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Head of Postal Workers Union Says Postal Service Could Be Dead in Three Months

37 points by pmoriarty 7y ago

0xy 7y ago
Isn't parcel volume up substantially right now? How could a post office be teetering when online retail is at unprecedented volumes right now?
- SteveJS 7y ago
  My understanding is, unlike any other government agency or business, the USPS is required by law to fully fund 50 years of pensions. If that requirement were removed, it would be fine.
  - 0xy 7y ago
    I totally agree with you, but why is it a problem right now? Parcel volumes are at dizzying heights.
    - SteveJS 7y ago
      According to the article revenue from advertising (junk mail) is down 40% while local businesses are mostly closed.
      - Exmoor 7y ago
        This is an anecdote not data, but I've heard several USPS delivery folks mention that a lot of long-tenured drivers decided to take vacation and sick time when the lockdown started ramping up. This has caused other drivers to pick up the slack so there may be a lot of overtime getting paid out.
      - 0xy 7y ago
        This doesn't wash. If advertising is down 40% and parcel services are up 150%, that's a substantial revenue increase overall. https://about.usps.com/who-we-are/financials/annual-reports/fy2018.pdf https://about.usps.com/who-we-are/financials/annual-reports/... I can't get the numbers to add up here. Even with letters down, advertising down then their revenue should either be flat or have a slight increase based on my guesstimate for their increase in parcel business.
  - diebeforei485 7y ago
    Businesses are required to fund their pension obligations. In any case USPS hasn't actually fully funded their pensions since the recession.
    - jdxcode 7y ago
      They’re required to PRE-fund the pensions which private businesses are not required to do
      - diebeforei485 7y ago
        Of course private businesses are required to pre-fund their pensions (with some exceptions like religious organizations). It's a requirement under the Employee Retirement Income Security Act of 1974. Lots more info here: https://www.forbes.com/sites/ebauer/2020/04/14/post-office-pensions--some-key-myths-and-facts/amp/ https://www.forbes.com/sites/ebauer/2020/04/14/post-office-p...
- mlyle 7y ago
  Residential parcel volume is up. Commercial parcel volume is way down. Letter volume-- both residential and commercial, is way, way, way down.
  - 0xy 7y ago
    It's my understanding that parcels are where the money is. Is that wrong? Parcel volumes in my country are up north of 150%, I'd expect similar or even higher numbers in the US. But if they really are dependent on letters, why? Letters are a dying business and there is no future there.
    - AnthonyMouse 7y ago
      It's because they have a legislated monopoly on letters. For parcels they have to compete with UPS, FedEx and others, so they have to price those competitively or they'd get no business, which means they have thin margins there and even then lose a lot of the volume to competitors. But they can't just charge arbitrarily much for letters because people would stop sending them, which is really what they're doing regardless.
      - pseudalopex 7y ago
        They also can't charge arbitrarily much for letters because Congress tied rate increases to the Consumer Price Index.
- nickff 7y ago
  Most mail services make all their money on 'junk' mail. I don't know what the numbers for USPS are, but their biggest problem is likely the lack of advertising in the form of mass mailings.
  - joering2 7y ago
