Americans Continue to Pay More for a Postal Service That Delivers Less

Consumers are once again on the hook for USPS' failures.

Photo by The New York Public Library on Unsplash

If the U.S. Postal Service (USPS) were a business—instead of cosplaying as one through a “.com” web address—it would have been out of business a long time ago. America’s mail carrier loses $9 billion per year and repeatedly raises stamp prices to provide a service that gets less useful by the day. On July 12, the USPS is poised to raise the price of a first-class Forever stamp from 78 cents to 82 cents, its fifth price hike in three years. The struggling agency perpetually raises stamp prices while doing next to nothing in the way of reforming operations, cutting costs, and better serving consumers. By accepting responsibility for its financial failures and implementing long-overdue changes, the USPS can finally deliver for taxpayers and consumers.

The primary culprit behind the USPS’ downward spiral is the agency’s deeply flawed operational strategy. While consumers count pennies to afford the next stamp hike, the USPS has engaged in an expensive hiring spree. Instead of streamlining operations, the agency has brought on a wave of highly paid career hires and executives, bloating administrative overhead at a time when frontline sorting facilities and local post offices are desperate for basic resources. Compensation and benefits alone cost the agency more than $55 billion per year, or about 60 percent of total operating expenses. This figure is up sharply from $44 billion ten years ago, largely because the USPS added (on net) 40,000 career employees since 2015 and compensates them at higher rates. Meanwhile, the Board of Governors is spending $900 per night on hotel rooms and $1,200 for lavish breakfast spreads, and leaves taxpayers and consumers holding the bag.

When the agency does spend money on modernization, it misallocates it spectacularly. Case in point is the $10 billion effort to replace its aging delivery fleet. The USPS committed to buying thousands of custom-built electric vehicles (EVs) costing roughly $80,000 each. Rather than rolling out an efficient fleet with varied fuel types to save on transportation and maintenance costs, the program has been plagued by bureaucratic bottlenecks and is running drastically behind schedule. Taxpayers and consumers are left funding an incredibly expensive vehicle program while mail carriers continue to drive breakdown-prone vehicles from the 1980s.

Meanwhile, the USPS remains tethered to an outdated operational framework that its balance sheet simply cannot support. Chief among these is the mandate for six-day-a-week delivery. In 2015, the Inspector General surveyed consumers on whether six days of delivery was worth it at various stamp price points. The watchdog found that a large majority of consumers favored five-day delivery at any price point over 50 cents. Now that the price of a first-class stamp is 82 cents and rapidly rising, it’s reasonable to think consumers prefer five days of delivery over six. While this idea would likely need lawmakers’ sign-off, it’s definitely worth considering and could save taxpayers and consumers about $3 billion annually.

Until then, the USPS will continue to run trucks carrying declining mail volume down neighborhood streets six days a week, burning through fuel, vehicle wear-and-tear, and labor costs.

True reform requires facing these operational realities head-on. The USPS must freeze expensive hiring, procure a more varied fleet mix without overpaying for custom platforms, and work with lawmakers to transition to a more flexible five-day delivery schedule. Until leadership pursues much-needed reforms, the American public will continue to pay more for a service that delivers less.