Postal Service Eyes Closing Thousands of Post Offices

[alp227]

Source: The Wall Street Journal

HOLMES MILL, Ky.—The U.S. Postal Service plays two roles in America: an agency that keeps rural areas linked to the rest of the nation, and one that loses a lot of money.

Now, with the red ink showing no sign of stopping, the postal service is hoping to ramp up a cost-cutting program that is already eliciting yelps of pain around the country. Beginning in March, the agency will start the process of closing as many as 2,000 post offices, on top of the 491 it said it would close starting at the end of last year. In addition, it is reviewing another 16,000—half of the nation's existing post offices—that are operating at a deficit, and lobbying Congress to allow it to change the law so it can close the most unprofitable among them. The law currently allows the postal service to close post offices only for maintenance problems, lease expirations or other reasons that don't include profitability.

The news is crushing in many remote communities where the post office is often the heart of the town and the closest link to the rest of the country. Shuttering them, critics say, also puts an enormous burden on people, particularly on the elderly, who find it difficult to travel out of town.

The postal service argues that its network of some 32,000 brick-and-mortar post offices, many built in the horse-and-buggy days, is outmoded in an era when people are more mobile, often pay bills online and text or email rather than put pen to paper. It also wants post offices to be profitable to help it overcome record $8.5 billion in losses in fiscal year 2010.

Read more: http://online.wsj.com/article/SB10001424052748704881304576094000352599050.html

[Psephos]

1. In related news, Pony Express plans to close all relay stations. n/t

[Sparky 1]

79. LOL - We may need them to start up again

[zazen]

2. transform them into welfare offices

We're going to need a lot more of them.

[cutlassmama]

40. Sadly, this is a good idea

[nadinbrzezinski]

3. They won't let them raise the cost of a stamp

they won't let them do a lot of the tings they need to do.

The failure is NOT accidental...

[liberal N proud]

4. Exactly

The owners of UPS and FEDEX are frothing at the mouth over any possible elimination of mail service.

[nadinbrzezinski]

8. Never mind IT IS the only department of the government

IN THE FUCKING DOCUMENT Conservatives pray to... but have not read.

[RUMMYisFROSTED]

76. The document where John Galt visits the post office?

:shrug:

[RufusTFirefly]

25. Yup. Corporations want to control every possible avenue of communication

How soon until we're forced to pay a fee for face-to-face conversations?

[hay rick]

21. See reply 19.

Fruits of "Postal Reform", 2006.

[nadinbrzezinski]

26. Absolutely, again not accidental

This is quite on purpose.

[Blue_Tires]

77. +1000

this is the end result of an orchestrated campaign over the course of many years...

and of course, no one ever asks the fuckin' Pentagon to show their balance sheets...

[Dappleganger]

5. This will be a huge hardship on those homeless who depend upon a PO box.

Not every town or city has alternatives. Quite often this is their only address and the only way they get benefit checks/correspondence.

[glinda]

30. No residence equals no voting.

[Lint Head]

6. Because private fascist corporations, posing as individuals, think

they can do a better job and have convinced congress critters (with a little greasing their palms with money) that they know how to handle the country's mail.

[thereismore]

7. See? The gov'mint can't do anything right. nt

[Doremus]

15. BINGO!

The USPS has and is doing everything it can to create a humongous deficit so it can 1) kill off the postal union; and 2) eventually deliver another gift into the hands of the corporatocracy.

[ngant17]

39. USPS hires a lot of casual (temp) workers

and only a smaller percentage of them will ever get to the point of applying for permanent positions.

[WinkyDink]

54. Not run by the govt.

http://en.wikipedia.org/wiki/United_States_Postal_Service

[SheilaT]

9. To everyone who thinks the Postal Service doesn't

do a good job, I want to hand them an envelope and 44 cents or whatever the current rate for first class mail is and say, Okay, now get this to Bemidji, or to Missoula, or anyplace on the other side of the country, and then to some out-in-the-boonies location. The Post Office does that every single day.

More to the point, postal service should not be expected to turn a profit. It should be one of those services a decent government supplies to its citizens.

[enlightenment]

10. Absolutely agree.

I appreciate the job they do every single day. People who think they aren't needed are no different then those who think that highways and roads maintain themselves. It surprises me how many people believe the Post Office is irrelevant or out-dated, just because they - personally - have never written a letter or mailed a package.

