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Amazon is one of the only things keeping the US Postal service afloat

This fellow's retirement is supposed to be prefunded. That's hurting the USPS.
This fellow's retirement is supposed to be prefunded. That's hurting the USPS.
Getty Images

The US Postal Service does a staggering amount of work, when you sit down and really think about it: it delivers 158 billion pieces of mail per year, the vast majority of them on time. And it also has some staggering financial problems: the GAO reported earlier this year that the USPS has $100 billion in debt and unfunded liabilities related to retirees' pensions and health benefits.

All of those troubles have a lot to do with digital communications — it's quicker to send Grandma an email or even a text than a card — but there are plenty of other moving parts. Here are 9 charts that explain what's going on with the US Postal Service.

1) The westward spread of postal service

The US post office underwent some fantastic growth in its early years. In this video from data visualization pro Derek Watkins, you can watch the post office grow from 75 offices in 1789 to nearly 77,000 in 1900. The number of offices would peak in 1901, at 76,945, then start to decline after that with the advent of rural free delivery, which eliminated the need for many offices.

USPS office count

So while the USPS closes post offices today due to shrinking revenues and postal service usage, the decline in post offices has been going on for a century. As of 2013, the total number of post offices stood at 26,670. Since 2012, the postal service has closed 141 facilities as part of a cost-cutting strategy it calls a "network rationalization plan." While the USPS had planned on cutting more than 3,600 offices as of 2011, it eventually decided to instead slash hours at rural offices.

2) The fast death of your friendly neighborhood mailman

USPS employees

Source: USPS

Of course, as the USPS grew, so did its ranks of employees. The number of workers skyrocketed as the population (and therefore number of customers) likewise grew, but in the last decade the postal service has aggressively cut back on workers. Today, there are just under 500,000 workers, down by around 300,000 from the nearly 800,000 there were in 1999.

The postal service has been cutting its workforce through attrition — simply not hiring people to replace its retiring workers, as Government Executive reports — and is also offering buyouts to some postmasters, hoping they'll retire early. But the agency could cut some of those workers through layoffs, if they do not accept buyouts or get other postal jobs. Postmaster General Patrick Donahoe has said he wants ultimately to shrink the workforce down to 400,000 workers by 2017.

3) The check is not in the mail

Mail volume

Starting in 1886, the first year for which continuous data starts to be available (though data doesn't exist for most of 1914-1925), the amount of mail the USPS handled took off, growing exponentially until around 2000. But then email and online bill pay helped drag mail volume down sharply starting in the mid-2000s.

4) Lots of work for far fewer workers

Mail per USPS employee

The number of postal workers may be shrinking, but the efficiency of the USPS has grown relatively steadily since 1926. Today, the USPS is handling nearly 325,000 pieces of mail per worker, compared to around 104,000 in 1926. And the trend is still upward, so even as the postal service has shrunk in the last few years, it has grown more efficient by this measure.

5) The ever-rising (but really quite stable) cost of postage

Cost of postage

(U.S. News & World Report)

The USPS (through Congress) keeps ramping up the cost of postage, and with each hike, there is some degree of backlash. But when you adjust it for inflation, the cost of postage has been relatively stable since the 1980s and is in fact cheap today compared to the mid-1970s. The above chart from 2013 shows how much today's 49-cent stamp (then the "proposed" rate) would cost in comparison to the past. While it continued the upswing in the cost to send a first-class letter, it really didn't raise prices out of the ordinary.

6) Revenues vs. expenses

USPS profits and losses

Starting in 1971, the USPS stopped receiving taxpayer dollars and became an independent agency of the US government. And in the last decade or so, the USPS's finances have gone from the black to the red. In 2012, the postal service lost a record $16 billion.

The internet certainly helped kill postal revenues, but the question of whether the USPS should have to undertake the costly step of prefunding retirement benefits is very controversial (see chart 8 for more). Congress in 2006 passed a law mandating that the USPS prefund pensions and health benefits for its retirees. The postal service and many of its supporters argue that it's silly to require the USPS to do this — no other government agency is required to do so, nor is any business. But proponents say it's necessary to keep taxpayers from eventually having to bail out the postal service.

What all of this really highlights is the odd no-man's-land that the USPS occupies, somewhere between being a business and a government entity. Congress has made it "independent" but still maintains heavy control over it. For example, Congress has nixed USPS plans to cut costs by cutting Saturday delivery. But then as the USPS cuts costs other ways and shrinks, it reduces service to many Americans, like those in rural areas. That raises the question of what sort of a postal service Americans have a right to.

7) Packages are helping the USPS stay afloat

USPS revenue sources

The postal service isn't hurting on all fronts; in fact, its package business has been one bright spot for the agency. According to data from the USPS's 2013 annual report, package revenue grew by around 8 percent from 2012 to 2013. Partnerships with Amazon, FedEx, and UPS all are helping the USPS keep its parcel business thriving.

But it will take a lot of Amazon and eBay purchases to solve the postal service's fiscal problems. As the Wall Street Journal's Laura Stevens reported earlier this year, the postal service was designed for letters, not packages. First-class mail is simply more profitable than packages; currently, it takes around $3 in package revenue to make up for $1 in lost first-class letter revenue.

8) Prefunding retirements

GAO USPS prefunding retirement

(Government Accountability Office)

The US Postal Service has long railed against the requirement that it prefund employees' pensions and health benefits. This chart shows exactly how big those liabilities are (i.e., huge). As of 2013, the postal service owed nearly 1.5 times its annual revenues in retiree benefit funding.

9) Postal banking

postal banking

(USPS Inspector General)

One plan the USPS has to boost its income is postal banking. In a proposal released earlier this year, the USPS inspector general pointed out that around one-quarter of all Americans are unbanked or underbanked — that is, they either have little or no access to financial tools like bank accounts or loans. That's a huge potential customer base, and the plan could benefit both the post office and poor Americans who rely on expensive payday loans. The above chart is an example from the proposal of what loans from a post office would look like — i.e., much less predatory than those from a payday lender.

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