US Postal Service in critical condition: borrowing money from employee pensions to survive

The United States Postal Service (USPS) reported a net loss of $2.5 billion in the third fiscal quarter — a loss about $600 million lower than in the same quarter last year. However, in a statement released by the company, it called on Congress to take a series of steps to deal with the worsening financial crisis it is in.

Postmaster General David Steiner said that legislation approved by a Senate committee to add dozens of new ZIP codes could cost the already budget-strapped service about $800 million. Along with this, he noted that the agency is requesting approval to raise stamp prices as early as this coming January, instead of waiting until July 2027 as planned.

Steiner warned that without action from Congress this year, "our plans will necessarily have to include changes that will harm service — including a re-examination of service levels, the closing of thousands of unprofitable post offices, and price increases."

In June, Steiner warned:

"The bottom line is, we have run out of money. We are borrowing money from our employees' pension funds to keep the service running."

He called on Congress to compensate the Postal Service for loss-making activities and to carry out further reforms. Last March, the Postal Service hired organizational consultants to help deal with the financial difficulties. One of the central questions currently on the table is whether it should continue to deliver mail to 170 million addresses six days a week — a service that costs $3.4 billion a year, with 70% of these routes being loss-making, according to Steiner. Also, about 58% of the agency's 18,000 post offices operate at a loss.

Since 2007, the US Postal Service has accumulated net losses of more than $120 billion, against the backdrop of a sharp decline in the volume of regular mail — its most profitable product in the past — in parallel with the shift of consumers to digital communication. In May, the Postal Service announced a freeze on non-essential expenses — including travel, office equipment, and external consultants. In the same month, it also announced a temporary freeze on employer contributions to the federal pension plan, and raised the price of a regular postage stamp from 78 cents to 82 cents. According to Postal Service estimates, the freeze on pension contributions will save about $2.5 billion by September 30, and potentially up to $15 billion by 2030.