Here is a statement from NALC President Fredric Rolando:
Today’s quarterly report puts the year-to-date operating profit of the Postal Service at $1.3 billion, demonstrating the overall strength of the postal turnaround. Operating profits for each of the past two years have exceeded $1 billion, and the Postal Service is now into its fourth straight year of operating in the black. The year-to-date operating profit is up by $100 million from 2015’s first nine months. And the postmaster general today said she expects a “robust” fall season with political mail, followed by the peak holiday season.
The third quarter’s $522 million operating loss reflects the typical slowness of Q3 plus the first stamp price rollback since 1919, with the ending in April of the “exigent” price increase—which lowered the quarter’s revenue by about $450 million. That rollback makes little financial sense, since USPS already has the industrial world’s lowest rates.
Nonetheless, the adverse effect on postal revenues should be short term, with the Postal Regulatory Commission’s legally mandated review of the postage rate-setting system starting early next year. We are confident that the PRC will restore rates to sensible levels before implementing a new system.
The big picture is that USPS operations are $4.4 billion in the black since 2012. That’s an impressive performance for a government entity that gets no taxpayer money—earning its revenue instead by selling stamps—and that enjoys widespread public support while providing Americans and their businesses with the industrial world’s most-affordable delivery network.
Equally important is that these operating profits stem from two ongoing structural factors: As the economy continues to improve from the worst recession in 80 years, letter revenue is largely stabilizing. And as the internet drives online shopping, package revenue is skyrocketing, auguring well for the future.
Indeed, the red ink you hear about has nothing to do with the mail but rather with congressional politics—the 2006 decision by a lame-duck Congress to compel the Postal Service to do something no other entity in the country has to do: pre-fund future retiree health benefits. No other public agency or private company has to do this even one year in advance; USPS must pre-fund these benefits decades into the future. That $5.8 billion annual charge is the “red ink.” (It goes on the ledger as a debit, whether or not it’s actually paid in a given year.)
Both the pre-funding and rate issues can be readily addressed if Congress acts on practical, targeted postal reform. There is a strong consensus within a coalition consisting of the Postal Service, postal unions, businesses, mailers and industry groups, as well as key legislators, for a reform package that all stakeholders can buy into, including addressing pre-funding, allowing USPS to use its invaluable networks for some new products and services, and adopting best private-sector practices in investing the USPS retiree health benefits fund. Our coalition will work with Congress to overcome the short-term impact of the rate roll-back and move legislation this year.