It is no mystery that the Postal Service is not performing well financially. USPS is supposed to support itself by charging for its services, and it has failed to do so for years.
In 2025, USPS lost $9.0 billion on revenue of $80.5 billion.
Or it lost $2.7 billion.
It depends on who you ask.
The “stuff” includes retiree and pension obligations and workers’ compensation adjustments, some mandated by Congress and some affected by broader economic factors. Congress could shift some of those obligations elsewhere, but that doesn’t make the costs disappear. It mostly changes which government pocket pays for them.
I have vastly oversimplified this, but the important point is that these obligations account for a significant part of the annual loss — but not all of it.
Former Postmaster General Louis DeJoy tried to address the problem through network changes and aggressive postage increases under his 10-year Delivering for America plan. Whatever its other accomplishments, DFA did not solve the financial problem.
More recently, new Postmaster General David Steiner painted a similarly grim picture for Congress, seeking greater borrowing authority in the near term while looking toward operational improvements and additional revenue over the longer term.
So, what actually fixes this?
Last month, the USPS Office of Inspector General released a white paper, Options for Addressing the U.S. Postal Service’s Financial Gap. It lays out five broad possibilities:
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Reduce operating costs: Outsource more operations, expand cluster boxes, reduce delivery days, or modify some universal service requirements.
Wow. That’s quite a menu.
Nobody seriously expects all of it to happen. The eventual solution would almost certainly be a blend of the politically and operationally possible. So, let’s handicap the field.
Higher postage: Very likely. And potentially a lot higher.
Government funding: Also likely in some form, particularly if Congress wants to preserve the Universal Service Obligation and six-day delivery.
Workforce reform: Much harder. Postal unions are powerful; Congress is involved, and many proposed changes nibble around the edges without addressing the inefficient use of labor throughout the network.
Benefit reform: Likely, although much of it amounts to moving financial obligations from one government pocket to another and calling the result reform.
Operational savings: Certainly desirable, but difficult. Cluster boxes are already common in new developments. Much of the middle mile already involves private-sector transportation and work-sharing. Cutting delivery days could save money, but the public doesn't like reduced service — which means Congress doesn't like it either. USPS made a serious run at eliminating Saturday delivery in 2013. Congress got cold feet.
So, what might the eventual solution actually look like?
You might not like it.
Expect Substantially Higher Postage
Historically, mail volume has been surprisingly insensitive to postage increases.
From 1980 through 2006, mail volume grew almost relentlessly despite repeated rate increases. In 1991, volume declined just 0.3% following a 16% postage increase — and that occurred during a recession.
The real decline in mail volume didn't begin until 2007 — 2008 for Marketing Mail — as the internet began replacing transactional mail. Postage increases were relatively modest at the time.
Volume declines have accelerated somewhat during the era of twice-a-year increases under DeJoy but proving that postage alone caused those declines is difficult.
Given that history — and USPS's financial condition — I would not be surprised to eventually see rate increases exceeding 10%.
Expect Taxpayers to Contribute
I also expect some federal funding to support portions of the Universal Service Obligation, particularly if Americans insist on maintaining six-day delivery to virtually every address in the country.
We want universal service. We just haven't quite decided who should pay for it.
Expect "Reform"
There will probably be workforce changes that sound more significant than they are. Benefit obligations will be rearranged between USPS and the federal government. There will be announcements about billions of dollars in savings over ten years.
Some of them will help. Some of them will be accounting.
Expect Some Real Operational Changes
Cluster-box delivery will probably continue to expand. Network and transportation changes will continue. Technology should create opportunities for efficiency.
But dramatic reductions in service — fewer delivery days, closing large numbers of post offices or significantly reducing the USO — are politically difficult. Americans may complain about the Postal Service, but they become remarkably fond of it when somebody proposes taking part of it away.
Who Pays?
In the end, I believe the mailing industry will bear much of the cost of making USPS financially sustainable through considerably higher postage rates.
There is some logic to that.
The mailing industry is, by far, the Postal Service's biggest customer — not the individual consumer buying a few stamps. Consumers may say they don't like “junk mail,” except, of course, for the pieces they do like.
More importantly, direct mail helps support the enormous infrastructure that puts a letter carrier on nearly every street in America six days a week. It is also a huge engine of commerce.
That means mail isn't going away.
But it does mean mailers will have to get better at it.
If postage becomes substantially more expensive, mailing smarter becomes essential: better targeting, better timing, better measurement, better creative, and smarter use of AI and other technology to improve response. The question won't simply be, “What does it cost to mail?”
It will be, “What did I get for the money?”
And here's the oddest part of the whole financial crisis: viewed as a percentage of revenue, the gap isn't enormous.
In 2025, USPS's loss was either about 11% of revenue or about 3.3%, depending on which expenses you count.
Unfortunately, when you're an $80 billion organization, even a relatively small percentage adds up to billions of dollars.
And somebody is going to have to pay for it.
When postage gets more expensive, mailing smarter isn't optional — it's essential. SnailWorks gives you the tracking, analytics, and reporting to prove every mailing worked. Book a demo to see how.