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Charlotte Observer - No Easy Fix for Postal Service Woes


Location: Unknown

By Senator Richard Burr

In this age of technological advancement, words like high-speed, digital and electronic seem to define our day-to-day lives. Online interactions are more commonplace than ever, but there are some things that cannot be replicated by electronic services.

The United States Postal Service has long served as a vital resource for American citizens, and reliable postal services remain important for many daily functions today. However, fiscal problems facing the Postal Service are so dire that they threaten to bankrupt the agency.

The Postal Service is almost $13 billion in debt and will have maxed out its $15 billion credit limit by the end of this year. In fact, there is a very real possibility that the Postal Service will not even be able to fund its payroll expenses as early as this fall. While some try to attribute this to a decline in the use of traditional mail, that is not a comprehensive assessment. The truth is that the Postal Service is suffering from numerous internal issues that are just as big, if not more of a threat, than external pressures.

While it is true that there has been a decrease in the volume of mail handled by the Postal Service since 2006, there has not been a corresponding decrease in operating costs. Contrary to what one would expect, operating costs have actually increased over the same time period. That increase in operating costs is due primarily to personnel expenses.

Employment costs make up 80 percent of the Postal Service's budget, despite recent attempts to scale back the number of employees. The Postmaster General has said that he would like to get the total number of employees down to 425,000 -- a big task considering that there are more than 557,000 people on the Postal Service payroll. Additionally, the Postal Service Retiree Health Benefits Fund -- which the agency supported when it passed Congress -- directs the Postal Service to pre-fund the health benefits of future retirees at a rate of roughly $5.5 billion for 10 years.

Some Postal Service employees have been told that if we just do away with the directive to pre-fund health care, the financial woes of the agency will be solved, but that is simply not the case. According to the Government Accountability Office, Congress reduced retiree health benefit payments by $4 billion in 2009, but the agency still reported a loss of $3.8 billion.

Workers' compensation expenses also play a large role in the Postal Service's current situation. Nearly 40 percent of all workers' compensation benefits paid to federal employees in 2010 went to postal workers. This program is designed to help injured workers recover and return to work, but of the postal employees receiving benefits from the program, nearly 3,400 of them are 65 years old or older, 928 are over 80, and at least one person is 99 years old. These employees will likely not return to work, but they continue to draw workers' compensation because it is tax free and in many cases pays 3/4 or more of their salary as opposed to most states which typically pay around 2/3 of salary or less in workers' compensation.

Wasteful administrative and bureaucratic costs, such as costs associated with the 67 million square feet of unused property maintained by the Postal Service, represent another drain on its budget.

While the future of the Postal Service is uncertain, what we do know is that comprehensive reform will be needed to address its many issues. There is clearly no "magic bullet" that will solve all of the Postal Service's problems, and it is disingenuous and detrimental to suggest that there is. These issues cannot be fixed by eliminating one day of delivery per week or closing a post office here and there. Unfortunately, the situation facing the Postal Service is much more grave than that, and it might require a restructuring of the entire agency in order to save it from insolvency.

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