What is the Value of the Postal Service?

Abstract

The United States Postal Service (USPS or Postal Service) has a storied history that predates the constitution and founding of America. Through war, economic boom and bust, the industrial revolution, and technological innovation, the USPS has evolved its operations and remains a beacon for consistency that binds Americans together. As the world adopted electronic technology as its primary means of communication, USPS experienced precipitous declines in mail volume. Large institutions have turned to electronic alternatives for consumer outreach and the share of the population who has never entered a Post Office or mailed a letter is growing. Has the Postal Service finally met its match in electronic diversion? How long until mail volume becomes too low to justify the Postal Service’s universal service obligation? Will package delivery alone sustain a ubiquitous government mandated shipper? These questions are not new and will not go away for the foreseeable future. With 640,000 current employees, the USPS remains a vital part of the economy with the promise of job stability and enriched benefits still intact. If losing the Postal Service is not a sustainable option for the economy, and most certainly for either political party, what is the way forward? This thesis will provide a framework to analyze the value of the Postal Service through a variety of lenses. It will highlight the value that the Postal Service has provided for the United States historically and examine its more recent history through a financial microscope. A wideangle overview of regulations and mandates that shape the USPS’s financial condition sets the stage. I then turn to a brief review of the core financial valuation concepts that underpin the analysis. An assessment of the value of balanced scorecards in a corporate setting provides the foundation for key metric recommendations. I end with a proposed scorecard intended for public consumption that captures the value of the Postal Service.