[Sal Minella]

14. Exactly. For-profit postal service makes about as much sense as

for-profit health care or for-profit highways.

Some things are simply maintained by a civilized society for the welfare of the citizenry as a whole.

[RobinA]

31. Sounds Like

socialism to me. Wefare of the citizenry? Commie!!!

[glinda]

32. Exactly. I used to live in Bemidji but never got a letter from you. LOL.

[sofa king]

41. Just today I hauled hundreds of pounds of mail to the post office.

Today the U mailed out international acceptance letters to a couple dozen countries, mid-year check-up forms for those students already accepted from virtually every state, W2 forms for all employees, and since there were several thousand more forms than there are employees, I presume also some sort of tax documents for students and their parents who pay the bills. And someone here must be writing a history of New Zealand, because the interlibrary loan system is sending back a dozen books back to Auckland, Christchurch, and Dunedin, nine thousand miles away.

I loaded a van with fourteen tubs, half a dozen trays, and who knows how many packages, so much that the poor old thing looked like a lowrider and the transmission slipped all the way across my diminutive little town to the post office, where we delivered those thousands of letters an hour and a half late to about five overworked postal employees, who grumbled and shook their heads--and proceeded to send it all on its way anyhow.

We simply cannot function without them.

[quakerboy]

55. I agree with you, it is a government service and should be treated as such.

However, I think this may be a lesson needed. I live in a city, and my local PO is always stuffed to the brim with people, each of whom is handing over cash. They are generally busier than the mall across the street. I therefore doubt it will be mine which is cut.

Much of the red voting seems to come out of rural areas and smaller communities. Where I would be willing to wager they have a much lower return on the dollars spent to keep the PO open. If these communities are going to elect people who's priority is to cut gov't services so that they can cut taxes, they will eventually have to pay the price in not having those services.

[Skittles]

68. I agree

and all those assholes bitching that they had to wait in line at the post office - I mail packages to soldiers on a regular basis - so I'm at the post office at 1:00 PM on Thursday, and it's practically empty - so, I go the exact same day / time a couple weeks later and the line is out the door. I've done several experiments and have come to the conclusion that, outside of holiday rushes, it is IMPOSSIBLE to predict when a long line will form

[PoliticAverse]

11. What are the odds they will end Saturday deliveries to save money? n/t

[jwirr]

29. I don't like that but I could live with that. At least they aren't firing some

one that way.

[Joanne98]

12. THAT SUCKS!

[trud]

13. close the big ones, keep the little ones.

[williesgirl]

16. The post offices I've been to in the past year have ALL been very busy. Long lines etc.

And I don't mean just at Christmas. How can they possibly think it's not critical to our country? This sucks and the repukes will be loving every minute of it. rec'd

[damntexdem]

17. "Loses money": nonsense! Essential services cost money.

Expecting the Postal Service to make a profit, or even to break even, is ridiculous.

[fob]

23. I agree, "lose money" is a bullshit depiction of what this very critical

government service is doing. $8.5 billion in "losses" in 2010, is about what, a week-and-a-half in Iraq? Bring the troops home and divert the weekly cost for that boondoggle into the USPS account for 3 months, bingo, no more fucking "losses".

[naaman fletcher]

69. I agree,

but at some point there ought to be some recognition that in the age of email the post office is not as useful anymore as it once was. 90% of what I get goes straight into the garbage can. It primarily is just a messenger service for advertisers cutting down trees to try to sell useless shit.

There are a few important services like registered mail. I'd be fine with two days a week. Let the drivers sort on monday and wednesday and deliver on tuesday and thursday, then give them a long weekend.

[kentauros]

18. Raise junkmail rates to First Class rates.

While that probably wouldn't make them any money directly, it would likely eliminate 90% of the crap that has to be carried, sorted, and delivered. How much money would that save them in fuel and maintenance costs?

[Recursion]

24. The thing is even at cheap rates junk mail subsidizes our 44-cent stamp

Anytime you get mail addressed to "Ken Tauros or current resident" the mailer paid a premium to be able to do that (which is what makes it different from spam: the sender bears the cost.) As you point out, raising the rates would conceivably just drive down usage rather than driving up revenue.

