From Google:
Why the USPS Loses Money
The U.S. Postal Service isnāt a typical business. By law, it must behave like a business and a public utility at the same time. That creates built-in conflicts.
Here are the biggest structural money-losers:
1. The Universal Service Obligation (USO)
USPS must deliver to every address in America, no matter how remote, at the same price.
Private carriers (UPS, FedEx) do not do that. They charge extra for rural, remote, or hard-to-access locations.
USPS canāt opt out. That obligation costs billions a year.
2. Congress Controls Prices
The Postal Service cannot independently raise postage prices like a normal business could.
Price increases require regulatory approval and are tightly capped by law, meaning revenue cannot grow as fast as costs.
3. Declining First-Class Mail
First-class mail (bills, letters, cards) used to be the profit engine of USPS.
Now itās been collapsing for 20 years because of email, online bill-pay, digital everything.
Packages help, but margins are lower and Amazon negotiates very good rates.
4. Competition is Allowed to Cherry-Pick
UPS and FedEx only compete in profitable segments.
USPS must handle the expensive categories they avoid.
So USPS subsidizes a high-cost network without the higher-margin flexibility its competitors enjoy.
5. Congress-Imposed Financial Burdens
This is the one that almost no other organization in the country faces.
The infamous pre-funding mandate
Passed in 2006, the Postal Accountability and Enhancement Act forced USPS to:
ā Pre-fund 75 years of future retiree health benefits
Not pensions, but healthcare.
And to pre-pay them in a 10-year window.
No other federal agency or private company in the U.S. has ever been required to do this.
For years, this mandate alone turned what would have been operational profits into billions in losses.
Partially repealed in 2022, but the financial damage lingers.
Would allowing USPS to offer banking services help?
Absolutely. And itās not a new idea.
Most countriesā postal systems offer banking:
Japan Post Bank
La Banque Postale (France)
Royal Mail-backed banking (UK)
Brazil, Italy, Germany⦠the list goes on
These banks:
generate steady revenue
serve low-income and rural communities
reduce dependence on taxpayer bailouts
USPS used to offer simple banking from 1911 to 1967 and it was wildly successful.
If USPS could again offer:
bill payment
small loans
check cashing
money transfers
savings accounts
ā¦it would create a stable, profitable revenue stream and reduce predatory lending in poor communities.
Congress has blocked it under lobbying pressure.
Would removing the pre-funding requirement help?
It already did. When Congress finally rolled it back in 2022:
USPS wiped away over $50 billion in paper losses
Annual financial pressure dropped dramatically
But the damage from 15 years of impossible obligations hasnāt fully evaporated.
Removing it earlier would have changed the entire financial trajectory of the USPS.
Bottom Line
USPS loses money because Congress set it up with contradictory missions and financial handcuffs.
If the Postal Service was allowed to:
operate more like a business in pricing,
drop the outrageous pre-funding mandate,
expand into simple banking,
and modernize revenue streamsā¦
ā¦it would likely be profitable or close to break-even.
The problem isnāt incompetence.
The problem is Congress.