When Postmaster General Louis DeJoy outlined plans on Tuesday for the future of the post office, he pointed to higher postage rates and slower first-class mail as a means of curbing losses in postal services that he says can reach $ 160 billion.
But missing from its new 10-year plan were two idea economists, members of Congress and consumer advocates say they could generate billions of dollars for the besieged service and bring the post office into the 21st century: a return to the postal bank and entry the post office in the lucrative alcohol delivery business.
“We don’t expect 21st century post offices to be the same as those of the 20th century,” said Rakim Brooks, senior campaign strategist at the American Civil Liberties Union. “People are using the mail less and we think the institution has to offer new services.”
The postal bank, he said, is among the new services that postal services in the 21st century could – and should – provide. This would include basic banking services, including check cashing, providing checking accounts at low or free rates, installing ATMs at low rates, and wire transfer and bill payment services.
“The postal banking service is a win-win solution: it can help the financial results of the postal service and serve millions of Americans who currently do not have banks or not,” said Brooks, referring to the more than 30 million Americans who do not have a bank. sufficient access to the traditional financial services system or who have no bank account, often because of the fees associated with traditional commercial banks.
Postal banking is not a new concept. Banking services have been part of the menu of services offered by the post office for decades, starting in 1910, when Congress created the Postal Savings System to encourage people to put their money into financial services. In 1947, the postal banking system had $ 3.4 billion in deposits. But in the 1960s, interest in the program waned when commercial banks began offering higher interest rates and, in 1967, postal banking services were eliminated.
Porter McConnell, who runs the Save the Post Office Coalition, says that now is the time for postal banking services to return.
She points to a 2014 report from the Office of the Inspector General of Posts that indicates that banking services can generate $ 9 billion in new revenue for the post office.
“I’ve been working with postal banking for three years,” said McConnell. “The idea is definitely catching on. Now, the conversation with employees went from whether the postal bank is going to work, to how it is going to work and how we can design it so that it has the maximum impact. “
The Post Office has lost money in recent years as a result of a combination of factors, mainly the high cost of fulfilling a retirement benefit prepayment mandate decades in advance, as well as a reduction in the volume of first class mail, competition increasing and increasing costs of compensation and benefits.
McConnell said postal banking services can help increase critical revenue and serve the public, noting that consumer advocates would find it particularly attractive to have a post office capable of providing consumers with digital wallets, low-rate ATMs and the ability to cash out checks without paying the often exorbitant fees that check discount establishments charge.
Also in favor of postal banking services: an increasing number of economists, including Melanie Long, assistant professor of economics at The College of Wooster in Wooster, Ohio.
“Postal banking services have been used in other parts of the world to democratize services,” she said, noting that postal services in 139 countries offer some form of financial services.
Long said it makes sense for the post office to double its bank, especially given the growing number of “banking deserts” in the United States, communities in which there are no commercial banks.
Between 2008 and 2020, more than 13,000 bank branches closed in the United States, representing 14 percent of all branches, according to the National Community Reinvestment Coalition.
Many of these bank closures occurred in rural communities and with socioeconomic difficulties, she said.
“Many commercial banks argue that it is not profitable to operate branches in these areas,” said Long.
Congress is taking note of postal banking services. Last year, Senator Kirsten Gillibrand, DN.Y., and Senator Bernie Sanders, I-Vt., Introduced the Postal Bank Act, designed to provide consumers with bank accounts and mobile banking services.
In a statement, Gillibrand noted: “Postal banking is an elegant solution that would provide the USPS with more than $ 9 billion a year in revenue and address the high cost of being poor in America, eliminating payday loans, checks and other predatory financial products.
“Instead of trying to destroy the USPS … DeJoy should recognize his unique opportunity to reach millions of American workers.”
According to David Partenheimer, a spokesman for the Post Office, he is open to exploring the possibility of postal banking services, “insofar as our research concludes that we can legally provide additional services, making a positive contribution to our finances and without being distracted by our core business. “
The American Postal Workers Union supports postal banking services, calling it a “win-win-win proposal”.
“The addition of additional financial services would bring much needed new revenue to the USPS, while taking advantage of the skills of postal workers and their place of trust in communities and providing critical public service,” the agency said in a statement. .
In 2019, the union called for the launch of a pilot program, in which postal banking services could be tested in four locations. Suggested locations include Cleveland and the Bronx neighborhood in New York City.
Just as McConnell believes that postal banking services can provide additional revenue for the postal service, she notes that transporting alcohol can also generate money for this.
FedEx and UPS are currently allowed to ship wine, beer and spirits, but due to Prohibition-era legislation, the Postal Service does not.
According to the Congressional Budget Office, the Post Office could earn an additional $ 50 million per year if they could transport alcohol.
Online alcohol sales have seen exponential growth in recent years. According to an IBISWorld report, the online beer, wine and spirits industry in the United States is a $ 1.2 billion business, growing at an 8% annual rate.
In 2019, Congressman Jackie Speier, D-Calif., Introduced the bipartisan USPS Shipping Equity Act, a bill that would allow the Post Office to send alcohol.
“In most states, private carriers like FedEx and UPS are already delivering alcoholic beverages,” she said at the time. “It makes no sense to create a competitive disadvantage for the USPS by preventing it from making these types of remittances, especially due to the poor financial condition of the postal service.”
McConnell added that “microbrewery owners in particular are really hopeful that the post office will be able to start shipping their products in the near future.”
In a note, the American Postal Workers Union said it supports expanding the agency’s services to include alcohol delivery. “Allowing the USPS to send beer and wine is a measure of common sense that allows customers better access to this growing trend … There is no good reason why beer and wine cannot be included in other mail and packages.”
As the post office looks to its future, postal advocates like McConnell hope that they can take on new services and play new roles in the communities they serve.
“There is a history of government messing with the post office and saying, ‘Look, it’s broken, you have to fix it’. The mail is not broken. This can be fixed. Allowing the post office to evolve and expand its services can help to fix it. “