Voodoo economics: USPS turns a profit in May thanks to PAEA

In the bizarro world of postal accounting post-PAEA, it was probably bound to happen. Most readers know that since 2006, when PAEA was enacted, the USPS has been running close to break-even from operations, but falling deeply into debt after the $5.5 billion annual charge for future retiree health benefits.

Last month, however, the tables were turned. The US Postal Service reported a profit of $202 million in May. Yes, you read that right- a profit. It seems absurd, which may explain the lack of any news coverage of the report- if it doesn’t fit the standard “USPS hemorrhaging money” template, reporters apparently can’t figure out what to write!

There is of course, more to the story. The USPS really didn’t take in more money than it spent in May, which is how you make a profit in the real world. In terms of real cash, the USPS actually lost $135 million in May. What turned that into a profit was a whopping $817 million “non-cash adjustment” for “the impact of discount and inflation rate changes and the actuarial revaluation of existing [workers comp] cases”. The workers comp adjustments are another byproduct of the 2006 PAEA law.

It will be interesting to see how the politicians and postal brass spin the slightly inconvenient news- if they acknowledge it at all!

Aside from the voodoo department, there was some good news in the real numbers too. Revenue for the month was up 1.4% from May 2012. The increase came despite the continued decline in total mail volume, which was down 2.3% from last year. Shipping and package services continued to show growth, with volume up 4.6%, and revenue up 8.6%. The increased revenue from packages was enough to more than make up for the drop in other mail.

Meanwhile, on the expense side, excluding PAEA charges, total salaries and benefits dropped by 3.0% from last year. The decrease came despite the fact that total workhours increased slightly, and probably reflects the USPS’s increased use of lower paid and part time workers.

In May 2012 the total cost of salaries and benefits for bargaining unit employees came to $43.19 an hour- in May 2013 the number is $41.06, a drop of 5%.

  • DaPhantomMailman

    Repeal the prefund, return to the USPS the pension surplus, allow the USPS to innovate and grow, mandate 6 day delivery! That will help too, PSE’S & CCA’S can then become career employees and there will be a PROFIT ALSO!

    • minoconnor

      What are you? Sane?

    • Nalc

      How will keeping 6 day help cca’s? We need 5 day, early outs, then the cca’s will move up.

      • nogjr

        how will 5 day help cca’s become career? 5 day eliminates 1 out of every 6 career jobs. You would need 17% of active carriers to take the early out for just 1 cca to make regular with your math genius.

  • Slim Shady

    Conveniently left out in the article was the cost of salaries and benefits for the bloated management.

  • Male man

    I am on a New T-6 string and one of my routes delivers to a brand spanking new 3 billion dollar mall that is so large it covers 2 zip codes and required the demolition of two entire city blocks. The management of the mall built a mail room for the tenants of the mall in one corner completely opposite the other end of the mall, underground, about a quarter mile away from some of the tenants who are actually in a different zip code. Instead of having two separate mail rooms conveniently located with easy access in each zip code, the property management worked with Postal Management and came up with this system. Well one half of the mall uses the same address of a demolished 1600 story office tower that used to be on the site. So you get this huge clump of mail that is no good everyday trying to figure out if the suite number is from the old high rise or the new tenants of the mall. Then half the mail is miss directed to another to route that is in the other zip code and has to be handed over piece by piece sometimes to get it to the correct route. There was supposedly verbal agreement between mall management and the postal management that all packages would be signed and cared for by the property manager of the mall, so that they would not have to be delivered physically to the tenants of the mall. Well after the mall was built the mall management declared that they never agreed to such an arrangement. So I am ordered by my supervisor to leave notice on any package requiring a signature or those that do not fit in a parcel locker, for the tenants to come pick up at the post office without even attempting a physical delivery. There are tenants of the mall who don’t pick up mail or packages out of the mail room for weeks sometimes. Priority mail sitting parcels lockers waiting to be picked up. Meanwhile I deliver to several highrise apartments that are built above the mall all around the perimeter of the mall.

  • sk8sonh2o

    Don’t worry, the pension fund managers will find a place to hide the profits. They’re why that whole prefund idea got there in the first place. Follow the money…