Is The Us Postal Service An Independent Agency

The United states of america Mail (USPS) is big. It employs over 600,000; but ii private employers (Amazon and Walmart) employ more people. It serves 160 meg homes, businesses, and other delivery points. It would have ranked number 44 on the 2019 Fortune 500 if it were included. The COVID-nineteen pandemic has severely threatened demand and revenue for USPS, straining its already fragile finances. As the financial standing of the Postal Service makes headlines, we examine how it is set up, what fiscal challenges information technology faces, and how it is managing these challenges during a global pandemic.

How is the Postal service governed?

The 2nd Continental Congress appointed Benjamin Franklin every bit the first Postmaster General in 1775. The Post Function Department was created in 1792 and became a Cabinet department in 1872. In 1971, Congress replaced the Department with the United States Post, an contained entity within the executive branch. USPS is operated by a 11-person Board of Governors (which resembles the board of directors of a public corporation)—the Postmaster Full general, his deputy (currently vacant), and ix governors appointed past the President and approved by the Senate for seven-year terms. All six of the electric current independent governors were appointed by President Trump; 3 slots are empty. The Board appoints the Postmaster Full general, who acts as the CEO.

A split up Postal Regulatory Commission with five members appointed past the President and confirmed past the Senate oversees the USPS, including the rates information technology charges.

How is the Postal Service financed?

The Postal Service receives no direct taxpayer funds. It relies on revenues from stamps and other service fees. Although COVID-xix has choked off the USPS acquirement in recent months, factors that arose well before coronavirus take contributed to the unsustainability of the Postal Service's financial situation for years.

What are the long-term issues with how the Postal service is financed?

The fundamental problem is that while the USPS generates plenty revenue to comprehend its operating costs, its pension and retiree health care liabilities button its lesser line into the red. The USPS has operated at a loss since 2007. From 2008 to 2018, information technology reported $69 billion in losses. For the 2019 fiscal year, it lost $eight.8 billion on $71.1 billion of operating revenue.

Because of the rise of email and digital communication, USPS has seen the volume of First-Class Post decline from a peak of 103.5 billion pieces in 2000 to simply shy of 55 billion pieces in 2019. USPS has tried to increment the commitment of marketing mail and has tried to compete with UPS and FedEx in the parcel delivery sector, including by forging a commitment deal with Amazon. (This has provoked criticism from President Trump.) As of 2017, the USPS held a market place share of over 19 per centum in U.S. package delivery. By law, the Postal service has an obligation to provide universal service—that is, to evangelize mail to "as well-nigh every bit practicable the entire population of the United States." This forces USPS to deliver to more addresses each yr, even as fewer pieces of mail are being delivered.

Equally Outset-Class Mail service volumes have declined, the USPS has been reducing the number of blue mailboxes for years. It currently has 140,837 of them, down from 164,099 in 2013.

What is the issue with USPS retiree wellness benefits?

Beyond operational challenges, the other drag on the finances of the USPS is the Postal Service Retiree Health Benefits Fund. Like many employers, the Mail service provides pensions for its retired employees—and it is required, equally individual companies are, to gear up aside coin from electric current income to cover its pension promises.

In addition, USPS provides wellness benefits to its retirees, equally other government employers—but not all big private employers—exercise. Unlike other employers, though, the USPS is required by the Postal Accountability and Enhancement Act (PAEA) of 2006 to pre-fund retiree wellness costs out of current income. The unique drag on the Mail service comes from this congressional requirement.

In 2002, the Office of Personnel Management establish that the Postal Service had been significantly over-paying into its pension fund, leaving it with greenbacks across what was needed to run into its employee retirement liabilities. Combined with potent functioning in the early 2000s, this unexpected windfall positioned USPS to catch upward on the pre-funding of its retirement health benefit obligations after years of a "pay-as-y'all-go" approach earlier the passage of PAEA. In that law, Congress instructed USPS to contribute approximately $v.6 billion per year from 2007 to 2016 and to stretch any boosted obligations over the almost 40 years from 2017 to 2056.

Shortly after the requirements were passed, the economic system sank into the Groovy Recession and digital contest intensified, driving downward revenues. As a result, USPS has missed $42.6 billion of required payments on its health benefits since 2010 and $v.6 billion in required contributions to its alimony plan since 2014.

What strains has the COVID-19 pandemic put on the finances of the Postal Service?

Provisions of personal protective equipment to employees, a decrease in the power to use air transportation for deliveries, increased paid ill leave, and low customer demand have all contributed to surging costs and declining revenues. Package shipping revenues in the 2d quarter surged by 53.half-dozen percent over the second quarter of 2019, which kept the USPS net loss to $2.two billion for the quarter compared to a loss of $2.3 billion a yr earlier. Increases in book for packages are not expected to brand up for continued weakness in marketing post book (down 37.2 per centum, year over twelvemonth) and Fantabulous post volume (down half dozen.4 percent) as the pandemic continues.

What has Congress done to support the Mail service?

In the CARES Act, Congress provided a $10 billion emergency loan to the USPS. The loan is sufficient to cover immediate greenbacks needs for the Postal Service, according to the agency'due south 2020Q3 Financial Study. The conditions that the Treasury imposed on the loan led the vice chairman of the USPS lath, David Williams, a former USPS inspector general, to resign, alleging that the Treasury demands threatened to plough the agency into a "political tool."

The loan postpones, rather than solves, the USPS looming liquidity crisis. The House of Representatives passed a bill on August 22 to provide $25 billion in additional government funding to the Postal Service. In addition, the bill—which is unlikely to pass the Senate—mandates that the USPS must opposite whatever policy changes that take led to delays in mail delivery and refrain from any new policies that would reduce its mail service delivery performance until the finish of the COVID-xix public health emergency.

What steps has Postmaster Full general Louis DeJoy taken since taking office in June 2020?

In April 2018, President Trump created the Task Strength on the United States Mail service, chaired by Treasury Secretary Steve Mnuchin. The Chore Force produced a report in Dec 2018, urging cost-cutting and price increases. The New York Times reported that Mnuchin was unusually involved in the Postmaster General recruitment procedure, with Mail service Lath Chairman Robert Chiliad. Duncan, a former chairman of the Republican National Committee, suggesting Louis DeJoy, who has a background in the logistics business.

Cost-cutting efforts at the USPS were already underway when DeJoy was sworn in equally Postmaster General in June 2020. However, combined with President Trump's comments questioning the security of postal service-in voting, changes to Mail operation—some of which were in train before DeJoy's engagement—have been particularly controversial. Internal memos outline new policies to avoid late departures and extra delivery trips, fifty-fifty if it ways that "we may come across post left behind or mail on the workroom flooring or docks."

In August 2020 testimony to the Firm Committee on Oversight and Reform, DeJoy said he didn't explicitly society the practices that have generated criticism: "First, I did not directly the removal of blue collection boxes or the removal of mail processing equipment. 2nd, I did not straight the cut back on hours at any of our mail service offices. Finally, I did not directly the elimination or any cutback in overtime." Nevertheless, on Baronial xviii, DeJoy committed to suspending his long-term reform initiatives until later the Nov ballot. He promised that there would be no changes to Mail retail hours, that collection boxes and processing equipment will remain where they are (though no commitment was fabricated to return boxes and equipment already removed), and that overtime hours would be granted to employees as necessary.