How the Postal Service Reform Act Impacts Direct Mail

In spring of this year, the US Congress passed the Postal Service Reform Act of 2022 (PSRA), which President Biden then signed into law. The bill provides some much-needed relief to the US Postal Service (USPS), which will ease the tremendous financial burden the USPS has faced over the last decade.

“The Postal Reform Act of 2022 is at its heart a law to modernize USPS finances in order to provide for the long-term viability of a critical print delivery partner,” says Lisbeth A. Lyons, the VP, government and political affairs for PRINTING United Alliance. “It does so by creating a more accurate financial baseline the Postal Regulatory Commission (PRC) will use when determining future postal rates. The financial reforms include: 

Eliminating the USPS retiree pre-funding requirement that was out of step with private sector best practices, and bled red ink for years on the USPS books, and Integrating future USPS retirees into Medicare, again in line with most private companies, to reduce the organization’s hefty health care costs.”

And it’s already making a difference. In its Q3 financial report, the USPS reported a net income of $59.7 billion for the quarter, compared to a net loss of $3 billion for the same quarter last year. This was almost exclusively due to one-time, non-cash benefit of $59.6 billion that came from the PSRA eliminating the need to prepay future retiree health benefits, and canceling all past due prefunding obligations.

Another interesting point of this bill is that it opens the door to “nonpostal” services as well, with the language noting, “the USPS may establish a program to enter into agreements with an agency of any state government, local government, or tribal government, and with other government agencies, to provide certain nonpostal products and services that reasonably contribute to the costs of the USPS and meet other specified criteria.” 

It remains to be seen how the leadership of the USPS chooses to interpret that leeway — and what they do with it — in the future.

Why should you care?

“The Act also addresses mail service standards by mandating the creation of a public online dashboard that will publish weekly data to allow mailers to monitor slowdowns and identify service failure trends,” says Lyons. “Hopefully, this leads to more timely resolution of mail service concerns. These transparency provisions should allow printers to more confidently sell the value of print to customers. Bonus: the six-day mail delivery mandate that Congress passes as an ad-hoc provision every year was made permanent by the Act. This is not only good policy, but demonstrates the reliability of USPS as a key mail and delivery channel.”

In that Q3 report, the USPS notes that marketing mail, in particular, has been strong this year: revenue for this segment increased $324 million, or 9.4%, compared to the same quarter last year, on volume growth of 545 million pieces, or 3.5%. As the USPS is finally allowed to move into the new era, unhindered by legacy laws holding it back, mail will only become a more attractive option you can bring to your customers, showing them solid ROI they just can’t match any other way.