I've heard about how terrible this is for a long time, so I just went and checked your first link there, and it says that the cost is about $5.5B per year. It appears that the USPS has about 497K employees[1]. So it seems like that is around $11K per employee per year. That doesn't sound particularly out of line in magnitude.
The rhetoric about paying for the next 50 years sounds like somehow the post office is being charged at more than the amount necessary to maintain a steady state. Is it that they would be paying $5500/year/employee, but they have to pay double that for 50 years?
I'm having a hard time wrapping my head around what exactly is the problem and where the unreasonableness lies. I'm sure a Republican would say that the problem is the amount of benefits, and I can imagine that might be disingenuous, but I don't honestly understand what's really going on despite hearing about it for years and years.
Maybe someone can ELI5 why or how there's a gap between the long run average cost of the retirees and the payments.
The usual proximate causes for pension scheme funding gaps are excessively optimistic assumptions about investment growth and mortality, coupled with underfunding.
i.e. you assume your investments will growth faster than they do, and you assume people will die earlier than they do, then you don't even put in enough to fund the scheme based on your optimistic assumptions.
In the US, state pension schemes tend to use more aggressive growth assumptions than private ones: the government holds private companies to strict standards, but does not impose them on itself.
The "up front" part I think is what is considered onerous.
Typically you'd target a result in the future and work backwards off of an average return rate (over years/decades, not months!) to ballpark a "this is what we need now to fund (with interest/returns) our pension obligations in the future".
As one can see from many pensions today though, this setup often falls prey to politics or other mismanagement. I think the "other side" sees it as an attempt to say "USPS can't stay solvent, time to chuck it over to the private sector." while ignoring that other comparable businesses do not and will not have such an explicit cash requirement, which by definition makes them looks better.
> I'm having a hard time wrapping my head around what exactly is the problem and where the unreasonableness lies. I'm sure a Republican would say that the problem is the amount of benefits,
As far as I know, that is exactly the problem. I don't think any private corporation would be paying $11k per year for each employee for retirement benefits right now. Unless the base salaries are much lower, this is a pretty difficult requirement.
As an aside, I love that this got downvoted here. Do people think most corporations are paying $11k+ each year for each employee for retirement benefits?
I would certainly not bet that they are, but if you imagine an employer that paid a reasonable amount in an ideal world, it could easily be that much. $11K is barely over half the 401k limit and health care for retirees is costly and not particularly visible so I at least have no idea how much that should add but it might be significant.
Two separate questions are - is $11K a reasonable cost in general, and is it reasonable for whatever the USPS actually needs to fund? I think it's obviously a reasonable cost for the sort of benefits that I personally would like, and for the sort of retirement most SWE HN participants expect to be able to fund. It could still be a vastly excessive amount for whatever USPS employees actually will get. The number really means nothing out of context.
The rhetoric about paying for the next 50 years sounds like somehow the post office is being charged at more than the amount necessary to maintain a steady state. Is it that they would be paying $5500/year/employee, but they have to pay double that for 50 years?
I'm having a hard time wrapping my head around what exactly is the problem and where the unreasonableness lies. I'm sure a Republican would say that the problem is the amount of benefits, and I can imagine that might be disingenuous, but I don't honestly understand what's really going on despite hearing about it for years and years.
Maybe someone can ELI5 why or how there's a gap between the long run average cost of the retirees and the payments.
[1]https://about.usps.com/who-we-are/postal-history/employees-s...