The Postal Service used to lose money slower. Eric Boehm writes:
The U.S. Postal Service lost more than $2 billion during the second quarter of the fiscal year, putting it on track to finish the current year more than $7 billion in the red—way worse than the nearly $4 billion in losses it posted last year.
In its quarterly fiscal report, published today, the Post Office reported small decreases in mail volume and overall revenue compared to the same quarter of 2018. Its big losses are driven by a sharp increase in expenses, primarily workers’ compensation costs, pension liabilities, and payments for retirees’ health benefits.
For the fiscal year that ended on September 30, 2018, the Postal Service recorded a then-record loss of $3.9 billion. At the time, Postmaster General Megan Brennan bluntly declared that the agency “cannot generate revenue or cut enough costs to pay our bills” and predicted that the agency would continue to post losses at “an accelerating rate.”
After losing $1.5 billion in the first quarter of the current fiscal year, the Post Office has now lost $3.6 billion in just six months. That comes even after an increase in the cost of sending first-class mail. The cost of a stamp jumped 5 percent on January 1, and other mailing services increased by 2.5 percent. The agency predicted that those changes would increase revenue by $1.7 billion—but expenses have been outpacing revenues by a wide margin.
It’s not exactly news that personnel costs are driving the Postal Service’s financial problems. The agency has $100 billion in unfunded pension liabilities and “no clear path to profitability,” according to a White House assessment report released last year. The Post Office has lost $69 billion since 2007, and it probably would have gone bankrupt long ago if it were a private entity—FedEx and UPS certainly wouldn’t exist today if they were posting annual losses of $4 billion. And they pay taxes, which the Postal Service does not.
[Eric Boehm, “After Losing Nearly $4 Billion Last Year, Postal Service on Track to Lose $7 Billion This Year,” Reason, May 10]
