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Why On Earth Is The USPS Paying FEDEX Stockholders Millions In Dividends

According to an annual report from a Washington DC law firm, FedEx is the top US Postal Service contractor for the tenth consecutive year.

You read that right.  The Postal Service’s biggest competitor, FedEx, is also its largest contractor.  In FY2012, the USPS paid FedEx $1.618 billion – an 8% increase over the previous year.

UPS had an even bigger increase.   In FY2012, the Postal Service paid UPS more than $126 million – a 24% increase from FY2011.  (Of course, UPS previously employed Janna Ryan – the wife of House Budget Committee Chairman Rep. Paul Ryan – as their lobbyist.  And she was reportedly a very effective lobbyist.)

Contracting with the Post Office is Big Business.  The Postal Service is spending almost $12 Billion a year on private contractors – even though the Postal Service is so financially strapped that they’re about to cut delivery service by one day a week.  Does this make any sense at all?  

There has been a lot of talk lately about “privatizing” the Postal Service.  Based on the law firm’s report, it looks like the Post Office is being privatized, one little piece at a time.  Just another example of government creating something of value, only to hand over the profits to someone else.  Just one more example of our government being used to further someone else’s private interests.

How many Postal Service jobs were lost, eliminated or downsized due to all these contracts?

And what percentage of each postage stamp we buy has been converted into private profits?

Let’s look at FedEx.  FedEx had about $43 billion dollars in revenues last year.  Of that, $1.618 came directly from the Postal Service.  That means the Postal Service is responsible for 3-4% of FedEx’s total revenues.

FedEx made quite a profit last year.  Company executives get to decide how much profit is paid out as dividends, and how much is reinvested in new equipment and new hires.  Last year, FedEx paid out a lot in dividends.

Frederick Smith is CEO of FedEx.  According to SEC filings, he owns about 15 million shares of the company.  Last year, FedEx paid out a total of 55 cents per share in dividends.  Do the math… and it looks like Mr. Smith received about $8.5 million in dividends (not counting dividends to his family holding company, his wife, or his retirement fund).

Do the math… and if 3-4% of FedEx business (and profits) are attributable to the Postal Service… that would mean Postal Service contracts account for more than a quarter-million dollars’ worth of Mr. Smith’s 2012 dividend income.

(Wonder how much stock other FedEx employees hold?  Click here.  Then do your own math about how much of their dividend income is attributable to Postal Service contracts.)

$12 Billion in Postal Service outsourcing.  Why?  Why are we continuing to outsource good jobs to private companies who are collecting record profits?  Why are we paying corporations billions of dollars to do exactly what workers at the Postal Service could already do?  The Postal Service continues to shed workers at an alarming rate while FedEx and UPS continue to make more and more money from the Postal Service.

FedEx made over $1.4 million in campaign donations last year.  Is it any wonder there’s so much talk about “privatizing” the Postal Service?




About Matt Murray

Matt Murray is the creator and an author on the NH Labor News. He is a union member and advocate for labor and progressive politics. He also works with other unions and members to help spread our message. Follow him on Twitter @NHLabor_News
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