President-elect Donald Trump confirmed at a news conference on Monday that he is “looking at” the idea of privatizing the U.S. Postal Service. That comes as the USPS ended its last fiscal year with a net loss of $9.5 billion.
Retired postal workers get a pension, which means — in the past year — the USPS had to pay a lot into its pension fund, according to James O’Rourke, a teaching professor of management and organization at the University of Notre Dame.
“In funding that pension, that unfunded pension requirement, those monies had to come out of current revenue,” he said.
Put aside the pension costs, which the Postal Service’s management can’t do much about, he said that last year’s loss doesn’t look as bad.
Still, per Cornell’s Rick Geddes, the USPS has a lot of other fixed costs because it has to deliver to every address in the country, six days per week. And even though it’s delivering more packages (thanks to the rise of e-commerce), so are other private companies.
“The Postal Service is in a competitive marketplace — in the parcel delivery business — so that constrains their ability to raise rates,” Geddes said.
And the FedExs and UPSs of the world aren’t obligated to deliver to the most remote parts of the country — they rely on the Postal Service to handle that.
