BUSINESS INSIDER 3/27/2020
The United States Postal Service isn't doing well, both financially and in terms of employees' exposure to the novel coronavirus.
Fifty-one USPS employees had tested positive for COVID-19 as of Wednesday, and 2,000 of its roughly 500,000 employees are in quarantine.
Financially, lawmakers warned this week that plummeting mail volumes could force the USPS to shut down by June without immediate financial help.
The USPS is included in the $2 trillion stimulus bill that President Trump signed on Friday, but the city carriers' union called the $10 billion provision for the service "woefully inadequate."
The US Postal Service is in crisis, with lawmakers warning that plunging mail volumes could shut it down by June without "urgent" financial help — threatening everything from critical medicine deliveries and vote by mail to a third of Amazon orders.
But the crisis is far more than financial. The National Association of Letter Carriers, the union representing USPS city carriers, said 51 USPS employees had tested positive for COVID-19 as of Wednesday. On top of that, nearly 2,000 were in quarantine.
"As the number of confirmed positive coronavirus cases have increased throughout the general public, so too have been the number of postal employees who have tested positive," a statement from the union's president, Fredric Rolando, read. "About half of the postal employees are quarantined by order of public health officials and half have chosen to self-quarantine."
The union on Thursday announced the coronavirus-related death of New York City carrier Rakkhon Kim, age 50.
About 150 employees have returned from quarantine, the statement said. "Eligible" workers ordered to quarantine by health officials are being paid administrative leave during the quarantine, while those who choose to quarantine themselves must take sick leave.
"Employees who do not feel safe working in the facility may be allowed to take emergency annual leave or leave without pay, to the extent feasible," the statement quoted the USPS as saying. "The Postal Service will follow a liberal leave usage policy for employees."
As of this writing, there have been more than 576,000 confirmed coronavirus cases and 26,400 deaths worldwide. On Thursday, the US passed Italy and China for most confirmed cases in the world.
The USPS recorded having just under 497,000 employees in 2019 compared to the 2,000 in quarantine, meaning numbers are relatively low. But the numbers worldwide don't accurately reflect the exact number of cases because of limited testing, nor do they immediately convey the infectiousness of the disease — which has a snowball effect that one expert broke down, explaining how one person could end up infecting 59,000.
Postal employees, like others considered essential — arguably, in some cases — are also still at work, handling packages and touching surfaces where the coronavirus can live for up to several days.
The USPS, the union said, has agreed to certain provisions during the pandemic, including providing daily supplies for employees to clean office items and vehicles; providing hand sanitizer and other cleaning supplies for postal carriers; and providing masks and protective gloves for any employee who requests them.
"We have received almost 3,000 reports from all over the country regarding these issues," the union statement said. "In some places, all of these things are being done. However, in too many places they are not.
"In the places where there are not enough supplies, or none at all, it is generally due to the overall shortage of these items throughout the country. USPS has been working to acquire more items, even authorizing local managers to purchase them if they could be found."
Carriers are also being advised to knock instead of ringing doorbells, keep a safe distance from others, and use an alternative method for signed deliveries — all while the USPS itself fights to stay alive.
Two US representatives warned this week that the USPS could shut down in three months without financial help, introducing a bill that would give the service $25 billion in emergency funding, eliminate its current debt, and require it to prioritize medical deliveries.
The union said Friday that Congress must provide "at least $25 billion" to the USPS "to both protect the public health and to stabilize our economy," but the $2 trillion stimulus bill signed by President Trump on Friday includes only $10 billion to the Postal Service.
The bill passed in the Senate with the language that the USPS could prioritize medical deliveries, and that "if the Postal Service determines that, due to the COVID-19 emergency, the Postal Service will not be able to fund operating expenses without borrowing money," the USPS would be allowed to borrow up to $10 billion from the Treasury "to be used for such operating expenses" and "which may not be used to pay any outstanding debt of the Postal Service."
The USPS lost $3.9 billion in fiscal year 2018, according to a report from the Task Force on the United States Postal System, and lost $62.4 billion between fiscal years 2007 and 2016. The report said that as the service's financial condition "continues to deteriorate," it's expected to "lose tens of billions of dollars over the next decade" — if it makes it that far.
The union called the $10 billion in the stimulus package "woefully inadequate," considering that the USPS' services "are needed more than ever."
"Right now we are delivering notices for the decennial census, CDC pamphlets for households, and a large volume of e-commerce products at a time when retail options are limited," a statement said. "Soon we will likely handle the distribution of Treasury stimulus checks, home virus testing kits and a surge of absentee ballots later this year.
