How to Rescue the U.S. Postal Service

The government-run U.S. Postal Service began in 2020 with a dubious track record. It has lost money in each of the past 13 years.

In 2019, USPS made $514 million more in revenue than it did in its previous fiscal year, thanks to increases in postage rates and its package delivery business. But the agency also recorded a net loss of $8.8 billion, with 80 percent of that loss attributable to employees’ health-care benefits after retirement.

Losses stemming from retirement-benefits have occurred annually since 2006 when the U.S. Congress passed a law requiring the Postal Service to pre-fund the cost of providing its retiree health benefits, similar to how many businesses in the private sector are required to do.

The law reduced the risk to U.S. taxpayers of having to bail out the USPS for the massive unfunded liabilities it was otherwise set to rack up, unlike the many nearly insolvent pension funds for state and local government employees that still operate the way the agency’s retiree benefits system had previously operated. Unfortunately, because its retiree-benefits system started out so deeply in the red, the annual costs to the USPS of funding retirement benefits remain high, contributing to its annual losses.

Notify of
Inline Feedbacks
View all comments