Employees Push Postal Profits Up Postal Service To End 1997 With A Profit Of $1.26 Billion

After three years of surprise billion-dollar profits, the U.S. Postal Service is pushing to be debt-free by 1999, reversing a history of poor performance and financial returns.

Postal money manager Michael J. Riley believes the increased profits have led to growing pride among mail carriers and executives and could mean a money-making future for the agency.

“People take great pride in how much they can save … how well they can beat the budget,” Riley said in an interview. “People need to be winners, they need to feel like they’re winners.”

The Postal Service will finish 1997 with a $1.26 billion profit. That follows profits of $1.77 billion in 1995 and $1.57 billion in 1996. The strong three-year performance trimmed the agency’s long-term financial deficiency from $5.9 billion to $1.36 billion.

“Our history over the last few years has been beating our budget and I hope that continues,” said Riley, predicting that a 1-cent postage stamp rate increase, starting July 1 at the earliest, will likely mean another profitable year in 1998 - although a bad winter could cut into returns.

“We think this rate increase is just enough to be able to budget a small profit for ‘99 and maybe, if we get lucky, a big profit,” Riley boasted.

With the post office profitable, people might wonder why there’s a need to increase the cost of stamps - now 32 cents for regular mail inside the United States.

Riley maintains that sending mail is still cheaper because the cost of living has gone up since the last stamp price hike in 1995.

Riley joined the post office in 1993, a year the agency lost $1.8 billion.

“The fall of ‘93 was really tough, service was declining, there were stories about mail burning in Chicago, the financial results were horrible,” he recalled.

As a result, the postal service board decided that year to get aggressive to turn things around. The agency instituted a short-term incentive system to spur better performance by managers and mail carriers alike. Bonus pay worked.

Now, thousands of postal employees are eligible for bonuses of up to $12,000 each based on the agency’s economic performance and customer satisfaction.

But since federal salaries at the agency are capped at $148,000, Riley’s potential $47,000 bonus was trimmed to $400 - or $260 after taxes.

“I don’t think we’d be here without the incentives,” Riley said. “The (past financial) losses and the ridicule on TV just destroy self-confidence. The profits and the good news stories have given us the confidence to make the investments we need.”

In fact, the postal service will be racking up some new costs this year that will eat into some of the profits in order to pay for new construction and equipment, including trucks, Riley said.