The U.S. Postal Service is facing stiff resistance from a swath of stakeholders over some of its reform plans, though the agency’s leader is asking them not to stand in his way.
Postmaster General Louis DeJoy announced on Tuesday that USPS has brought its projected long-term losses down from $160 billion to between $60 billion and $70 billion, driven largely by the financial relief Congress delivered in the Postal Service Reform Act. He cautioned that to enable the agency to break even by 2030, it will have to implement the other elements of his plan. Those include continuing to increase prices to keep pace with unusually high inflation, consolidating delivery processing to reduce transportation costs and reducing the workforce through attrition.
“All stakeholders need to realize that each day lost in executing on our strategy will consume cash and eventually accumulate to a cash deficit that will necessitate more aggressive actions by us or the federal government,” DeJoy said at a board of governors meeting.
USPS announced it experienced a net profit of $59.7 billion in the third quarter of fiscal 2022, which ended June 30. Nearly all of that came from the reform bill’s lifting of the Postal Service’s obligation to pre-fund health benefits for retirees, however, and management said, while setting aside that windfall and other factors outside management’s control, the agency lost $459 million in the three-month period. In the same period last year, USPS lost just $41 million. Revenue from packages, usually a growth area of the Postal Service, dropped by 1.1% from the pandemic-inspired boon in the third quarter last year.
DeJoy said that due to inflation’s impact and the ongoing need to alleviate the agency’s projected deficits, USPS will increase its rates in January. Postal rate hikes have historically been modest and tied to inflation, but the postmaster general has on several occasions used new authority to institute higher increases. Several industry groups have asked the Postal Regulatory Commission to revoke that authority, noting the Postal Service’s financial outlook has changed dramatically since President Biden signed a reform measure into law. The groups previously sought to block the new authority from taking effect, but they lost the case in federal court.
“Initiatives by stakeholders to delay the simplest of our operational changes to integrate our network, improve our service and reduce our cost are relics of our failed strategies of the past,” DeJoy said. “These actions have led to the near financial ruin of the Postal Service and I ask all stakeholders—mailers, shippers, legislators, and regulators—to support this management team and board of governors in what I believe should be our collective efforts to move swiftly with our plans to save the post office and ensure a vibrant organization that provides the excellent service which our customers and country deserve.”
The mailers, however, did not appear willing to back down from their fight. Steve Kearney, executive director of the Alliance of Nonprofit Mailers, said he was not surprised by DeJoy’s announcement of the coming price hike, noting the postmaster general recently told industry it would be two more years until it can expect the rate increases to abate. Kearney and others have warned DeJoy will drive mail out of the system, though the postmaster general has said volumes will inevitably decline and he would rather rip the band-aid off quickly.
“It is concerning that the managers at USPS have little idea what the long-term effect on mailers and mail volume will be,” Kearney said. “Raising rates twice a year on monopoly-controlled mail services is completely unnecessary and will be very damaging to the mailing community.”
Mike Plunkett, president of the Association for Postal Commerce, another group representing large-scale mailers that has fought against high rate increases, similarly said DeJoy’s comments did not come as a surprise and the industry has planned for the rate to go up. He also expressed appreciation for management’s efforts to find other ways to bring down costs so the entire deficit-reduction plan did not fall on the shoulders of customers.
DeJoy may also have been referring to resistance from employee groups, who reacted with defiance over his recent announcement that USPS will look to shed 50,000 positions through attrition in the coming years. American Postal Workers Union President Mark Dimondstein said this week he has spoken to DeJoy since his remarks and made clear he would push back against any effort to shrink the workforce.
“If it’s management’s intent to weaken our union, attack our pay and conditions or eliminate family-sustaining union postal jobs, the PMG will get a strong fight from the APWU,” Dimondstein said. “We will oppose future job reductions that affect the lives of the postal workers we represent, good living wage union jobs for future generations and diminishes the good service the people deserve. Rest assured that any such management actions will be met with [the] unbridled opposition of the APWU.”
The board of governors stressed at its meeting on Wednesday that USPS is still in a hiring posture, though it is struggling to fill its needs in positions like rural letter carriers. DeJoy has said USPS expects to see 200,000 employees voluntarily leave over the next couple years, so the Postal Service will continue to aggressively hire even as it looks to shed its overall employee count.
APWU and other groups have also pledged to fight against DeJoy’s plan to consolidate mail and package sorting at fewer facilities before going out for final delivery. USPS last week identified an initial 10 previously closed plans to reopen for final processing, removing that function from many of the post offices in those areas. The announcement has caused concern among some employees worried they will lose their jobs or be forced to relocate and employee groups have said management has not been forthcoming on the impact of the changes on the workforce. APWU suggested it could file a national dispute to block the reforms. The Postal Service vowed to comply with all of its legal and contractual obligations, and said the changes would improve working conditions and allow for more efficient delivery routes.