US House of Representatives Passes Sweeping, Bipartisan Postal Service Overhaul Bill
In an unusual show of bipartisan unity, the U.S. House of Representatives passed the sweeping Postal Service Reform Act of 2021 (H.R. 3076) last Tuesday by a 342-92 vote, clearing the way for the U.S. Postal Service (USPS) reform legislation to move on to the U.S. Senate, where a companion bill (S 1720) already has similar bipartisan support. The bill — which reportedly would save the USPS about $50 billion over the next decade — also has the backing of President Biden; some 200 organizations including, among them, postal unions, Postmaster General Louis DeJoy, and printing and mailing industry groups; as well as Amazon, one of the Postal Service's biggest customers.
Some of the key provisions within the Act:
- It will eliminate a mandate created in 2006 that required the USPS to pre-fund 75 years in advance more than $120 billion in retiree healthcare benefits for current and retired employees, a requirement that no other business or federal agency faces. (The USPS has actually defaulted on the scheduled pre-funding payments since 2012.) Instead, it allows the agency to return to an annual pay-as-you-go system for retiree health benefits. The Postal Service indicated the elimination of this pre-funding measure alone will save it approximately $27 billion during the next 10 years.
- It requires future USPS retirees to enroll in Medicare. Reportedly, about one-quarter of USPS employees do not sign up for Medicare, even though they are eligible, which results in the Postal Service paying higher premiums and prescription reimbursements. The USPS says that change will save the agency roughly $22.6 billion during the next decade.
- It mandates that mail delivery remain at six days per week, not the five-day delivery reform move that had been suggested — and which proved to be a "hot potato" that politicians didn't want to face among their local constituencies.
- It requires the Postal Service to develop an online weekly performance dashboard, broken down by ZIP codes across the U.S., for First-Class mail delivery, to help increase transparency surrounding service delivery times and delays.
- It opens the door for the USPS to work with state and local governments — especially in rural areas — to potentially provide other services, such as hunting, fishing, and even drivers' licenses. It would also help rural newspapers by lowering their delivery mail rates.
The legislation also received support from Keep US Posted, an alliance consisting of members of the American public and consumer interests, as well as industry groups, newspapers, nonprofits, and businesses. (PRINTING United Alliance announced its support of the postal reform legislation and recently invested $100,000 as a first-year supporter of the Keep US Posted initiative to help promote the value of mail.)
“The House has seized the greatest opportunity for positive, bipartisan postal policy in more than a decade, and now it’s time for the Senate to do the same,” former Congressman Kevin Yoder (R-Kan.), executive director of the Keep US Posted campaign, says. “As the U.S. Postal Service is proving now as it delivers COVID-19 testing kits throughout the nation, it remains the only network capable of reaching every address in the country six and seven days each week.”
Yoder continued, “The Postal Service Reform Act represents conservative yet fair fiscal policy by guaranteeing that the Postal Service will remain funded by postage, not taxpayer funding ... In codifying an integrated mail-and-package delivery network, the legislation also means that the Postal Service will be able to take advantage of the critical economies of scale it needs to keep reaching every address in America, no matter how remote.”
Financial State of the U.S. Postal Service
After reporting financial losses for 14 straight years, the Postal Service had warned that it would run out of cash by 2024 without Congressional action. In fact, as outlined in its press release, the USPS announced its financial results for the first quarter of its fiscal year 2022 (Oct. 1, 2021 - Dec. 31, 2021), reporting an adjusted loss of approximately $1.3 billion for the quarter, compared to an adjusted loss of $288 million for the same quarter last year. On a U.S. generally accepted accounting principles basis, it reported a net loss of approximately $1.5 billion for the quarter, compared to net income of $318 million for the same quarter last year.
The agency said the increases in both net loss and adjusted loss were partially driven by inflationary impacts to operating expenses, including rising prices associated with energy and fuel expenses.
First-Class Mail revenue increased $160 million, or 2.5%, compared to the same quarter last year, despite a volume decline of 529 million pieces, or 3.8% The revenue increase was driven by price increases, while the volume decline is reflective of the continuing migration from mail to electronic communication and transaction alternatives, which has been exacerbated by the pandemic, according to the release.
Marketing Mail revenue increased $304 million, or 7.3%, compared to the same quarter last year, despite a volume decline of 710 million pieces, or 3.6%. Marketing Mail has generally proven to be a resilient marketing channel, and as the economy has shown a recovery, its value to U.S. businesses remains strong due to healthy customer returns on investment and better data and technology integration, the release indicated.
However, Marketing Mail volume in the same quarter last year was significantly positively impacted by political and election mail associated with the calendar year 2020 general election season. As a result, political and election mail revenue and volume declined approximately $400 million and 2.3 billion pieces, respectively, compared to the same quarter last year. Overall, Marketing Mail revenue grew due to price increases despite the volume decline, the USPS said.
Shipping and Packages revenue decreased $738 million, or 7.9%, on a volume decline of 210 million pieces, or 9.7%. The measured decline in Shipping and Packages volume is a result of the higher package volumes in the prior year due to the pandemic-related surge in e-commerce, which continues to abate as the economy recovers and market competition intensifies. However, Shipping and Packages volume remains higher than pre-pandemic levels, the USPS indicated.
"Despite the record package volume during the holiday season, the overall surge in e-commerce has begun to subside," Chief Financial Officer Joseph Corbett said in the financial reporting statement. "This shift in market trends, along with the continued declines in mail volumes, our increasing costs, and general economic conditions creating inflationary pressure, highlight the ongoing financial challenges that the Postal Service faces.
"While we continue to adapt to efficiently manage our business, invest in our infrastructure and our people, and optimize our network, our Delivering for America plan must be fully implemented, including legislative changes, to restore the Postal Service to financial sustainability."