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Post Offices in the Negative, But Banking Can Help

The United States has over 31,000 post offices; however, according to a report by the U.S. Postal Service inspector general, around 42% of them were operating financially in the red during 2019, unable to cover their expenses.

Until recently, most of us may not have viewed the U.S. mail service as needing to be a profit center.

Roughly half of the so-called “failing post offices”, many of which are in rural areas, are also identified to be within 5 miles of another post office.

However, despite this, some researchers believe that doesn’t mean there are too many in the nation.

Paul Steidler, a senior fellow at the Lexington Institute, studies the US Postal Service and has looked back at this issue over more than ten years.

He said, "Patrick Donahoe, the postmaster general [from 2010-2015], proposed closing 3,700 post offices, about 12% of the number that is in the country today. And frankly, there was a firestorm of bipartisan, intense congressional opposition to this.”

As a result, the Postal Service elected to cut back on service instead, including reducing operating hours depending on the location and surrounding population.

Although there is a federal subsidy of $460 million to help rural post offices, the Postal Service does not request it because it prefers to instead be financially self-sufficient, and the dollar amount of that aid would still not be enough to cover the cost of providing service to rural customers.

James O’Rourke, a professor at the University of Notre Dame’s Mendoza College of Business, advocated that the Postal Service can perhaps find new lines of revenue by getting into banking.

"Access to safe and affordable financial services I think is vital, particularly among low-income families," he says. "It's something the Postal Service could do very easily. They've got the locations. They have clerks that are trained in accepting and managing money, and they have a focus on customer service."

This is a practice that has been widespread in Japan with the Japan Post Bank. Dating back to the 1800s, the postal savings system provides depositors who do not have access to banks a safe and convenient method to save money.

Back here in the U.S. The Postal Service already sells money orders, and a group of Democrats in Congress has proposed expanding this service through a pilot project to provide low-cost check cashing and fee-free ATMs at a number of rural and urban post offices.

Steidler says, “Post offices all across rural areas can often help reflect a town’s identity and history and is a crucial lifeline for many.”

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