Latest episode gets the math wrong on revenue per mail volume: forgets to adjust for inflation
I'm listening to today's episode and noticed something glaringly wrong with Corey's rebuttal to the Boston Herald's opinion piece.
Total mail volume in 2006 was 231 million pieces, dropping to just 101 Million in 2025. That's just 43.7% of the volume we had twenty years ago.
Corey says that despite that, revenue is up, from $72.8 billion in 2006 to $80.5 billion in 2025. That's true, but comparing those two numbers directly does not account for two decades of inflation. Revenue of $72.8 billion in 2006 would be equivalent to about $117.7 billion in 2025 if USPS was making the same today. That reduction, from 117.7 billion to 80.5 billion is a 31.6% reduction in revenue.
What this means is that 2025 USPS made 68.4% of the revenue it did in 2006, with just 43.7% of the volume. That fact might be obvious, but the conclusion is apparent to anyone who has worked for the postal service for the past two decades: lower profit margin/lower volume products like parcels have soared while higher profit margin/higher volume products like 1st and 2nd class mail have plummeted. We are not making "more money" than we did in 2006.
USPS makes larger margins on its products than ever before, but also has bigger losses than ever before.
Now just me making conjectures: It's no wonder, then, that the service has been prioritizing cutting labor costs everywhere it can right now, because there really isn't any more money to make on the products and services, at least not without radical legislative changes allowing USPS to do so.
The concept of our United States Postal System relies on an economy of scale: the system historically has been cheap and universal because everyone used it, which allowed for small margins on extremely high volume products. The reality is that fewer and fewer people use us each year, and that dependency on scale can't be fixed by laying off employees, or even just doubling the price of postage.
It's like if you ran a restaurant, that everyone said they loved, and you made great margins on every dish you served. But the problem is that no one is coming in for dinner. No matter how much they love you, how cheap you source your ingredients, you will not stay open if you can't fundamentally figure out how to get people to come in and order a meal.
I'm very concerned for what comes of this next contract, especially in the way of job protection. For many years the old-timers in my office have dismissed the financial woes because "we've been going out of business for decades." But right now USPS really is speed running into insolvency.