The United States Postal Service is a mammoth—hulking and hurtling towards extinction.
The critical agency, with an internal structure that would make Kafka blush and a propensity for hemorrhaging money, is in desperate need of reform.
That’s about all that the Postal Service’s numerous stakeholders—postal management, politicians, labor leaders, economists, business owners, logistics consultants, business consultants, political consultants, consultant consultants, vote-by-mail advocates, aunts on Facebook, really any American who receives and sends mail—who are currently hashing out the best way to save the agency, can agree on.
After a series of congressional hearings, Postmaster General Louis DeJoy, a large donor to former President Donald Trump, released his 10-year plan, entitled “Delivering for America,” which he said would save the Postal Service. The plan is long and multipronged, and it includes aspects that labor leaders and postal advocates have long fought for and agree with—like ending a 2006 requirement that the agency pre fund healthcare pensions for all employees up to 75 years in the future. Over 80% of the agency’s losses can be attributed to payments to retiree and healthcare funds.
But other parts have Democratic lawmakers and union representatives worried. The plan would slow mail delivery by limiting sorting and transportation methods. DeJoy also said that under his plan, “a small percentage” of post offices would have reduced hours, and “a small percentage” of stations in cities would close permanently, though he did not specify exact numbers.
“Postmaster General DeJoy has put forth a draconian plan that guarantees the death spiral of the United States Postal Service,” said Representative Gerry Connolly (D-VA) in a statement. “Customers and Congress are fed up with DeJoy’s service cuts and record delays.”
Representative Carolyn Maloney (D-NY), the chairwoman of the Committee on Oversight and Reform, added that she was “extremely concerned about the Postal Service’s unacceptable decision to make permanent slower mail delivery despite substantial public and Congressional opposition.” DeJoy, she claimed, failed to fully engage with Congress and other “postal stakeholders” while creating his plan.
David Partenheimer, a spokesperson for the USPS, denied those claims. “We received feedback from key customers and industry associations, our unions and management associations, and members of Congress,” he told Fortune.
But because of the USPS’s labyrinthian structure, different aspects of the plan require approval from separate governing bodies. Some pieces will necessitate Congressional action while others can be implemented quickly through a vote by the USPS board of governors. Still others require a review by the Postal Regulatory Commision, an independent agency that has regulatory oversight over the Postal Service, before they can be voted on by the Board of Governors.
The part of the plan that is least controversial—ending the prefunding of retiree healthcare plans—will need to be instituted by Congress. A bill ending the law passed the House last year but did not make it through the then-Republican controlled Senate. It is widely expected to pass this time around.
The more controversial aspects of the plan—slowing mail delivery, closing and limiting the hours of post offices and mailboxes, shutting down sorting machines—don’t need Congressional approval. Once a review has been completed by the Postal Regulatory Commission, the board of governors can implement those changes. The review is non-binding guidance, and governors can vote any way they’d like no matter what the findings are.
A full review by the PRC will take at least 90 days, meaning a vote by the board of governors is unlikely to occur before early June.
Members of Congress have issued warnings about making such changes, but they do not have the authority to stop them. “Mr. DeJoy’s plan should not be implemented until Congress and the American people have the opportunity to fully review it and provide substantive feedback,” said Maloney.
President Joe Biden recently announced three nominees to fill vacant seats on the Postal Service’s board of governors. If approved by the Senate, this would make Democrats and Democratic appointees the majority on the nine-member board. They would have the voting power to fire Postmaster General Louis DeJoy, a Trump appointee and longtime supporter of the Republican Party, and could nix any of DeJoy’s proposed changes to the structure of the Postal Service.
But DeJoy doesn’t plan on going anywhere: He warned Congress earlier this month that the American public had better “get used to me.”
It will take some time for an already overloaded Senate to get to approving Biden’s nominees. The timing on the hearings and vote for these board members is still undetermined, but DeJoy has indicated that he wouldn’t mind a swift onboarding.
“The quicker we get some new board members from the administration, the less we can talk about this and move on to the plan and the real, real problems that we need to fix here,” he told Congress last month.
And a Democratic majority on the board doesn’t necessarily mean big change, either. It’s not a given that board members will vote out DeJoy based on party affiliation alone. Ron A. Bloom, the current Democratic chairman of the USPS board of governors, who previously served in the Obama administration, came out in support of the 10-year plan.
“The Board challenged Postal management to devise a plan that was firmly rooted in our public service mission to bind the nation together,” said Bloom in a statement, adding that without the plan the future of USPS will be “profoundly threatened.”
Other aspects of the plan include modernizing post offices and investing in new delivery trucks, along with creating outreach programs to help small- and medium-sized companies with e-commerce and mail services.
Eventually, DeJoy said, he would change the prices of first-class and business mail; proposals would be released within the coming weeks. Any price change would need to be approved by the Postal Service Governors and reviewed by the PRC.
Managing the United States Postal Service is no small task. The quasi-governmental agency has 644,000 employees, delivers about 143 billion pieces of mail to 160 million delivery addresses annually, and operates more than 31,000 post offices. It’s the second largest employer of civilians in the United States and would rank 46th on the 2020 Global Fortune 500 list if it were a private sector company.
But the Postal Service hasn’t turned a profit in the 14 years since President George W. Bush’s 2006 Postal Accountability and Enhancement Act was signed. The USPS has lost $87 billion over the past 14 fiscal years—including $9.2 billion in fiscal year 2020. DeJoy claims that his plan will ultimately avoid $160 billion in projected losses over the next decade.
DeJoy projected that his actions would also create $58 billion in revenue over the next decade. Postage rate increases, he predicted, would add another $44 billion in new revenue; internal management initiatives like cost cutting in mail processing would add another $34 billion, and package price increases would add an additional $24 billion. The figures come from internal studies and are being reviewed by the PRC, but, the plan notes that all elements, including those that require congressional approval, are required “to achieve break-even net income, generate sufficient cash to invest in our business, and maintain modest positive liquidity over the 10-year period.”
