The United States Postal Service or USPS has been in operation since 1971. It operates as an independent agency of the executive branch of the federal government responsible for providing postal service across the United States, its insular areas, and associated states. Article I, Section 8, Clause 7 of the U.S. Constitution or the Postal Clause specifically gives it the power to construct or designate post offices with the implied authority to carry, deliver, and regulate the mail of the country.
Understanding the United States Postal Service in Modern Times: Importance and Pressing Challenges
Importance
The arrival of digital communication has rendered post mails less favorable. Modern means of communication like email and instant messaging have become more accessible with the expansion of telecommunication networks and wider adoption of digital communication devices like mobile phones. However, despite this, the U.S. Postal Service continues to hold significant importance in modern times because its service is based on an explicit legal obligation.
One of the main advantages of USPS over other private couriers like United Parcel Service and FedEx is that it has a monopoly on traditional letter delivery within the U.S. The institution is also the only delivery service that reaches every address in the U.S. Furthermore, in most rural and remote areas, it is the primary or sole delivery service. This ensures access to essential goods like medications. The entire delivery network of USPS remains unmatched.
The U.S. Postal Service is also essential in several aspects of government operations. It is the sole service provider responsible for delivering social security checks, tax forms, and other official documents. The institution has also been used to enable voting by mail. Hence, because of its expansive delivery network and reach, it plays a very significant role in increasing voter turnout by expanding and ensuring voter accessibility and convenience.
Another importance of the U.S. Postal Service rests on its economic contribution. The institution provides employment to more than 520,000 career employees and more than 110,000 non-career employees. Some of these jobs are in rural areas. It also provides affordable shipping options for small and rural-based businesses to help them compete in the marketplace. The service has also been used even by companies like Amazon for last-mile deliveries.
Challenges
The U.S. Postal Service does not receive funding from taxes. It is mandated to be self-financing and operates using revenue from the sales of postal stamps and fees from package deliveries. Republicans have been discussing the idea of privatizing the institution since the 1990s. The first-term administration of Donald Trump first proposed turning it to a private postal operator in 2018 as part of its greater plan to reorganize the federal government.
Financial woes have remained its biggest challenge. These also represent one of the reasons why several politicians have recommended its privatization. For example, in 2023, despite increasing its revenue to USD 79.32 billion, it had a net income of USD -6.48 billion. It also lost USD 9.50 billion in the fiscal year ending 30 September 2024 although its revenue increased to USD 79.50 billion. These losses transpired despite postage stamp hikes.
The financial challenges of the U.S. Postal Service partly stem from a decline in the volume of mail. The increasing reliance on digital communication like email and online bill payments has reduced the need for traditional mail services. First-class mail like letters and postcards has remained its most profitable segment. However, as digital communication grows, first-class mail volumes have been steadily declining and are close to becoming obsolete.
Competition in the package delivery segment has also heightened over the last decade. It is also labor-intensive. Labor costs have been increasing over time. The law also mandates it to pre-fund future retiree health benefits over a 10-year period. This is a significant financial burden. USPS also has other operational costs. These include infrastructure costs for maintaining its vast network of offices and delivery routes and fuel costs for its fleet of delivery vehicles.