    Yes, the price of advertising in their inserts fell 40% literally week to week. They always send my busines an advertising opprtunity and my zipcode for minimum of 1000 mailpieces was $199 last week, and is down to $120 this week. Furthermore over 80% of advertising is for food and inhouse services - oil change, furniture shopping, pet grooming etc. Virtually all these businesses are shut off for the time being, hence no need to advertise.
  - 0xy 7y ago
    https://about.usps.com/who-we-are/financials/annual-reports/fy2018.pdf https://about.usps.com/who-we-are/financials/annual-reports/... If advertising is down 40%, and their parcel business is up 150%, they should be making way more money in this climate. 150% is my estimate, but I suspect it would actually be more than that.
    - jdxcode 7y ago
      Are the margins the same for both? I doubt it
- olefoo 7y ago
  The postal service is subject to a law saying it has to pre-fund it's benefit plans; this is due to a law passed by the Republican congress specifically so they could point to the USPS failing finances and use that as the excuse for privatising it. Just another part of our American heritage getting looted by private equity.
  - jariel 7y ago
    Uhm, pre-funding benefit plans seems like a very responsible thing to do, given that many entities completely avoid funding them thereby creating ever increasing black holes of liabilities. Without them, administrators have the ability to spend as they please by handing out future liabilities. And FYI 'heritage' is no business to keep something operational. Either it works well, or it doesn't.
    - kristopolous 7y ago
      Proactively sabotaging something and then using the consequences of the sabotage as evidence that it should be dismantled isn't "it either works or it doesn't". Such details actually matter. Incompetently legislating some thing to ruin isn't a failure of the thing, it's a failure of the people writing the legislation.
      - jariel 7y ago
        Requiring that benefits are accounted for is not 'sabotage', it's actually sound and transparent financial accounting. Such details actually matter! If, after the real cost of operating USPS is exposed and they cannot cover it with revenues - or - cannot be subsidised enough - then the US can make a more rational decision as to whether or not it should exist.
        locopati 7y ago
        they are being required to prefund for 75 years.... no govt body has that requirement does the military cover itself with revenues? why is that okay but a public service like the mail is not?
AnthonyMouse 7y ago
Maybe it's time. The whole USPS as a quasi-governmental entity thing has been an anachronism for about a hundred years and a farce ever since email replaced its raison d'etre. Just delete every law on the books that distinguishes it in any way from UPS or FedEx and let it live or die on its own merits.
- kitotik 7y ago
  So price most rural citizens out of mail?
  - AnthonyMouse 7y ago
    What mail? Spam? People don't mail things anymore. It's why they're going out of business. And it's not like mail would be unavailable. If it cost $2 for rural customers to mail a letter instead of $.50, would it really matter for the two letters that still get mailed a year?
    - kitotik 7y ago
      You seem to be disconnected from rural life completely. Many people rely on physical mail for things like social security checks, taxes, bills, communication with family and friends. Remember, broadband never actually got rolled out everywhere like phones did(hint: one was considered a vital utility)
      - AnthonyMouse 7y ago
        > Many people rely on physical mail for things like social security checks, taxes, bills, communication with family and friends. All of those things can be done on the internet and don't require broadband. Also, how many times a year do you have to file your taxes, if you really want to do it that way?
