US Postal Service Reports a $5 Billion Loss, Asks Congress For Help
The U.S. Postal Service is still suffering from painful blows to their economic growth. Post office officials reported a $5 million loss over the past year and they’re begging Congress to pass legislation to rectify their financial crisis, ABC News reports.
USPS is blaming a 2006 congressional decree for their financial troubles: the mandate forced the Postal Service to cover health care plans for future retirees. The additional $5.6 billion per year that services retired employees caused the federal agency to default on three of those annual payments.
“Postal officials have been pressing Congress to let the agency end Saturday mail delivery and reduce the payments for retiree health benefits,” ABC News adds, “But prospects for a legislative fix are increasingly unlikely this year.”
The Post Service is also urging the Postal Regulatory Commission to raise the rate of postage stamps from 46 cents to 49 cents.
USPS has made significant cuts in the agency saving them $1 billion. They reduced their workforce by 37,400, consolidated 143 mail processing centers, eliminated 1,400 delivery routes, and changed retail hours in 7,000 locations. “The $5 billion loss is less than a third of the record $15.9 billion loss the Postal Service reported last year,” ABC News noted.
This is the Postal Service’s seventh consecutive year of reporting an annual loss — despite a 1.2 percent growth in 2008 due to gains in package delivery and standard mail. However, the slight increase in revenue just couldn’t offset the losses from the Postal Service’s 2.4 percent decline in first class mail — the agency’s most profitable sector.
“We’ve achieved some excellent results for the year in terms of innovations, revenue gains and cost reductions, but without major legislative changes, we cannot overcome the limitations of our inflexible business model,” said Patrick Donahoe, the USPS Postmaster General.
By “innovations,” Donahoe may be referring to USPS’s new deal with Amazon to ship off deliveries on Sunday. As more internet users rely on e-mail for communication, the USPS suffers — but the agency discovered a silver lining as online purchases began to boom. Their collaboration with the large online retailer might just be what the Postal Service needs to gain ground in the business.