In recent months, the United States Postal Service (USPS) has been attacked repeatedly by the Trump administration. Part of Trump’s motivation is to create a crisis around mail-in voting. Trump thinks mail-in ballots will hurt him in the election. But there is a much more basic drive behind attacks on the post office, which have been going on for decades. Private investors and private delivery companies like UPS and FedEx think they can make a lot more money if they can break up or downsize the post office. Their strategy is to force it into bankruptcy and then turn it into a private company. This strategy is called privatization.
This sector of the delivery industry (also known as logistics) has grown rapidly in recent decades. A good part of the growth of the private companies comes from the fact they pay less for combined wages and benefits and work their workers to the point of exhaustion. While working conditions at USPS can be brutal, many postal workers have better conditions in some ways than, for example, the part-time workers at companies like UPS. There are many new companies clustered around the industry giants UPS and FedEx and competition is fierce. Increasingly, the USPS has to compete with these companies, although it also is required to subsidize them with cheap rates when it performs some parts of these company’s delivery operations, such as some residential service that UPS and FedEx would find more expensive to do themselves. Even though the use of technology like email has largely replaced mailing letters, the USPS still had more than $71 billion in revenues in fiscal year 2019. This makes the post office an attractive target for the private delivery companies and investors eager to make more profit if they can get the post office out of the way.
For more than 200 years, the government-run post office was the way most packages and mail got delivered to people and businesses. The post office got support from taxes and postage rates were relatively low. The post office wasn’t required to make a profit. However, private profit-making companies, like UPS, began decades ago to find ways to profitably compete with the post office in the package and overnight mail sector of the market. In this drive to undermine the post office, they have been helped by the government at key moments.
The first step came in 1970 when a bi-partisan majority in Congress eliminated all direct government financial support for the post office, meaning that all its operations would have to be funded from charges for services. Postal workers had just won a strike and the government didn’t want to provide any tax money for higher wages and better benefits for unionized postal workers. This law also locked in the practice of using revenue from 1st-class mail to subsidize business mail. It also meant the post office didn’t have the money to start offering services based on the new communications technology like email. Consequently, as email grew and there was a corresponding decline in 1st-class mail, it became inevitable that the post office’s finances would deteriorate.
The biggest blow came in 2006 when the George W. Bush administration and Congress passed an unprecedented bill with bipartisan support—95 percent of Republicans and Democrats voted in favor of it. Despite their recent displays of outrage over the attacks on the postal service, Nancy Pelosi, Bernie Sanders, and many other current Democrats in Congress voted for this bill. The new law required the post office to pre-pay all the estimated health and retirement benefits its employees would receive 75 years ahead of schedule. This has caused the post office to fall deeply into debt, setting up the possibility of bankruptcy. If the post office can be forced into bankruptcy, the fact that it has pre-paid all its workers’ benefits makes it an extremely attractive candidate for privatization, which seems to be the outcome Trump is shooting for.
The bill (The Postal Accountability and Enhancement Act) required the Postal Service to get rid of its normal pay-as-you-go retirement plan, which was working fine. Instead, the Postal Service was now required to calculate all of its expected employee pension costs over the next 75 years, and then put away enough money between 2007 and 2016 to cover the expected pension costs. This was an insane requirement, and all it did was drain Postal Service funds. Between 2007 and 2016, the USPS lost $62.4 billion, the majority of that from the requirement of prefunding the pensions. By the end of 2019, the USPS had $160.9 billion in debt.
Similar attacks on Postal Service funding continued under the Obama administration, always with bi-partisan support. In 2011, the Obama administration’s federal budget forced the Postal Service to repay the federal government $6.9 billion from the retiree health benefits account, ridiculously claiming the federal government overpaid the Postal Service during a period it was undergoing unprecedented cuts. The impact of the bill was expected to accelerate the planned closure of about 3,700 Postal Service facilities. Since 2009, the Postal Service has cut over 126,000 positions, most of which occurred during the years of the Obama administration.
Workers at the post office are mobilizing in 2020 to protect their job security against the threat of bankruptcy and privatization. The postal unions are demanding the government pass a short-term subsidy to stave off a collapse. However necessary right now, a short-term financial fix for the post office won’t end the crisis, only slow it down. Postal workers will have to find ways to challenge the system at a more basic level, challenging the idea that everything in our society should be organized around making a profit. If they decide to take that challenge on, they will find that a lot of people who don’t work for the post office are asking the exact same question, and might be surprised at the support they get.