        jackyinger 7y ago
        My brother bought a rural place that doesn’t have any internet whatsoever, and it’s not that far out in the sticks. If internet access is needed to interact with the government/banks/etc, we have to do better to provide it to rural folks.
enraged_camel 7y ago
This has two components. First, Trump hates the Postal Service, because he mistakenly believes that they are giving Amazon (owned by Bezos, whom Trump despises) too good of a deal: https://twitter.com/realDonaldTrump/status/980063581592047617 https://twitter.com/realDonaldTrump/status/98006358159204761... https://twitter.com/realDonaldTrump/status/980065419632566272 https://twitter.com/realDonaldTrump/status/98006541963256627... The second part is that Republicans believe starving the Postal Service will be yet another hurdle to throw in front of mail-in voting, which is gaining momentum amidst the coronavirus crisis. After all, without USPS, there wouldn't be a low-cost option to mail ballots. The entire thing is cynical and vile. edit: judging by the downvoters I guess I hit a raw nerve...
- jdxcode 7y ago
  Didn’t downvote but my guess is people aren’t interested in discussing pure politics. Doesn’t necessarily mean they think you’re wrong.
kitotik 7y ago
It’s amazing to me that this isn’t being covered more on the mainstream media.
- bpodgursky 7y ago
  There's no point in covering any US government shutdown more than a week or two before it happens. We've turned political gamesmanship into a refined art-form. Everyone knows the USPS isn't going to stop running. Republicans will try to gut the union as a precondition for emergency funding. Democrats will try to beef up the retirement funds. Of course the head of the Postal Workers Union will want to prevent the former from getting pushed through the negotiations, so they'll talk up the potential shutdown now. But that doesn't mean it's a realistic outcome. We'll inevitably get a shitty, 18 month funding deal out of it, and kick the can down the road to the next congress. It will suck, we'll live with it, whatever. Everyone knows this is the outcome though, and there's no point talking about THAT stupid game when we have the stupid game of the week to cover -- in this case, re-funding the Paycheck Protection Program.
lend000 7y ago
I can't imagine I would get much junk mail delivered through UPS and FedEx.
- DangitBobby 7y ago
  Interesting. You think UPS and FedEx aren't interested in the new money on the table from advertisers that are suddenly willing to pay their higher prices?
  - jimmaswell 7y ago
    I'm guessing the rates wouldn't be subsidized to the degree of USPS.
    - plorkyeran 7y ago
      Junk mail is a profit center for the USPS. It isn't the thing being subsidized.
therealdrag0 7y ago
The mail-in ballot angle is really concerning here. We need the ability to do that. And we need a post office to do that.
- deleted 7y ago
  [deleted]
- jariel 7y ago
  "And we need a post office to do that." No you don't, you just need some kind of mail delivery service with either reasonable rates, or 'paid for' by dear government.
- alexmingoia 7y ago
  Absentee ballots can be sent with private couriers like FedEx. That's actually what some people living overseas have to do. Election commissions can choose to send ballots via private mail couriers as well, and allow people to print and send self-certified ballots.
  - bottle2 7y ago
    How much does that cos? The post office is cheap for a lightweight letter (and I can use a stamp from home), but if I use FedEx I generally have to go to their local shop and pay a few dollars
- deleted 7y ago
  [deleted]
RickJWagner 7y ago
If the Post Office is floundering when FedEx and UPS are turning profits, then something is out of whack.

