In November, on the day that networks called the election for Joe Biden, cheering crowds stopped mail trucks in the streets of New York City to thank postal workers for delivering more than 135 million mail-in ballots on time during a pandemic. Now, in Washington, DC, a coalition of lawmakers and advocates are trying to pull off a different sort of feat: saving the United States Postal Service.
Without help from the federal government, the Postal Service could run out of cash later this year. Such a financial crisis would mean laying off workers, limiting service, and worsening delays — and delays are already so bad that holiday cards mailed in early December are still being delivered in late January. In the long term, Congress could decide to privatize the Postal Service, fulfilling one of the Trump administration’s ambitions but likely denying service to millions of Americans.
While it sounds a bit odd at first, an increasingly popular idea to fix the agency’s financial woes is to give it more jobs to do. In other words, to grapple with its ongoing existential crisis, the Postal Service needs to rethink its very existence.
“There needs to be creativity and other things the post office can do, when it’s done its mission of binding the country together,” Mark Dimondstein, president of the American Postal Workers Union (APWU), told Recode. “So we’re very keen on all sorts of expanded services.”
Ideas include everything from making post offices function more like UPS stores to turning the Postal Service into a broadband provider. Mail carriers could also expand their purview and start delivering groceries and alcohol (a Prohibition-era law makes it illegal for USPS to ship alcohol). And there’s one other thing: Post offices could become banks.
President Biden can implement some of these concepts through executive orders, but others — namely the banking idea — would require action from Congress.
A cash-strapped agency that’s perfectly capable of making money
Conservatives have long argued that the Postal Service shouldn’t try anything new until it solves some of its own longstanding financial problems. Many of these can be traced back to 2006, when a Republican-led Congress passed the Postal Accountability and Enhancement Act. This required USPS to prefund the health care benefits it promises future retirees in its workforce with annual payments of about $5.5 billion. This meant that even when the agency was operating at a profit, it looked like a financial disaster on paper. Then the Great Recession happened in 2008, causing first-class mail volume to plummet and slashing the Postal Service’s revenue.
Things took another ugly turn in 2020 when the Covid-19 pandemic hit. In early February, the House of Representatives had actually voted to end the prefunding mandate that’s driven the Postal Service deep into the red, but the coronavirus took over the legislative agenda just a few weeks later. The bill has been stalled in the Senate since. Meanwhile, President Trump waged a campaign against the Postal Service his entire time in office and even threatened to veto the CARES Act if it gave the Postal Service any help. The Treasury Department at one point agreed to loan the agency $10 billion — but only if it would surrender proprietary information to private-sector competitors. That loan was turned into a grant in the second coronavirus relief package.
One particularly difficult development from last year was when a top Trump donor and logistics executive named Louis DeJoy took over as postmaster general in June. He implemented new, cost-tightening policies that led to mail delays, leading many to fear that one of the president’s cronies was trying to sabotage the election and privatize the Postal Service. A judge eventually suspended DeJoy’s policies until after Election Day; when they were reinstituted, mail service dropped to a historically low level during the holiday season. The Postal Service recently added 10,000 new jobs to its sorting facilities, but still, on any given day, up to 20,000 postal workers are under quarantine, according to the APWU. More than 150 have died due to the pandemic.
Because of these upheavals, Americans took to social media last year to urge their friends to buy stamps and USPS merchandise in an attempt to bail out the agency. But the Postal Service, which has about a 644,000-person workforce, needs a lot more help than that. A USPS financial planning report for 2021 shows the agency is saddled with over $160 billion in debt, much of which can be attributed to prefunding retiree health benefits; the report also calls for “significant legislative reforms.” And although the Postal Service previously asked for a $25 billion bailout at the beginning, it hasn’t received any additional relief beyond the $10 billion grant from the Treasury.
“Envisioning the post office for the future, you can’t just fix the artificial bookkeeping things and then expect the post office to magically be fine in its previous business model,” explained Porter McConnell of the Save the Postal Office Coalition. “I think it needs to be given the ability to innovate, in order to really start being a powerhouse.”
Put differently, even if Congress pulls through with a bailout and ends the prefunding mandate mess, the Postal Service still needs to evolve to survive. The Save the Postal Office Coalition, which includes 300 groups, including the APWU, MoveOn, and Color for Change, came together not long after DeJoy joined the agency and is calling for $89 billion in emergency relief for the agency in President Biden’s first 100 days. It’s also pushing for Biden to appoint a “postal czar” who favors postal banking and reform-minded leaders to fill the four open seats on the USPS Board of Governors, which Trump had left empty in the final months of his presidency. If Biden fills all the seats, Democrat-appointed governors would make up a majority of the board, giving them the power to remove DeJoy from office and reshape the Postal Service’s role in American life.
Some ideas for how the USPS could make more money are pretty basic: Post offices could expand partnerships with other government services and do things like offer driver’s license renewals in addition to passport services. Or they could stay open later hours so people have more time to mail packages at competitive rates (some UPS and FedEx stores are open 24 hours, while post offices tend to be 9-to-5 operations). After all, package deliveries are actually a rare bright spot on the Postal Service’s balance sheet. In November, the Postal Service reported a $2 billion increase in revenue year over year thanks to a nearly 20 percent increase in package volume. Package volume during the holidays was up about 100 percent.
Other ideas are more ambitious, but you can look abroad and see that they’re viable. The Postal Service has some of the internet infrastructure required for building a nationwide network, so it could theoretically build out a low-cost internet service in the US, which is something the UK’s Post Office does (for about $20 a month). Letter carriers already stop at most addresses around the country on a daily basis, so they could help provide basic caregiving services for older adults, as Japan Post does. And the USPS needs new vehicles, so replacing its fleet of boxy, gas-powered mail trucks with electric vehicles could help build out EV charging infrastructure by setting up charging stations for public use at post offices nationwide. This would cost money in the short term, but the charging stations could generate revenue for the Postal Service, while the more efficient trucks should save money in the future.
