There’s one federal government agency that is failing at an alarming rate – the United States Postal Service.
On Tuesday, the USPS released data that showed it suffered a net loss of $6.5 billion for its fiscal year, which ended on September 30. In addition to that harrowing data, the agency said it likely won’t even break-even in the year ahead.
A major part of that is that first-class mail dropped to the lowest volume it’s experienced in one year since back in 1968. Since 2006, overall volume of first-class mail has decreased by 53%.
Overall revenue for the Postal Service hit $78.2 billion in the last fiscal year, according to the data, which represents a drop of 0.4% over the previous fiscal year.
According to Louis DeJoy, the U.S. postmaster general, that loss included $2.6 billion for inflation “above what we projected and what we were able to recover. … We are not happy with this result.”
Part of the way that the Postal Service has been trying to combat dropping volume in first-class mail is by aggressively increasing the prices of stamps, and that has worked to a degree. While the volume of first-class mail dropped by 6.1% last year to a total of 46 million pieces, the USPS revenue for that class of mail increased by $515 million due to the higher prices of stamps.
The next price increase for stamps will happen on January 21, when first-class stamps will be 68 cents, up from 66 cents.
In addition to hiking the prices of stamps, the Postal Service is in the midst of a restructuring plan that will last 10 years, with a goal of eliminating predicted losses of $160 billion over the next 10 years. The original restructuring plan, which was announced just two years ago, showed 2023 as being a year when the agency would break-even.
Now, apparently, that projection has already changed.
As DeJoy said:
“Despite substantial planned reductions in our cost of operations and growth in our package revenues, we will not reach breakeven results in 2024.”
He added that the agency has reduced its projected losses of $160 billion in 2021 “to less than $60 billion.”
A major reason for the net loss came from accounting for its retirement plans, which are underfunded, and were impacted by revaluation of actuarial results as well as changes to the discount rate.
The USPS employs about 640,000 people, and reported an increase of 2.6% for costs related to employee benefits and compensation, up to a total of $52.8 billion.
As a strategy to preserve some liquidity, the Postal Service said it didn’t make the complete $5.1 billion in payments to its retirement plan that were due.
In the next year alone, the Postal Service is planning to reduce transportation costs by $1 billion. For last year, total operating expenses sat at $85.4 billion, which represented a 7.3% increase.
Last April, President Joe Biden signed a bill that will provide the Postal Service with financial relief totalling approximately $50 billion over the next 10 years.
Whether that will work or not is anyone’s guess at this point.