37 points by pmoriarty 7y ago

0xy 7y ago

Isn't parcel volume up substantially right now? How could a post office be teetering when online retail is at unprecedented volumes right now?

SteveJS 7y ago
My understanding is, unlike any other government agency or business, the USPS is required by law to fully fund 50 years of pensions. If that requirement were removed, it would be fine.
- 0xy 7y ago
  I totally agree with you, but why is it a problem right now? Parcel volumes are at dizzying heights.
  - SteveJS 7y ago
    According to the article revenue from advertising (junk mail) is down 40% while local businesses are mostly closed.
    - Exmoor 7y ago
      This is an anecdote not data, but I've heard several USPS delivery folks mention that a lot of long-tenured drivers decided to take vacation and sick time when the lockdown started ramping up. This has caused other drivers to pick up the slack so there may be a lot of overtime getting paid out.
    - 0xy 7y ago
      This doesn't wash. If advertising is down 40% and parcel services are up 150%, that's a substantial revenue increase overall. https://about.usps.com/who-we-are/financials/annual-reports/fy2018.pdf https://about.usps.com/who-we-are/financials/annual-reports/... I can't get the numbers to add up here. Even with letters down, advertising down then their revenue should either be flat or have a slight increase based on my guesstimate for their increase in parcel business.
- diebeforei485 7y ago
  Businesses are required to fund their pension obligations. In any case USPS hasn't actually fully funded their pensions since the recession.
  - jdxcode 7y ago
    They’re required to PRE-fund the pensions which private businesses are not required to do
    - diebeforei485 7y ago
      Of course private businesses are required to pre-fund their pensions (with some exceptions like religious organizations). It's a requirement under the Employee Retirement Income Security Act of 1974. Lots more info here: https://www.forbes.com/sites/ebauer/2020/04/14/post-office-pensions--some-key-myths-and-facts/amp/ https://www.forbes.com/sites/ebauer/2020/04/14/post-office-p...
mlyle 7y ago
Residential parcel volume is up. Commercial parcel volume is way down. Letter volume-- both residential and commercial, is way, way, way down.
- 0xy 7y ago
  It's my understanding that parcels are where the money is. Is that wrong? Parcel volumes in my country are up north of 150%, I'd expect similar or even higher numbers in the US. But if they really are dependent on letters, why? Letters are a dying business and there is no future there.
  - AnthonyMouse 7y ago
    It's because they have a legislated monopoly on letters. For parcels they have to compete with UPS, FedEx and others, so they have to price those competitively or they'd get no business, which means they have thin margins there and even then lose a lot of the volume to competitors. But they can't just charge arbitrarily much for letters because people would stop sending them, which is really what they're doing regardless.
    - pseudalopex 7y ago
      They also can't charge arbitrarily much for letters because Congress tied rate increases to the Consumer Price Index.
nickff 7y ago
Most mail services make all their money on 'junk' mail. I don't know what the numbers for USPS are, but their biggest problem is likely the lack of advertising in the form of mass mailings.
- joering2 7y ago
  Yes, the price of advertising in their inserts fell 40% literally week to week. They always send my busines an advertising opprtunity and my zipcode for minimum of 1000 mailpieces was $199 last week, and is down to $120 this week. Furthermore over 80% of advertising is for food and inhouse services - oil change, furniture shopping, pet grooming etc. Virtually all these businesses are shut off for the time being, hence no need to advertise.
- 0xy 7y ago
  https://about.usps.com/who-we-are/financials/annual-reports/fy2018.pdf https://about.usps.com/who-we-are/financials/annual-reports/... If advertising is down 40%, and their parcel business is up 150%, they should be making way more money in this climate. 150% is my estimate, but I suspect it would actually be more than that.
  - jdxcode 7y ago
    Are the margins the same for both? I doubt it
olefoo 7y ago
The postal service is subject to a law saying it has to pre-fund it's benefit plans; this is due to a law passed by the Republican congress specifically so they could point to the USPS failing finances and use that as the excuse for privatising it. Just another part of our American heritage getting looted by private equity.
- jariel 7y ago
  Uhm, pre-funding benefit plans seems like a very responsible thing to do, given that many entities completely avoid funding them thereby creating ever increasing black holes of liabilities. Without them, administrators have the ability to spend as they please by handing out future liabilities. And FYI 'heritage' is no business to keep something operational. Either it works well, or it doesn't.
  - kristopolous 7y ago
    Proactively sabotaging something and then using the consequences of the sabotage as evidence that it should be dismantled isn't "it either works or it doesn't". Such details actually matter. Incompetently legislating some thing to ruin isn't a failure of the thing, it's a failure of the people writing the legislation.
    - jariel 7y ago
      Requiring that benefits are accounted for is not 'sabotage', it's actually sound and transparent financial accounting. Such details actually matter! If, after the real cost of operating USPS is exposed and they cannot cover it with revenues - or - cannot be subsidised enough - then the US can make a more rational decision as to whether or not it should exist.
      - locopati 7y ago
        they are being required to prefund for 75 years.... no govt body has that requirement does the military cover itself with revenues? why is that okay but a public service like the mail is not?

AnthonyMouse 7y ago

Maybe it's time. The whole USPS as a quasi-governmental entity thing has been an anachronism for about a hundred years and a farce ever since email replaced its raison d'etre. Just delete every law on the books that distinguishes it in any way from UPS or FedEx and let it live or die on its own merits.

