Jay Coggins, an applied economist at the University of Minnesota, said, “it turned out to be a very convenient way to measure all sorts of socioeconomic and health numbers.”
Banks and insurers now use ZIP codes to analyze mortgage risk and set premiums, real estate firms use them to organize listings, and retailers use them to decide where to build new stores. A recent analysis by the Postal Service’s Office of the Inspector General and IBM estimates the annual value of ZIP codes at $9.5 billion.
ZIP codes are now an integral part of 20th-century technology, such as credit card authorizations, and 21st-century technology, like mapping programs on smartphones. The U.S. Census Bureau churns out rafts of ZIP code-specific economic data.
What’s remarkable is that this was all an accident. In the early 1960s, the Postal Service just needed a better way to sort mail and was eyeing automated sorting. Before July 1963, mail was largely sorted by address. Mail volume exploded after World War II, and hand-sorting it all became nearly impossible.
West Germany had just rolled out postal codes and achieved 80 percent adoption in one year, so Postmaster General Edward Day introduced the idea of ZIP codes at a conference in October 1962.
The launch of the new system was met with grumbling by some companies, but it quickly caught on, thanks in part to the aggressive publicity campaign. By 1969, 83 percent of Americans were using ZIP codes, and in 1983 the Postal Service added four digits.
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