Is USPS a Monopoly? (all you must know)
The United States Postal Service has a strong presence in the United States, with roots dating back to the 1700s before the Revolutionary War. Today, it is characterized by a robust system of post offices and distribution centers and a strong network of 600,000 employees.
But is USPS a monopoly? The agency has a strong claim to the billions of mail that crisscross the country every day, but is that enough to constitute a monopoly? Here’s what you need to know.
Is USPS a Monopoly?
The US Postal Service does have two legal monopolies, as described in Title 39 of the US Code. The first deals with letter mail, or anything that can be defined as a letter, while the second deals with the use of mailboxes. The US is the only western country with a mailbox monopoly in 2022.
To learn more about the postal monopoly, whether USPS competes, whether USPS is still government owned, and more, keep reading below!
What is a postal monopoly?
As I mentioned above, the US Postal Service has two legal monopolies – which means that US law gives them the right to hold monopolies.
According to the U.S. Postal Service’s Role in Public Safety and Security: Relaxing the Effects of Mailbox Monopolies, Monopolies Are For Good Reason.
The reason is that the monopoly helps the USPS remain financially solvent, allowing it to continue fulfilling one of its sacred duties: the Universal Service Obligation (USO).
The USO describes the Postal Service’s commitment to delivering mail to any address in the United States, no matter how remote, no matter how far from civilization.
If it’s an address, USPS will receive it in the mail.
(That’s why private couriers like FedEx use USPS as their “last mile” delivery service.)
So monopoly is required by law to ensure that no mail goes undelivered to any address.
Letters or first-class mail can only be delivered by the USPS under a so-called postal monopoly.
The Postal Act of 1845 was the first statute proposed against a postal monopoly. From there, it was further defined by other laws, most recently in 2006.
Thus, a “letter” is defined as “information directed to a specific person or address and recorded in or on a tangible object”.
There are some exceptions to the postal monopoly; letters that weigh more than 12.5 ounces; letters that cost six times the price of a permanent stamp.
Likewise, very urgent letters are not part of the postal monopoly. This laid the foundation for the operations of private courier companies such as FedEx and UPS.
The second monopoly is using your mailbox.
Did you know that it is actually a federal crime for anyone other than the mail carrier and yourself to put anything in the mailbox?
Since 1934, Congress has passed a law that prohibits anyone other than your mail carrier from putting anything unmailable into your mailbox.
(This is because utilities bill their customers directly, putting USPS’s USO at risk.)
Does USPS have competition?
USPS does have competition, but not in letters. Instead, the competition mainly comes from the shipping of packages.
The major couriers FedEx and UPS compete domestically for package shipments, but also compete quickly internationally—perhaps where these shipping giants shine.
For example, UPS’s UPS Express Critical can deliver goods anywhere in the world within 24 hours.
Additionally, UPS can ship heavier items – 150 lbs. Weight, to be precise, and the USPS maximum weight is 70 lbs.
FedEx also specializes in overnight shipping.
Also, FedEx is the go-to choice for shipping special items, such as perishables (every Hello Fresh I’ve received ships via FedEx).
Still, in my opinion, USPS has an advantage in domestic shipping if you’re not in a rush.
USPS shipping prices are sometimes a fraction of UPS and FedEx, and they have their own super fast money-back guarantee for overnight shipping, Priority Mail Express.
Finally, despite competing with UPS and FedEx, the Postal Service works with them too!
For years, FedEx required USPS to complete deliveries, and USPS flew FedEx, the world’s largest cargo fleet.
In addition, the UPS store regularly sells USPS services such as Priority Mail.
Is USPS still owned by the government?
The USPS is still “owned” by the government — or rather, it’s an independent agency of the federal government, separate from the executive branch (like the Office of the President).
However, there has been talk of the need to privatize USPS, take it away from the government and put it under the control of private companies.
Advantages may include significant improvements in efficiency and lower operating costs. Innovation is likely to rise due to competition.
And, as Jesus Salas said in an interview with Lehigh University, “…the United States no longer has to bear the burden of what to do with the USPS.”
shortcoming?
Prices may rise across the board, but more specifically for rural addresses, they may see huge surcharges for services that were once free.
Likewise, the USPS may see a significant slowdown in mail delivery in these rural areas.
So what happens to farmers who rely on transporting small livestock, veterans, seniors and people in remote areas who rely on government inspections?
Well, they will all see their mailing slower and more expensive to send.
Likewise, the burden will be greater for poorer people and people of color.
Additionally, we’ve seen the Postal Service take these small but thoughtful steps toward privatization, as well as Postmaster General DeJoy’s 10-year plan.
It includes a slowdown in mailing to these rural areas, and it has already started.
Does USPS get funding from the government?
Although it is a federal agency, the Postal Service does not take any taxpayer money as part of its day-to-day business.
Instead, it relies on the sale of stamps, postage and services to fully fund its operations. This is why the price of Forever stamps continues to rise.
The USPS, however, received substantial tax breaks, and in March 2022, the Postal Service received a $50 billion bailout from Congress to help it get on the path to financial solvency.
To learn more, you can also read our posts on Does USPS Make Money, USPS Media Mail, and USPS is a Good Job.
in conclusion
USPS does have two legal monopolies, one over letter mail and one over the use of mailboxes.
Still, the Postal Service’s financial health is dire, and discussions about privatizing the USPS — taking small steps in that direction — are still in the public eye.
