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Old 04-29-2013, 10:33 PM #1
benji25
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Why the postal service loses money

So I was thinking the other day, how does the postal service lose money?

-They charge $0.46 per stamp for a small envelop. They pay nothing for the envelop and a minimal amount for the actual stamp. They can fit tons of them on a truck and drive it across the country for the hourly rate of a trucker.

- They sell money orders in which they charge money for people's own money. They have to print this on a piece of paper that is of minimal costs

-They weigh heavier packages and charge you appropriately. Similar to above, many of these can fit on 1 truck/plane all for the price of one trucker/flight crew.

So I am sitting here trying to figure out how you lose $15 billion with that business model. Maybe you don't make a huge profit, but a $15 billion loss?

I then decide to look at their financial statements for 2012.

2012 Revenue of $65 billion.
2011 Revenue of $65 billion.
2010 Revenue of $67 billion.

Not too shabby. That is a lot of dough. Now let's see how much it cost them to make that revenue:

2012 Transportation $6 billion, Other Expenses $9 billion
2011 Transportation $6 Billion, Other Expenses $9 Billion
2010 Transportation $6 Billion, Other Expenses $9 Billion

Ok that leaves $50 Billion. No way can they piss that all away. No way.

Oh wait, Compensation and Benefits:

2012 $47 Billion
2011 $48 Billion
2010 $49 Billion

That is 73% of revenue going to salaries of employees. So I checked the BLS for the salary of a postal worker.

Median annual wages for Postal Service occupations in May 2010 were the following:

$53,100 for Postal Service clerks
$53,860 for Postal Service mail carriers
$53,080 for Postal Service mail sorters, processors, and processing machine operators

But you know, it is a strenuous job. Not much skill is involved but it is a lot of walking/carrying. So as long as it is similar to other jobs like it, no biggy as they are being paid at a fair market rate.



More than twice the salary of similar positions. For Comparison:
-Secondary School Teachers ($53k)
-Cardiac Technologists ($49k)
-Paramedics ($30k)
-Electricians ($48k)
-Police Officers ($55k)
-Hand Laborers and Material Movers ($23k)
-Construction laborers ($28k)

What the hell are they paying for?
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Old 04-29-2013, 10:40 PM #2
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I find it astonishing that you went through all that work and missed the real reason USPS looks like crap at a first and uninformed glance. USPS has been mandated to prepay SEVENTY FIVE years of retiree benefits, in just 10 years. It's an enormous financial burden.
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Old 04-29-2013, 10:50 PM #3
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Quote:
Originally Posted by Drex17 View Post
I find it astonishing that you went through all that work and missed the real reason USPS looks like crap at a first and uninformed glance. USPS has been mandated to prepay SEVENTY FIVE years of retiree benefits, in just 10 years. It's an enormous financial burden.
I already factored that out:



I find it astonishing that you assume I am wrong first. At least give me the courtesy of asking "Did you factor it in"

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Old 04-29-2013, 11:02 PM #4
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I can't understand why congress has social security and the postal service in it's crosshairs. I guess it's the trendy thing to do now in Washington and in the media.
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Old 04-29-2013, 11:05 PM #5
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Quote:
Originally Posted by $h@key J0nEZ View Post
I can't understand why congress has social security and the postal service in it's crosshairs. I guess it's the trendy thing to do now in Washington and in the media.
I don't know if that was directed at me or not. However my post was not spurred by any media (well, I guess the fact that I found out through them that they lost $15b).

I legit was thinking "how do they lose money?". My roommate and I even talked about it. So then I decided to find out, and made this post.
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Old 04-29-2013, 11:09 PM #6
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Quote:
Originally Posted by benji25 View Post
I already factored that out:

IMG]http://i23.photobucket.com/albums/b361/benji1025/other_zpsc4694199.png[/IMG]

I find it astonishing that you assume I am wrong first. At least give me the courtesy of asking "Did you factor it in"
To be fair, you said 73% was going to salaries, which isn't true. A significant part of that 73% is going to funding benefits for the next 75 years.

And $53k might be a touch high, but doesn't seem obscene to me.

http://jobs.aol.com/articles/2011/06...ich-pays-best/
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Last edited by Umami : 04-29-2013 at 11:12 PM.
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Old 04-29-2013, 11:18 PM #7
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Quote:
Originally Posted by Umami View Post
To be fair, you said 73% was going to salaries, which isn't true. A significant part of that 73% is going to funding benefits for the next 75 years.