But the really big idea for how to save the USPS — to establish a postal banking system — is easier to imagine, if only because the post office already performs several basic banking functions, like money orders. Expanding that menu of services, postal banking proponents argue, brings nothing but upsides.
The plan for postal banking
One of the biggest upsides: USPS banking could help the at least 7 million American households that are unbanked — meaning they lack access to a checking account or basic financial services — according to the most recent FDIC survey on economic inclusion. That number skyrockets when you include those who have accounts but use financial services like check-cashing and payday loans to get by. The plan for postal banking would not only provide a solution for these millions of Americans but also provide the USPS with a financial lifeline.
“I would imagine that any post office of the future proposal has got to include [postal banking],” McConnell told Recode. “Serving the one in four households in America who are unbanked and underbanked [while] providing a revenue stream for the post office is just too logical to leave out of any forward-looking proposals.”
The long list of financial services that post offices could offer includes checking and savings accounts, check-cashing, low-fee ATMs, money transfers, bill payment, and refillable USPS debit cards. Offering such services could generate some $9 billion in revenue for the Postal Service every year, according to a USPS Inspector General report from 2014. Some back-of-the-napkin math suggests that this alone could cover the prefunding mandate.
With Biden in the White House and Democrats controlling Congress, lawmakers have the chance to reconsider existing postal banking legislation. Last September, Sens. Kirsten Gillibrand (D-NY) and Bernie Sanders (I-VT) reintroduced the Postal Banking Act, which would not only bring basic financial services like low-cost savings and checking accounts to post offices but also take aim at predatory practices — payday loans, high-fee prepaid debit cards, overdraft fees — that have taken advantage of unbanked and underbanked Americans. Additionally, the law would allow the Postal Service to offer small-dollar loans that could eliminate the market for payday loans.
“Postal banking is an elegant and commonsense solution to problems that exist across the country in urban and rural states — problems which Congress has indicated it would like to address,” Sen. Gillibrand told Recode.
Think of it as a public option for banking. And this isn’t the only approach being floated for serving the unbanked. A task force set up by Biden and Sanders earlier this year called for the creation of so-called Fed Accounts, which would be free bank accounts for every American set up by the Federal Reserve and run through post offices. This is not to be confused with Reps. Rashida Tlaib and Alexandria Ocasio Cortez’s Public Banking Act, which would enable the Federal Reserve to encourage the establishment of public banks that could interact with postal banking infrastructure.
So in some shape or form, the Postal Service could play a role in all of these plans. But at this moment, USPS leadership doesn’t seem to like the idea of adding banking to its slate of offerings, although it’s not entirely opposed.
“Our core function is delivery, not banking. To the extent our research concludes that we can legally provide additional services at a profit and without distracting from our core business, we would consider these,” USPS spokesperson Martha Johnson told Recode in November. In January, she added that recent conversations with Congress did not involve postal banking.
Learning from the largely forgotten history of postal banking
If the idea of the Postal Service offering bank accounts sounds familiar, that’s because postal banking existed in the US throughout much of the 20th century. We’ve done it before, some say, so we can do it again.
Following the Panic of 1907, which led to a run on the banks and a string of bank failures, Americans developed widespread distrust in US financial systems. Warning of “the predatory man of wealth,” Theodore Roosevelt endorsed postal banking as the financial crisis took hold, and his fellow Republican William Taft sold the country on the idea when running for president in 1908. Taft won the White House, and the United States Postal Savings System was established in 1910. It offered savings accounts with a low 2.5 percent interest rate and a total savings cap at $500 (that amounts to $14,000 today), which was raised to $2,500 in 1918 (about $44,000 today).
By the 1930s, the Postal Savings System had over $1 billion in assets, making its holdings roughly 10 percent of the entire commercial banking industry. But its success was short-lived. Private banks successfully lobbied to shut down the Postal Savings System in the 1960s, and the decades that followed saw a pattern of deregulation that left inner cities and rural areas without any banks, leading to the rise of the $90 billion payday lending industry. The predatory man of wealth made a comeback.
“The bankers never liked the idea,” Christopher W. Shaw, author of Money, Power, and the People: The American Struggle to Make Banking Democratic, told me about the Postal Savings System. “They were always against it, and they lobbied against it from the start.”
Sen. Gillibrand has her own take on the matter. “It was a good idea then,” she said, “and it’s an even better idea now.”
Lots of financial transactions already happen in post offices. Billions of dollars worth of money orders go through the Postal Service every year. So if the Postal Service is looking for more money, it seems it shouldn’t have to look that far.
Of course, asking postal workers to do more things, like serve as town clerks or caregivers or broadband vendors, could certainly pose a challenge. But with first-class mail volume having declined by 30 percent in the past decade, the 600,000-plus people who work for the Postal Service are still well-positioned to fulfill the agency’s mission to bind the nation together.
Sandy Laemmel, the president of the National Letter Carriers Union branch in Detroit, Michigan, started working for the Postal Service the day after she graduated high school 45 years ago. When we spoke on the phone about a week ago, she sounded optimistic about new ideas, though the banking idea specifically seemed familiar to her, since she said plenty of people do their banking at the post office, mostly through money orders, to avoid paying steep fees elsewhere.
“Do I think the idea of banking within the Postal Service is feasible? Yes, I do. Do I think it’s something that needs to be explored more? Yes, I do,” Laemmel said. “The people who are handling what goes into the mail stream are the same people who would be running the operation of postal banking. So do I think it’s out there? Yes. Do I think we’ll get there? I think we will.”