The United States Postal Service is a strange hybrid.
It was established by the First Continental Congress in
1775. The new federal government
established in 1789 established the postal service permanently as a government
agency in 1792.
Therefore:
The USPS is a government agency within the Executive
Branch.
Its service standards are set in the Code of Federal
Regulations, and the Postal Regulatory Commission has oversight of it.
It has a public mission, and the price of minimal service
must remain affordable.
It maintains a monopoly of mailboxes and letter delivery to
be able to provide service to communities that would not be financially viable for
a private company. Only the USPS can
deposit items into mailboxes.
As a government agency, the USPS is exempt from tolls,
vehicle registration fees, state/local taxes, property/real estate taxes, and
parking tickets for delivery vehicles.
To fund growth and improvements, the USPS is granted very
low interest loans.
Postal workers are federal employees. The USPS assumes all financial risks for
workers’ compensation from its revenue.
It cannot use a private insurer.
Postal workers cannot strike.
However:
Since the Postal Reorganization Act of 1970, the USPS does
not receive appropriations from Congress provided by tax revenues. Unlike most
government agencies, it is almost completely financially independent.
It is required to act like a private business and must
compete for customers.
The rise in costs of providing services, especially employee
retirement benefits, competition from other delivery companies, and a reduction
in need for the postal service because of technological innovations for
delivery of communication (email, etc.) has led to a loss of revenue for the
USPS.
Currently the cost of universal mail service is higher than
the monetary value of having a monopoly.
Other handicaps:
USPS has more flexibility in purchasing than other
government agencies, but purchasing is regulated by government oversight and is
not as flexible as a private company would have.
The USPS is forbidden by law from putting retirement program
monies into any but the most secure investments. Therefore, the cost of retirement benefits
for postal employees is higher than the money the investments make.
The amount the USPS can borrow for growth and improvements is
capped by law, and the cap has not changed in 30 years.
Because of its hybrid nature, the USPS has some control over
it’s operations and low to no control over others. For example, USPS has no control over providing
6-day service. It also has no control
over its ability to diversify products and services. It has high control over the prices it charges
for services it competes with other companies to provide such as package delivery.
The US Postal Service component of the Office of Inspector General has studied the tension between the competing natures of the Postal
Service as a privately funded entity and a government agency and in a white
paper released August 2, 2024 has determined that its current structure is not sustainable
and needs reform.
