This article is part of a Fortune Special Report: Business in the Coronavirus Economy—a look at the impact of the pandemic on more than 50 industries.
Fifty years ago, a postal worker strike halted mail delivery. The eight-day strike, carried out by 150,000 letter carriers across 30 cities, prompted then-President Richard Nixon to declare an emergency and send in the National Guard to deliver mail.
“The United States Postal System is a vital element of our entire communications system. The poor depend heavily upon it for medical services and also for government assistance,” Nixon said in an address to the nation. “Veterans depend on it for their compensation checks. The elderly depend on it for their Social Security checks.”
Today, the Postal Service is just as essential: It delivers about 1 million lifesaving medications each year and serves as the only delivery link to Americans living in rural areas. Working with other delivery services like UPS, the agency supports $1.7 trillion in sales and 7.3 million private sector workers year, and this year will prove essential to delivering the 2020 Census to citizens as well as any vote-by-mail initiatives. The USPS is the federal government’s most favorably viewed agency, with an approval rating of 90%.
Yet once again, the USPS is in crisis mode.
With a negative net worth of $65 billion and an additional $140 billion in unfunded liabilities, the USPS originally expected to run out of liquidity by 2021 without intervention. That has accelerated rapidly because of COVID-19. Fewer people and businesses are sending mail because of the outbreak, which could hasten the decline of the Postal Service and close its doors as early as June, officials warned.
“The coronavirus crisis is wreaking havoc on the Postal Service. Without immediate action by Congress and the President, the Postal Service—a vital staple of American society since 1775—could cease to exist by this summer,” House Committee on Oversight and Reform chairwoman Carolyn Maloney (D-N.Y.) told Fortune by email. “This is a national emergency. We cannot afford to wait until June.”
Without government intervention, the post office is facing the same hurdle as other businesses are right now: There’s not enough cash to keep operations going.
First class and commercial mail volume, which brought in about $41 billion in revenue in fiscal year 2019, has dropped at a rapid clip since the virus spread across the U.S., according to the Postal Service. This downward trajectory is expected to continue, with mail volume falling lower than it did during the 1930s Depression. USPS estimates total revenue losses between $8 billion and $17 billion between now and the end of fiscal year 2020 as a result of the crisis.
While package delivery has increased during the crisis, “revenue growth in our package business will never be enough to offset imbalances in the Postal Service’s business model,” said Postmaster General and CEO Megan Brennan in November.
But the USPS has also been hemorrhaging money, largely owing to a piece of 2006 legislation, championed by the George W. Bush administration and congressional Republicans, that requires the Postal Service to pre-fund all future retiree health benefits, amounting to at least $5.5 billion annually. That edict, according to Brennan, has led to 80% of the agency’s losses. As a result of the lack of revenue, the Trump administration has suggested on multiple occasions that parts of the postal service be sold to private industry.
While the post office has not been funded by taxpayer dollars since the early 1980s, some in Congress—on both the left and the right—pushed for a bailout of the Postal Service as part of the recently passed $2 trillion stimulus package, the largest relief package in U.S. history. The original House bill included a $25 billion appropriation intended to help fund the agency and eliminate its $11 billion in outstanding debt. The measure would also eliminate the USPS’s $3 billion annual borrowing cap.
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While the plan passed through the House, the Republican-majority Senate rejected the funding, and the final bill, signed by the President on Friday, only granted the USPS access to a $10 billion Treasury loan—no direct cash.
“A collapse of the Postal Service at this crucial moment would severely undermine both our fight to defeat the COVID-19 virus as well as the effort to stabilize our economy,” said the National Association of Letter Carriers, a postal worker union, in a statement.
Just last week, President Donald Trump said that the Postal Service was essential to keeping goods flowing to households who were self-quarantining. In many areas of rural America, the USPS is the only mail option and provides last mile delivery for private companies. That means that the Postal Service alone will have the ability to adequately distribute the individual stimulus checks that Congress approved for Americans in the bailout package.
“Republicans pressed for hundreds of billions of dollars in massive bailouts to all kinds of large businesses and corporations, including $17 billion to Boeing and other companies. Yet they refused to give the Postal Service anything but increased borrowing authority,” said Maloney. “The White House and Senate Republicans…have wanted to privatize the Postal Service for years, but exploiting the coronavirus crisis in order to do so [is] a new low.”
In total about $500 billion was handed out to private corporations, with no money going to the Postal Service.
A closure of the Postal Service is uncharted territory, but it’s not impossible, said USPS spokesman David Partenheimer in a statement. “The Postal Service remains concerned that this measure will be insufficient to enable the Postal Service to withstand the significant downturn in our business that could directly result from the pandemic,” he said. “Under a worst-case scenario, such [a] downturn could result in the Postal Service having insufficient liquidity to continue operations.”
The USPS currently employs about 630,000 workers, and without funding there could be massive layoffs and the closing of certain offices in rural areas. Congress could also mandate that certain parts of the service be sold to private industry, as the Trump administration has suggested on numerous occasions.
“What would happen tomorrow in the wake of this pandemic if the Postal Service announced tomorrow that they were going out of businesses and they were laying off all their workers?” Rep. Gerry Connolly (D-Va.) asked in a statement.
There is talk of a fourth stimulus package, and Mark Dimondstein, president of the American Postal Workers Union, which represents about 250,000 postal workers, is holding out hope that there will be some support included in the next round of funding.
“It’s absolutely necessary that it include funds—as House proposals earlier this week did—to keep the mail and e-commerce moving until the economy begins to recover,” he said in a statement. “Simply having access to more debt from the Treasury—at the Secretary’s discretion—as included in the third stimulus, is an inadequate solution.”
The Postal Service Board of Governors will convene in a virtual meeting on Wednesday, where they are expected to discuss borrowing more money and how they intend to stay afloat amid COVID-19.
Postal employees are considered essential and will continue to work as the virus spreads across the country.
“It’s outrageous that the stimulus bill passed by Congress doesn’t include any financial support for the USPS, including needed funds to provide for the safety of workers and the mailing public,” said Dimondstein.
As of Friday, the USPS confirmed that 111 of its employees had tested positive for COVID-19. In a letter to its 270,000 members, the National Association of Letter Carriers noted that it had received at least 3,000 complaints from postal workers who did not feel as though their safety was being taken seriously.
Correction, March 31, 2020: A previous version misstated the 2019 revenue for first class and commercial mail.
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