kitotik 7y ago
So price most rural citizens out of mail?
- AnthonyMouse 7y ago
  What mail? Spam? People don't mail things anymore. It's why they're going out of business. And it's not like mail would be unavailable. If it cost $2 for rural customers to mail a letter instead of $.50, would it really matter for the two letters that still get mailed a year?
  - kitotik 7y ago
    You seem to be disconnected from rural life completely. Many people rely on physical mail for things like social security checks, taxes, bills, communication with family and friends. Remember, broadband never actually got rolled out everywhere like phones did(hint: one was considered a vital utility)
    - AnthonyMouse 7y ago
      > Many people rely on physical mail for things like social security checks, taxes, bills, communication with family and friends. All of those things can be done on the internet and don't require broadband. Also, how many times a year do you have to file your taxes, if you really want to do it that way?
      - jackyinger 7y ago
        My brother bought a rural place that doesn’t have any internet whatsoever, and it’s not that far out in the sticks. If internet access is needed to interact with the government/banks/etc, we have to do better to provide it to rural folks.

enraged_camel 7y ago

This has two components. First, Trump hates the Postal Service, because he mistakenly believes that they are giving Amazon (owned by Bezos, whom Trump despises) too good of a deal: https://twitter.com/realDonaldTrump/status/980063581592047617 https://twitter.com/realDonaldTrump/status/98006358159204761... https://twitter.com/realDonaldTrump/status/980065419632566272 https://twitter.com/realDonaldTrump/status/98006541963256627... The second part is that Republicans believe starving the Postal Service will be yet another hurdle to throw in front of mail-in voting, which is gaining momentum amidst the coronavirus crisis. After all, without USPS, there wouldn't be a low-cost option to mail ballots. The entire thing is cynical and vile. edit: judging by the downvoters I guess I hit a raw nerve...

jdxcode 7y ago
Didn’t downvote but my guess is people aren’t interested in discussing pure politics. Doesn’t necessarily mean they think you’re wrong.

kitotik 7y ago

It’s amazing to me that this isn’t being covered more on the mainstream media.

bpodgursky 7y ago
There's no point in covering any US government shutdown more than a week or two before it happens. We've turned political gamesmanship into a refined art-form. Everyone knows the USPS isn't going to stop running. Republicans will try to gut the union as a precondition for emergency funding. Democrats will try to beef up the retirement funds. Of course the head of the Postal Workers Union will want to prevent the former from getting pushed through the negotiations, so they'll talk up the potential shutdown now. But that doesn't mean it's a realistic outcome. We'll inevitably get a shitty, 18 month funding deal out of it, and kick the can down the road to the next congress. It will suck, we'll live with it, whatever. Everyone knows this is the outcome though, and there's no point talking about THAT stupid game when we have the stupid game of the week to cover -- in this case, re-funding the Paycheck Protection Program.

lend000 7y ago

I can't imagine I would get much junk mail delivered through UPS and FedEx.

DangitBobby 7y ago
Interesting. You think UPS and FedEx aren't interested in the new money on the table from advertisers that are suddenly willing to pay their higher prices?
- jimmaswell 7y ago
  I'm guessing the rates wouldn't be subsidized to the degree of USPS.
  - plorkyeran 7y ago
    Junk mail is a profit center for the USPS. It isn't the thing being subsidized.

therealdrag0 7y ago

The mail-in ballot angle is really concerning here. We need the ability to do that. And we need a post office to do that.

deleted 7y ago
[deleted]
jariel 7y ago
"And we need a post office to do that." No you don't, you just need some kind of mail delivery service with either reasonable rates, or 'paid for' by dear government.
alexmingoia 7y ago
Absentee ballots can be sent with private couriers like FedEx. That's actually what some people living overseas have to do. Election commissions can choose to send ballots via private mail couriers as well, and allow people to print and send self-certified ballots.
- bottle2 7y ago
  How much does that cos? The post office is cheap for a lightweight letter (and I can use a stamp from home), but if I use FedEx I generally have to go to their local shop and pay a few dollars
deleted 7y ago
[deleted]

RickJWagner 7y ago

If the Post Office is floundering when FedEx and UPS are turning profits, then something is out of whack.