And $53k might be a touch high, but doesn't seem obscene to me.

http://jobs.aol.com/articles/2011/06...ich-pays-best/
If you are referring to the prefunding - as noted above that is factored out. If you are not referring to that, then for future reference, the analysis above is based on compensation as described in the financials:

Quote:
Compensation and benefits expenses consist of compensation in the form of salaries and wages, future retirement
benefits earned in current periods, health benefits, plus miscellaneous other expenses incurred on behalf of current
employees.
Edit: Also if you look at your link, a package handler is in the mid $20k range. Same with a "loader/unloader" and a courier is slightly higher but still in the mid $40k range.

Last edited by benji25 : 04-29-2013 at 11:21 PM.
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Old 04-29-2013, 11:43 PM #8
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Old 04-29-2013, 11:48 PM #9
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These were interesting reads if you're actually curious.

http://courierexpressandpostal.blogs...son-chart.html

http://courierexpressandpostal.blogs...s-ups-and.html
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Old 04-29-2013, 11:48 PM #10
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http://about.usps.com/news/national-...2/pr12_131.htm
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Old 04-30-2013, 08:37 AM #11
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Quote:
Originally Posted by licence_to_kill View Post
What are you trying to point out? I never said they didn't fund the pension.

Quote:
Originally Posted by licence_to_kill View Post
Quote:
he U.S. Postal Service ended the 2012 fiscal year (Oct. 1, 2011 – Sept. 30, 2012) with a record net loss of $15.9 billion, compared to a net loss of $5.1 billion for the same period last year. The loss included expenses of $11.1 billion related to two payments to prefund retiree health benefits. The Postal Service, which is uniquely required by law to prefund these obligations, was forced to default on these payments.....

...The $15.9 billion loss was driven by $13.4 billion in expenses that were outside the control of the Postal Service in the short-term. These expenses include the $11.1 billion retiree health benefits prefunding expenses and the expenses related to the long-term portion of workers’ compensation. When these expenses are deducted the net loss would have been $2.5 billion. The Postal Service has been successful in reducing controllable expenses as mail volume and revenues have declined.
edit: Again, what are you trying to say, I already took the prefunding out:

Last edited by benji25 : 04-30-2013 at 08:40 AM.
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Old 04-30-2013, 12:01 PM #12
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Old 04-30-2013, 12:05 PM #13
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Old 04-30-2013, 10:33 PM #14
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Quote:
Originally Posted by benji25 View Post



edit: Again, what are you trying to say, I already took the prefunding out:
No you didn't and in your attempt to show you did you repeatedly quoted sections and sources which show almost all of the 15b loss is prefunding expenses.

try reading gooder
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Old 05-01-2013, 09:44 AM #15
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Quote:
Originally Posted by Snake13 View Post
No you didn't and in your attempt to show you did you repeatedly quoted sections and sources which show almost all of the 15b loss is prefunding expenses.

try reading gooder
See the operating expense section? I only included the "Compensation and Benefits" and not the prefunding. Yes it doesn't get you to the $15b loss, but just the salaries and benefits are 73% of revenue. This means for every dollar they earn, 73 cents go to employees.

Notice the title "Why does the postal service lose money". My theory is it is compensation, even without the prefunding.
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Old 05-01-2013, 10:04 AM #16
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Quote:
Originally Posted by benji25 View Post
Compensation and benefits expenses consist of compensation in the form of salaries and wages, future retirement benefits earned in current periods, health benefits, plus miscellaneous other expenses incurred on behalf of current employees.


again, your own quote
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Old 05-01-2013, 11:20 AM #17
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Post office should not be for profit.
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Old 05-01-2013, 03:13 PM #18
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i don't get it. are you complaining that wages/benefits are USPS' greatest expense?
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Old 05-01-2013, 06:10 PM #19
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Quote:
Originally Posted by licence_to_kill View Post
i don't get it. are you complaining that wages/benefits are USPS' greatest expense?
What do you not get?

Quote:
Originally Posted by benji25 View Post
Median annual wages for Postal Service occupations in May 2010 were the following:

$53,100 for Postal Service clerks
$53,860 for Postal Service mail carriers
$53,080 for Postal Service mail sorters, processors, and processing machine operators

But you know, it is a strenuous job. Not much skill is involved but it is a lot of walking/carrying. So as long as it is similar to other jobs like it, no biggy as they are being paid at a fair market rate.

More than twice the salary of similar positions.
I think his point is pretty clear.
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Old 05-01-2013, 06:13 PM #20
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Quote:
Originally Posted by licence_to_kill View Post
i don't get it.
We know.
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Old 05-01-2013, 08:17 PM #21
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Quote:
Originally Posted by licence_to_kill View Post
i don't get it. are you complaining that wages/benefits are USPS' greatest expense?
Yes and no.

Yes in that I believe they are too high at 73% of revenue and they are paying a median income of $53k for people to drive around and put things in mail boxes. I am not even sure if that includes the pension they get.

No in that in these types of business payroll probably should be the biggest expense based on the type of business. However, in this case I believe it is too high.
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