The Real Reason Behind USPS’ $3.9 Billion Loss in 2018

Ever since President Trump took office, the US Postal Service has been under much scrutiny. People are catching wind of USPS’ $3.9 billion loss in 2018, and right now, public perception of USPS is that the organization is burning through more cash than Captain Jack Sparrow on a deserted island. However, not everything is as it appears on the surface. While many reporters and media commentators are quick to blame USPS itself for the significant losses, the real reason comes down to Congressional-mandated pre-funding.

Hold up—What’s Pre-Funding?

In this case, pre-funding describes the action of funneling money to a pool set aside for future employees’ retirement health benefits. USPS is required to do this due to a Congressional mandate enacted in 2006, and to pre-fund these benefits decades in advance. You read that right: decades in advance. In our opinion (and the general opinion of any logical person), that congressional mandate needs to change…and fast.

Adding insult to injury, other shipping companies such as UPS (NYSE: UPS) and FedEx (NYSE: FDX) aren’t required to pre-fund future retiree health benefits the same way USPS is forced to. This automatically places UPS and FedEx at an unfair financial advantage…even though USPS’ recent track record shows they are outperforming other carriers.

Pre-Funding Accounts for Over 90% of USPS’ $3.9 Billion Loss

Here’s the truth: yes, Amazon’s enormous package volume and the decline of physical mail contribute to the problem. However, pre-funding future retiree benefits accounts for over 90% of USPS’ annual losses! In fact, pre-funding has costed USPS between $5.5 and $5.8 billion per year since the law was enacted in 2007. There’s no argument around it; the numbers speak for themselves. As the National Association of Letter Carriers wrote in this blog post: “It’s the pre-funding, stupid!”

Spread the Word

By now, you may be asking yourself, “So…what do you want me to do about it?” If you feel like this problem is bigger than you, think again! The US Postal Service touches all of our lives every single day, so spread the word! Contact your local representative if you so desire! In any case, the fact that you’re reading this means we’re moving at least one step in the right direction.

At the end of the day, a major part of the issue boils down to the public perception of USPS. We need to move blame away from USPS itself and set our sights on where the real change can happen: Congress. By publishing this, we only hope more people will realize the truth of this issue and raise their voices collectively. Then, maybe Congress will feel pressure to change the current laws, which will result in a healthier future for USPS. Trust us when we say: as residents of the United States, a financially healthier Postal Service is in all of our best interests.