Brookings Institution: Recent debates over postal service modernization, consolidation, and service performance have focused largely on improving operational efficiency and financial performance. Much less attention has been paid to the broader economic benefits of the postal network, including how universal service may support local economic activity and contribute to patterns of economic growth. These considerations may be especially relevant in rural and less dense areas, where private carriers offer fewer local access points and the postal network often provides the only nearby retail mailing and shipping infrastructure. This study examines one dimension of that relationship by analyzing how access to postal infrastructure is associated with small-business activity in rural counties, treating the postal network as part of the physical infrastructure that supports everyday economic activity.
Small businesses play a central role in the U.S. economy. Firms with fewer than 500 employees account for the vast majority of U.S. businesses and employ nearly half of the private-sector workforce, while also serving as a primary source of job creation. More than three-quarters of these firms are very small: Non-employer and owner-operated businesses account for the majority of business establishments nationwide and are particularly prevalent in service-oriented sectors such as professional services, transportation, real estate, health care, and retail trade. Operating at a small scale, these businesses are more likely to rely on shared external infrastructure rather than in-house administrative, logistics, or distribution systems. As a result, differences in the local infrastructure environment can shape patterns of business entry, persistence, and local activity.
Rural economies differ from urban economies in ways that make small businesses especially central to local economic activity. Business activity in rural areas is heavily concentrated in very small firms. As a result, small businesses play an outsized role in providing essential goods and services and supporting local employment and earnings. At the same time, markets for labor, inputs, and professional services are thinner, and routine business activities often require greater travel distances. These structural features mean that access to basic infrastructure plays a more direct role in enabling small-business operations than in denser settings, where firms can more easily substitute among providers and services.
Within this environment, the U.S. Postal Service (USPS) supports a range of routine business functions, including  sending and receiving parts and supplies, shipping goods to customers, sending contracts and other time-sensitive documents, maintaining a stable mailing address through a post office box, and handling payments and official correspondence. The Postal Service frequently serves as the most accessible option for these services in rural areas, as private carriers may have limited presence and impose location-based surcharges. Survey evidence from the Postal Service’s Office of the Inspector General (OIG) underscores this reliance: In fiscal year 2022, more than 60% of small and very small businesses reported visiting USPS retail locations two to four times per month, compared with roughly 50% for UPS and FedEx. The same survey found that small businesses cite convenient locations, competitive pricing, and knowledgeable retail associates as primary reasons for choosing USPS over private carriers. In addition, OIG data indicate that businesses rent approximately 250,000 post office boxes nationwide, highlighting the role of postal address services for firms that lack a fixed commercial location.
Despite the value of USPS services and infrastructure to small businesses, their role in supporting local economic activity has been understudied. Most existing evidence describing the role of the network consists of descriptive and oversight reports produced by bodies such as the Government Accountability Office, the United States Postal Service Office of the Inspector General, and the Postal Regulatory Commission. One exception is a national analysis that finds some evidence that post office closures are associated with short-run decreases in employment. Closure-based analyses, though, face inherent limitations because, as will be later explained, post office closures are infrequent, exposed to political pressures, and unevenly distributed across communities; this limits their usefulness for understanding broader economic relationships.
This study takes a different approach by treating postal access as long-standing, geographically fixed infrastructure and asking whether proximity to post offices is related to small-business activity in rural counties. Using administrative tax data on small businesses, patterns are examined both in aggregate and across industries. Rural counties with closer access to post offices consistently have higher levels of small-business activity, with the strongest relationships concentrated in sectors that account for a large share of rural self-employment. Because post office locations change infrequently, the evidence points toward postal access supporting small-business activity rather than simply coinciding with places that are already economically stronger. In other words, this work suggests that the postal network plays an economically meaningful role for rural small businesses.
Read more: The postal network as economic infrastructure: Evidence from rural small businesses | Brookings