What Could Happen if the U.S. Postal Service Stopped Delivering Mail
It would mean more than the end of the Restoration Hardware catalogs...
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There’s nothing quite like going to your mailbox and finding a good piece of mail. No, we’re not talking about bills or advertisements or letters from your alma mater requesting donations (when you’re not even close to paying off your student loans yet)—we’re talking about fun mail. Stuff like a lovely hand-written letter from a friend or relative, greeting cards, or that book you ordered and then forgot about. At a time when almost everything is done through email, text, instant message, and video chat, those just don’t compare with knowing that someone else took the time and energy to write to you, personally touched the envelope, and then mailed it.
But this simple joy may soon be a thing of the past, given that the United States Postal Service (USPS) is chronically in debt and in danger of being disbanded entirely. It’s hard to imagine what an America without the USPS would look like, but here are some possibilities.
How much trouble is the USPS really in?
In short, quite a bit. The Government Accountability Office describes the USPS’s financial condition as “deteriorating and unsustainable,” and has the numbers to back that up. Specifically, the USPS has lost $69 billion over the past 11 fiscal years—including $3.9 billion in 2018. On top of that, the USPS’s total unfunded liabilities and debt have grown to double its annual revenue ($143 billion at the end of 2018). Although the USPS did implement cost-saving measures in recent years, they’re helping less and less every year. Finally, the USPS’s expenses have gotten to the point of growing faster than its revenues, as a result of both rising compensation and benefits costs, and continuing declines in the volume of First-Class Mail.
Things briefly started to look up at the beginning of 2020. According to information released by the USPS, the most recent quarter (January 1 to March 30) saw an increase of $348 million compared to the same quarter last year. Then the novel coronavirus pandemic hit. Starting in late March, there has been a steady decline in mail volume during the pandemic. “It is estimated that the COVID-19 pandemic will substantially increase the Postal Service’s net operating loss over the next 18 months, threatening the Postal Service’s ability to operate,” the USPS said in a statement. So despite financial conditions improving in the first part of 2020, that trend is not continuing and does not bode well for the future of the USPS.
How did it get to this point?
The USPS has been doomed to fail for some time, according to Craig Kirsner, financial expert and author of Retire With Confidence: Preserve and Protect Your Wealth And Leave A Legacy. One major problem is that the USPS is a quasi-government entity, so they have to be efficient like any company, while also having to pander to politicians who don’t want their local post offices to close in order to protect the branch’s employees’ jobs (and the politicians’ votes). “So even though from a business standpoint, it makes economic sense to close certain offices and consolidate things, they can’t due to political pressure,” he tells Reader’s Digest. And in case you were wondering, no, the USPS doesn’t receive any tax dollars for operating expenses, and relies on the sale of postage, products, and services to fund its operations.
Here’s what could happen if the USPS were to be disbanded.
It would probably make sending letters more difficult and expensive
At this point, it’s hard to envision what, exactly, sending mail without the USPS would look like, but we can speculate, at least. In fact, this is something Scott Potash, co-founder of Postable, a web-to-print greeting card service, has given a lot of thought, considering how dependent his company is on the USPS. Let’s start with the big question: How would we send letters? Without the USPS, there wouldn’t be any viable way to send letters at all, according to Potash. “UPS and FedEx do not offer cost-effective ways to send anything other than boxes or flat pack envelopes,” he tells Reader’s Digest. “To send a letter via UPS or FedEx will cost consumers five times the price of a first-class stamp now, at a minimum.”
So if you thought that disbanding the USPS would mean lower prices for mailing letters, Potash says, to think again: “With a huge competitor out of business, [UPS and FedEx] rates will likely go up meaningfully.” In addition, he says that if UPS or FedEx does step in to deliver letters, they will likely charge according to weight and distance. “So rural areas, and in particular far-flung areas like Alaska, Hawaii, parts of the rural lower 48, will be incredibly expensive to send mail to,” he adds.
It could impact on direct-to-consumer businesses
As the co-founder of Veil, a direct-to-consumer product startup, Noah Kotlove says that he owes much of his company’s early success to the USPS. “Because of the affordable (and fast!) shipping rates the USPS provides, we were able to get up-and-running without taking on outside investment or saddling the company with debt,” he tells Reader’s Digest. “I fear that without this resource for small businesses, it will become prohibitively expensive to start businesses that ship physical goods—and could mean the end of this direct-to-consumer era.” On the other hand, it’s probably a good thing that we’re no longer able to ship babies through the mail.
What about postal workers’ jobs?
The USPS currently employs nearly 500,000 people—all of whom would presumably lose their jobs if the organization disbanded. But providing all these employees with benefits (negotiated through seven different unions) is part of what’s causing the USPS to go into so much debt. Every two weeks, the USPS pays $2 billion in salaries and benefits. According to a fact sheet put out by the USPS, the requirement to pre-fund the employees’ health benefits is a major expense, along with retirement benefits. This is just one aspect of the organization that would need to be reformed in order for it to continue operating.
How else might the economy be impacted?
Given how large the USPS is, it can be difficult to comprehend all the other industries its disbanding would impact. For example, in 2019 alone, the USPS purchased nearly 579,000 tires: enough that if they were stacked end-to-end, it would be 244 miles long or roughly the distance between Dallas and Houston. And then there are the rubber bands: the USPS ordered more than 750 million rubber bands in 2019. That is about 41,096 miles of rubber bands, or enough to wrap around Earth 1.7 times. To learn more, read about these 16 surprising facts about the U.S. Post Office.
What would happen to leftover stamps?
If the USPS does end up being disbanded, they’ll probably have a lot of stamps that have been printed previously. What happens to those? Though the USPS hasn’t revealed any information on this—specifically pertaining to its potential closure—their current policy is that you can use any old leftover stamps you have sitting around the house. This does require a little bit of research, though. Because the cost of first-class stamps is constantly changing, you have to figure out what the original value of a stamp was, and then put enough postage on a letter to equal the current cost of a first-class stamp (which is 55 cents). This is why the more recent “forever” stamps are so handy—you can continue to use them even when the rates change. Potash speculates that the government would be forced to redeem stamps at face value because they are legal tender.
Next, read on to find out what mail delivery looked like 100 years ago.