SIC 4311 United States Postal Service

 
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SIC 4311

This industry includes all establishments of the United States Postal Service.

NAICS CODE(S)

491110

Postal Service

INDUSTRY SNAPSHOT

The U.S. Postal Service is one of the largest organizations in the world. In fiscal 2004, it had nearly 707,485 career employees and over 100,000 noncareer employees and handled over 206 billion pieces of mail through an extremely complicated system of carefully coordinated activities. In addition to the national headquarters in Washington, D.C., the U.S. Postal Service consisted of regional and field division offices that together supervised more than 37,000 post offices, branches, stations, and community post offices throughout the United States. The U.S. Postal Service had a fleet of more than 212,000 vehicles and shipped millions of pounds of mail daily on various airlines, making it the nation's biggest shipper. It was the second-largest civilian employer in the United States during the mid-2000s, behind Wal-Mart Stores, Inc.

The U.S. Postal Service was created as an independent establishment out of the old Post Office Department by the Postal Reorganization Act of 1970 and commenced operations on July 1, 1971. The industry is highly labor intensive, with employee wages and benefits accounting for 79 percent of the system's total costs in 2004. To cope with its soaring costs, the organization increased postal rates consistently, from 6 cents at the onset of the Postal Reorganization Act to 37 cents in 2002 for first-class letters. It also faced increasing competition from private mail and package delivery services, and new technologies such as facsimile services, and electronic mail and bill paying that reduced the need for postal services. In 2005 the U.S. Postal Service submitted a request to Congress to increase the price of a first-class stamp by 2 cents to 39 cents.

ORGANIZATION AND STRUCTURE

The purpose of the U.S. Postal Service was to process and deliver mail to individuals and businesses within the United States. This mission also entailed handling mail efficiently and protecting it from loss or theft. The Postal Service handled about 206 billion pieces of mail in 2004 through its interrelated system of more than 37,000 post office branches.

Organizational Hierarchy

The top of the Postal Service's organizational hierarchy consists of an eight-member executive committee and a team of 33 officers. In charge of these officers is the postmaster general (PMG) and the deputy postmaster general, whose authority derived from the Postal Reorganization Act. The PMG is appointed by the nine governors of the Postal Service, who are, in turn, appointed by the U.S. president with the advice and permission of the Senate for overlapping nine-year terms. The governors and the PMG together appoint the deputy PMG, and these 11 people together form the board of governors. The remaining officers are appointed by the PMG, and the board of governors determines the nature and scope of activities of these officers. Primarily serving in the role of vice-president, these officers are in charge of such activities as regional operation, inspections, technology, finance, facilities, labor, international business, and emergency preparedness. In addition to these officers, there are approximately 782 other persons in senior management positions associated with the inspector general's office.

Geographical Distribution

In the mid-2000s the activities of the Postal Service were divided over seven postal regions: Eastern, Great Lakes, Pacific, New York Metro, Northeast, and Southwest. The reason for such field division is to reduce administrative layers and incorporate operating management expertise as near as possible to the locations where postal services are offered to the public. Each of the seven regions has a number of "field divisions" that are regarded as the Postal Service's key organizational units, with all other local offices reporting to a division. Moreover, there are 74 field divisions located in key cities throughout the country, and there is a regional chief inspector at each of the seven regions of the Postal Service. Any information or complaint with regard to postal violations is required to be presented to the closest postal inspector in authority. The seven regional postmasters general are in charge of all the postal activities in a geographical region.

Economic Structure

The Postal Service is not considered a business, but rather a governmental institution designed to serve the U.S. public. When Congress created the Postal Service as an "independent establishment" of the federal government, however, one of the main objectives was to assure financial stability and self-sufficiency for the organization. In the 1970s this seemed a highly ambitious goal. At that time, not only did the Postal Service suffer from long-standing operating problems and deficit-producing services, but it also faced a high inflation rate and rising cost of fuel. To cover its costs, the Postal Service received operating subsidies from the government, which were discontinued in 1982, and the Postal Service has been self-supporting since that time.

The Postal Service is not supported by taxes or government appropriations. As a self-supporting organization, it must obtain its funds from its operating activities or through borrowing. Under this policy its debt reached nearly $10 billion. From 1971 to 1994, prior years' losses accumulated to nearly $9 billion. The Postal Service began to achieve positive net income in 1995, then reported four consecutive years of positive net income through 1998, when it had an operating surplus of $550 million. From 1995 through 1998, the Postal Service had cumulative earnings of $5.1 billion. Its debt was reduced from $9.9 billion in 1992 to $6.4 billion in 1998.

By the early 2000s, the Postal Service was losing money again and was saddled with more than $11 billion in debt. In 2001, a net loss of $1.7 billion was recorded...

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