal agency send a letter or parcel to our country and that object arrives in our mailbox.

This very same system also provides the ability for anyone in America to send us a parcel or letter, directly to our mailbox, from anywhere in the United States for less than the cost of pretty much any private or third party shipper. In fact, when it comes to letters, it costs the same to send a letter across town as it does across the country. How amazing is that?!

This is called the flat rate U.S. Postal Service, and it lost $5,100,000,000 (that’s $5.1 billion) over the course of its last fiscal year. But the postal service’s losses are not the result of the discrepancy in the cost of service whether your letter travels 3,000 miles or 10 feet, nor are the losses the result of the lack of profitability of it’s service offerings. These huge losses are caused by a congressional mandate that forces the U.S. Postal Service to pre-fund 75 years' worth of retirement benefits for its employees.

Come again? Yes, there is only one entity in the entire country that is required by an act of congress to pre-fund 75 years worth of retirement benefits for its employees…our postal service. What effect has this had on the independent, U.S. government agency? Well, before the congressional mandate, it was profitable and in the black every year, but today, it has lost money the last nine years in a row and is $15 billion in debt.

Once again, government has taken a profitable business and regulated it into the red.

Want proof? Take away the retirement pre-funding requirement and the post office would have turned a $623 million profit last year instead of a $5.1 billion loss. While the good news is that this pre-funding requirement actually will end with this fiscal year, our U.S. Postal Service will start 2017 over $15 billion in debt as opposed to beginning the year debt free, as would have been the case for the past nine years without this restricting congressional mandate.

Government’s job should be to regulate trade, not force organizations to take on vast amounts of debt just to exist.

Photo by Xavier Massa via Pexels