Last week, President Biden signed into law the Postal Service Reform Act of 2022. This new law is intended to help the United States Postal Service (USPS) continue to provide services to United States citizens and remove some onerous requirements placed on it by past legislation.
For years we’ve heard about the financial struggles at the post office, but do we understand why the USPS is struggling? There are many underlying challenges facing the USPS and this legislation begins to address some of these issues and takes one of the biggest points they face head-on.
The two biggest elements of the Postal Service Reform Act revolve around how the USPS handles its obligations to retirees’ benefits.
In 2006, Congress passed and President Bush signed into law the Postal Accountability and Enhancement Act. One of the significant parts of this legislation was that the USPS was required to fund in advance the health and retirement benefits of all employees for 50 years - a significant obligation that no other organization was held accountable for. This funding obligation is a primary reason for the USPS’s struggling balance sheet. The Postal Service Reform Act of 2022 provides relief from that obligation. Another relief feature is that future retirees will be moved to Medicare as their primary insurance when they turn 65, and the Federal Employees Health Benefits Program (FEHB) will act as a supplemental insurance program.
Another key feature of the law is that the USPS is now required to maintain “a publicly available dashboard to track service performance and report regularly on its operations and financial conditions.” This portion of the legislation ensures that the post office is continuing to improve service and provide transparency for better oversight.
It’s important to keep in mind that the USPS doesn’t receive much in terms of taxpayer funding and is self-supporting through stamps, package deliveries, and mail services, though the USPS is mandated to serve all homes in the United States.
One area that is most interesting is the section around “Non-Postal Services.” This section appears to give the USPS a pathway to offer services other than letter and package deliveries as long as “reimbursement covers at least 100 percent of the costs attributable.” We’ll keep a close eye on how future leaders of the USPS interpret this section.
With these shifts in obligations and possible other revenue-generating opportunities, the postal service needs to focus on its primary service offering: delivering the nation’s mail. This is a critical service that continues to be of importance to our society, especially for rural communities. Whether delivering government notices and communications or letters from businesses, mail still matters.
Direct mail is an economic engine that helps drive our economy every day, and this legislation is a major step forward in helping the USPS flourish and grow to meet the needs of the United States and all of its residents.
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