The USPS was arguably on the path to bankruptcy by 2024 already. With the COVID-19 pandemic causing havoc on society, that timeline may have been pushed to as soon as the fall. Early estimates show since a handful of businesses have been forced to close or greatly reduce their labor output or alter their practices away from paper mail- the volume of the country’s mail has decreased by 30%.
The Federal Agency’s financial woes begin with a requirement to fund their retirement health benefits by about 75 years- and they’ve defaulted on this since 2012, causing a $70 billion shortfall in their books. Other than that, the agency can’t raise prices for its own services and products. Congress would need to enact that into law. Besides receiving a direct bailout- something the CARES Act did not provide although the legislation did provide what surmounts to a $10 billion line of credit for the USPS- there are other actions Congress could take to alleviate the financial stresses of an agency that has roots in America’s colonial origins. These steps include cutting mail delivery to Monday to Friday instead of Monday to Saturday as is now, offering more senior employees incentives to retire so a younger, less expensive, generation of Postal employees could take their place, and even canceling the $10 billion debt to the US Treasury that the USPS is still obligated to pay-off.
Until Next Time,
**Written by Benjamin Derge, Financial Planner. The information has been obtained from sources considered reliable but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Benjamin Derge and not necessarily those of RJFS or Raymond James. Links are being provided for information purposes only. Expressions of opinion are as of this date and are subject to change without notice. Raymond James is not affiliated with and does not endorse, authorize, or sponsor any of the listed websites or their respective sponsors.
US Postal Service Verge of Collapse