"In view [of] the Postal Service's crucial role, it is all the more disappointing and discouraging that the $2 trillion stimulus legislation that is about to be adopted did so little to help."
Opinion
Congress, Not Amazon, Messed Up the Post Office
Legislators passed a law that made the USPS less competitive with the private sector.
The problems start here. Photographer: Zach Gibson/Getty Images
Barry Ritholtz is a Bloomberg Opinion columnist. He founded Ritholtz Wealth Management and was chief executive and director of equity research at FusionIQ, a quantitative research firm. He is the author of “Bailout Nation.”Read more opinionFollow @ritholtz on Twitter
Before the news cycle gets consumed by the U.S.-China trade war in the making, let's go back to something I find much more intriguing: the U.S. Postal Service. Specifically, is Amazon.com Inc.'s contract with the USPS kosher, or is it a sweetheart deal that amounts to a government giveaway?
Let's get one thing out of the way up front: President Donald Trump's endless grousing about Amazon is nothing more than a thinly disguised complaint about the Washington Post, which has done a fine job reporting on his administration, revealing its many warts and ethical lapses. He has made no secret of his hostility, as a brief review of his Twitter posts would show.
But let's set that aside and try to answer whether the USPS provides an unfair subsidy to Amazon. To better understand these claims requires a fuller understanding about the Post Office.
Let's start with the USPS mandate: It was formed with a very different directive than its private-sector competitors, such as FedEx Corp. and United Parcel Service Inc. Those two giant private shippers, along with a bevy of smaller ones, are for-profit companies that can charge whatever they believe the market will bear. The USPS, by contrast, is charged with delivering to every home and business in America, no matter how remote. And, they can only charge what Congress allows; increases require approval. It also has congressional pressure and oversight on where it must maintain postal offices. The USPS has been slowly closing sites where there is insufficient customer demand. But closing an obsolete or little-used facility invariably entails a battle with each representative, who in turn faces voter anger when the local post office is targeted for closing. FedEx or UPS can open or close locations with little problem as demand and package traffic dictate.
Then there is the Postal Accountability and Enhancement Act of 2006 (PAEA), which some have taken to calling "the most insane law" ever passed by Congress. The law requires the Postal Service, which receives no taxpayer subsidies, to prefund its retirees' health benefits up to the year 2056. This is a $5 billion per year cost; it is a requirement that no other entity, private or public, has to make. If that doesn't meet the definition of insanity, I don't know what does. Without this obligation, the Post Office actually turns a profit. Some have called this a "manufactured crisis." It's also significant that lots of companies benefit from a burden that makes the USPS less competitive; these same companies might also would benefit from full USPS privatization, a goal that has been pushed by several conservative think tanks for years.
Paying retiree obligations isn't the issue here; rather, being singled out as the only company with a congressional requirement to fully fund those obligations is. It puts the USPS at a huge competitive disadvantage. Yes, a retirement crisis is brewing; most private-sector pensions are wildly underfunded. But the solution is to mandate that ALL companies cover a higher percentage of their future obligations -- not just one entity.
What about lobbying Congress for changes to these rules? Unlike private-sector entities, the Postal Service is barred from lobbying. Similar restrictions do not apply to FedEx or UPS or other carriers.
Perhaps it helps to think of the USPS as two separate entities co-existing together: On one side is the congressionally mandated operation that delivers letters everywhere in the country. This is the side that helped knit together the far-flung cities, towns and settlements that defined the U.S. at the time of the nation's founding. The modern innovations of email, texts and the internet helped turn this into a money-losing business.
The other side of the USPS is the parcel-delivery service, which is profitable. It both competes with, and provides services to, private-sector delivery businesses.
Indeed, both UPS and FedEx contract with USPS to perform so-called last-mile delivery for their rural and most-expensive routes. They leverage the existing infrastructure of USPS to provide services for their client base without having to build that same costly last-mile infrastructure for letters and parcels. Effectively, they arbitrage what would otherwise be low-margin or unprofitable deliveries.
The problem for the USPS isn't the packages from the likes of Amazon, but rather, the rest of the Post Office’s mandate. In its annual report, the USPS noted that 2017 saw "mail volumes declined by approximately 5.0 billion pieces, or 3.6 percent, while package volumes grew by 589 million pieces, or 11.4 percent." Amazon and other internet retailers are a source of profitable deliveries for the post office; the relationship is in no way a subsidy for the retailers. Incidentally, the PAEA bars the Post Office from pricing parcel delivery below-cost.
Pricing, locations, hiring, funding? The Post Office has broad limitations about making routine business decisions that its private-sector competitors do not.
Trump has raised a valid issue in pointing out the unfair conditions under which the USPS operates. He is looking, however, at the wrong side of the problem.