If you have watched the news at any point in the last five years, you will have noticed that the United States Postal Service, or USPS, isn’t doing so well financially.
Unfortunately, every year the agency’s profits have eroded, and Postmaster General Louis DeJoy has sounded the alarm: The USPS could be out of cash by 2022. Is the USPS going out of business? It’s not quite as simple as that, but let me give you the answer just below!
Is USPS Going Out of Business In 2023?
The USPS is not going out of business but has been losing money for the last 15 years. However, Postmaster General Louis DeJoy has implemented a 10-year plan, which is already showing signs of working in 2023. In addition, in April of this year, President Biden signed H.R. 3076, “The Postal Reform Act” to further help USPS achieve solvency.
To learn more about what happens if the USPS goes out of business, how much longer the USPS is expected to last, and what even is in the future for this most sacred of national institutions, keep reading!
What Happens If the USPS Goes Out of Business?
If the USPS goes out of business, it would be disastrous for millions of Americans.
As an independent agency that is part of the Executive branch of government, service from USPS is a constitutional right.
That means, via a universal mandate, that the Postal Service is bound by law to deliver mail to every single address in the U.S, even if the address is 30 minutes from the Post Office.
Further, the USPS delivers more than mail- t delivers life-saving medication, government benefits, seeds, and even live animals.
In fact, if the USPS goes out of business, the livelihood of many people could be put in jeopardy. However, the powers that be are dedicated to making sure that does not happen.
More specifically, Louis DeJoy, the latest Postmaster General, unveiled a 10-year plan in March 2021, which would help put USPS on the path toward financial stability.
His plan included the following:
- Slowing mail service for up to 40 percent of First-Class mail, from three days to delivery, to six
- Raising the prices of many mail classes, including First-Class Letter and Package
- Changing the need for retiree pensions to be pre-funded
- Merging retiree health coverage with Medicare
However, it’s crucial to note that many important lawmakers and experts were quick to criticize this plan.
Slowing service to many Americans – the same ones who would suffer if USPS went out of business – could mean reduced quality of life for those people.
However, that part of the plan has gone ahead, and the prices have been raised, including a temporary price hike on Priority Mail service over the 2021 holiday season.
Also, a very important part of the plan, the third bullet, was enacted in April of 2022.
When Congress passed an act in 2006 that put USPS on the hook for pre-funding their retiree’s health benefits, they perhaps could not foresee the effect that would have on this agency.
Nevertheless, starting that year, and every year since, $900 million in profits turned into billions in losses.
Therefore, Congress acted again, voting in favor of removing that financial chokehold, with H.R. 3076, the “Postal Service Reform Act of 2022.”
Ultimately, on April 6, 2022, President Joe Biden signed the Act.
He said, “This bill recognizes the Postal Service is a public service, and we’re ensuring that it can continue to serve all Americans for generations to come.”
How Long Will the USPS Last?
With the signing of the H.R. 3076 into law, and DeJoy’s slow-down/priced-up measures seemingly working, the future is much brighter for USPS.
It’s important to note that because the USPS is a constitutionally assured right, it would be much more difficult for this agency to shrivel up and fade away than it would for a regular business.
What would have been more likely – and indeed, could still occur – is that the USPS would require a bailout from the federal government.
Indeed, like the car manufacturers, banks and airlines before it, USPS would need a massive, publicly funded government check to save it from going under.
Now, it seems as though that will not be necessary, but we are still in the early phases of DeJoy’s plan and have yet to see how this will all work out.
What Is the Future for USPS?
The Postal Service is showing signs of life, with a $4.9 billion loss at the end of 2021.
Despite still showing a loss, that’s only half reported at the end of 2020, when the USPS came up $9.2 billion short.
What’s more, agency executives are reporting that, if numbers continue trending in this direction, the USPS could be looking at a break-even situation by 2023 or 2024.
This is thanks, in large part, to the passing of H.R. 3076, without which the USPS was projected to end the fiscal year of 2022 at an $8.4 billion loss.
Further, the USPS is looking to invest $4.7 billion toward a “next-generation delivery vehicle fleet,” $1.1 billion in facilities upgrades, and $1.4 billion toward processing equipment.
Also, in March 2022, USPS placed an order for 50,000 of those new trucks, of which 10,019 will be battery electric vehicles (BEVs).
The other 40,000-some trucks will be Next Generation Delivery Vehicles (NGDV), which will have air conditioning, 360-degree cameras, and a collision-avoidance system.
Is the Post Office Getting a Raise in 2023?
The American Postal Workers Union did indeed strike a deal with USPS for a new three-year contract, including general wage increases.
Ultimately, ninety-four percent of the APWU members who voted did so in favor of ratification.
To know more, you can also read our posts on new USPS trucks, USPS vs DHL, and USPS statistics facts & trends.
The United States Postal Service is not going out of business, but it still faces dire financial straits in its future. To that end, DeJoy’s 10-year plan and the passing of the Postal Service Reform Act are already showing improvements in USPS’s performance.