Postal reform raises hopes

Amid mixed financial reports, the postal reform bill passed earlier this year is buoying expectations of greater long-term organizational stability among both management and labor at USPS.

This month, the Postal Service announced a 4.7% increase in revenue for FY 2022’s second quarter, compared with last year. That’s the good news.

Here’s the bad news: Despite the solid jump in revenue, the delivery giant also booked a $639 million net loss, according to USPS.

"While our operating revenue grew compared to the same quarter last year, we have been challenged by rising costs due to inflation, leading to an adjusted loss for the quarter,” USPS Chief Financial Officer Joseph Corbett said, summarizing the still-problematic situation.

However, Corbett added, USPS projections foresee break-even up ahead—within the coming decade, rather than the $160 billion in losses that were predicted absent the recently passed Postal Service Reform Act (PSRA).

Postal labor organizations—though often critical of current USPS management—are like Corbett hopeful that the recently passed postal reform will ease the strain on the bottom line in coming years. All major postal unions applauded the law’s passage, including the American Postal Workers Union (APWU), the National Postal Mail Handlers Union (NPMHU) and the National Association of Letter Carriers (NALC).

“Over a decade of advocacy in the making, the Postal Service Reform Act will repeal the onerous 2006 mandate requiring the Postal Service to pre-fund its retiree healthcare benefits,” notes a Laborers International Union of North America statement hosted on the National Postal Mail Handlers Union website, heralding the law’s April passage with optimism. “No other private sector business or federal agency uses this practice, which has caused losses of $5 billion annually for over a decade.”

More recently, NALC in May reiterated its support for the new law, also framing the problem around pre-funding and noting that USPS’s recent deficit clarifies just how overdue reform is.

“[The] net loss of $639 million shows the importance of the recently signed postal reform law that will address the artificial red ink caused by the 2006 congressional mandate that USPS pre-fund future retiree benefits—a burden faced by no other U.S. company or agency,” Frederic Rolando, president of NALC, said in an email to FEND.

“Any impact of that legislation, which was signed into law after the second quarter ended, will be shown in the next quarterly report,” he noted.

To appreciate Rolando’s comments, it helps to recall just how long it took to get here.

In 2006, Congress passed the law saddling the Postal Service with the $5 billion-per-year “pre-funding” burden: an obligation to take that amount out of revenues to pay for future retiree health benefits.

The move appeared to defy business judgement. Most glaringly, at the time of passage, first class mail volume was plummeting and rising red ink loomed—so mandating that kind of multibillion-dollar set-aside from dwindling revenues was at best unrealistic.

In the 16 years since, most USPS management and labor leaders repeatedly have pressed Congress to have this enormous weight—amounting either to most or all of the organization’s losses, depending on which stakeholder is counting—reduced or rescinded.

And, finally this year, relief for USPS—in the form of PSRA—was enacted by both sides of Capitol Hill. As the reform is implemented, employees will get their healthcare by way of Medicare, rather than the Federal Employees Health Benefits Program.

“Congress has finally passed legislation to bring the Postal Service into the 21st century,” Rep. Peter DeFazio (D-Ore.), long a leader in the reform effort, said when the bill cleared Congress in March. “The agency has been burdened with the idiotic prefunding mandate for far too long.”

DeFazio noted that PSRA included his and many other advocates’ hoped-for fixes, and he applauded the move “to repeal this ridiculous mandate and finally bring financial stability to USPS.”

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