Usps Economic Overview

Economic Overview of the United States Postal Service

The United States Postal Service (USPS) is an independent government agency that offers mail and packaging services. In 2014, it delivered 155.4 billion letters and packages. It is estimated that it delivers more than 40% of the world’s mail. USPS is a self-sufficient agency that funds its operations through postage and fees. The Postal Regulatory Commission is assigned to set postal rates and regulate its operations As of February 2015, USPS employed 617,254 workers and it is the third largest civilian employer in the United States.

For 2014, USPS reported a total revenue of $67.8 billion and operating costs of $73.2 billion, for net operating loss of $5.5 billion. Their problems are not new. The firm has reported operating losses since 2006. Also, it faces declining demand of its mail delivery services, increased competition on the package delivery industry, high fixed costs, and currently operates at an excess capacity.

USPS provides domestic and international mail and package delivery

Own-price elasticity is the percentage change in quantity demanded if the price increases by 1%. Price is said to be inelastic if the value is less than 1 and elastic if greater than 1. According to the U.S. Office of the Inspector General’s Analysis of Postal Price Elasticities (2013), USPS price elasticity has been inelastic for the last two-and-a half decades. Elasticity values have very consistently been less than 1. From 1997 to 2011, own-price elasticity for one of its dominant product categories, the First-Class Mail Single Piece Letters, Flats and Parcels, ranged from 0.175 to 0.262 (Bozzo. Capogrossi. Eakin. & Snrivassn. 2013).The firm’s price elasticity is inelastic. Their consumers are less sensitive to price increases and will continue demand their products at the same rate, despite a price