[kentauros]

35. Well, to drive down usage is my point,

at least for the junkmail. Because the majority (if not all) that I get, goes into the recycling bin. I would bet for most everyone else, it goes directly into the trash. Now, why waste precious fuel and the wear and tear on vehicles for something that is a true waste? If it wasn't there to begin with, how much would that save them in these operating costs?

I wouldn't expect first class usage to go up with the elimination of junkmail, but without the costs of delivering junkmail, I also wouldn't think the cost of first class would have to go up much if at all. Eliminate that stuff from the "Directly-mailed-to-the-dump" waste-stream. It's just a mind-boggling waste of energy all the way around. And like others have said, why does the USPS have to operate at a profit? I don't see such constraints on any other agency to do the same...

[Abq_Sarah]

46. It's not going to save on vehicle expenses

At least from the delivery standpoint because the letter carrier still has to drive the route.

[kentauros]

50. Yes, they do still have to drive the same route.

But less weight carried means less stress on the vehicle (tires, bearings, suspension, transmission) and less fuel burned ;)

[Abq_Sarah]

58. I doubt it would make a noticable difference

USPS vehicles operate mostly stop and go. That kind of stress is a heck of a lot worse than 200lbs of magazine sitting in tubs in the back.

[kentauros]

59. I disagree,

because we're talking about however many hundreds of pounds of things like weekly advertisements, credit card applications, political mailings and so forth. It adds up, and any amount of extra weight is going to add that much more stress to what the vehicle has to carry around. Not to mention the added problem of mass in that starting and stopping. And it makes for a lowered fuel economy.

Now, the fliers probably aren't being flown, but those thousands of credit card applications are. Less weight means higher fuel economy, no matter what form the vehicle takes. It may seem insignificant per vehicle, but again, it all adds up to a respectable amount overall.

[Psephos]

60. Declining usage is precisely why the USPO is in trouble.

The fixed costs remain pretty much the same regardless of the amount of mail they handle. Less volume means less revenue spread over nearly the same fixed costs.

Look up the relationship between cost curves for variable and fixed expenses to understand why additional marginal revenue is what makes the post office viable. Basic economics is a valuable tool for understanding the way capital-intensive industries work.

[kentauros]

62. I'll let you look at the relationship of whatever that was you just said,

because I'm not an accountant, economics professor or anything related to the financial arts ;)

As has been stated already, shipping of packages is up. I'm just thinking in terms of environmental costs more than anything else. It takes a lot of energy to carry something that is just going to be thrown in the garbage, so why carry it at all? Let's avoid the making of the extra paper, the printing, the packaging and the mailing and let the companies relying on physical junkmail to go with the Internet and email like everyone else.

[Psephos]

63. Take it to the extreme.

Eliminate all unsolicited mail.

All gone.

Now the post offices are neat and orderly, there are no bins or carts on the docks, postal carriers have half the mail to carry as before.

The printing companies go out of business.

The pulp paper companies lay off their workers.

The companies who have relied on postal advertisement take a dive, lay off workers, some go bankrupt. The others move away from mail to other forms of advertising. They speed the transformation from advertisement you can ignore to the kind you can't.

Meanwhile, the post office still has the same number of trucks, the same number of carriers, the same legacy costs for retirees, the same billions tied up in sophisticated mail processing equipment filling their big centers...but half as much revenue as before.

The only choice outside of throwing it on the national credit card is to jack rates up to the sky. Which causes usage to drop down into the ocean. Revenue continues to fall off a cliff. It's called a price death spiral, and it means the end of an industry.

Meanwhile, all those other people you put out of work aren't very happy either.

But at least the post office is theoretically saving a bit of gasoline.

[kentauros]

64. But why take it to the extreme?

I'm not doing that. I'm just talking about streamlining what exists now. To get rid of all junkmail would mean to phase it out anyway. Nothing like that is ever stopped immediately, and it doesn't take up a large enough percentage of paper and printing industries to create the extremes you're inventing. But it does make an environmental impact that can be lessened, or do you think we should throw that to the wind and keep wasting precious resources for no good reason?

It might also lessen the human stress on the workers that maintain the USPS 'machine' without laying them off.

But all of this is just supposition. Until someone in the USPS makes the decision to lessen the physical load, what's the point of arguing? Instead, we're more likely to see the Republicans destroy them in the name of privatization. And then all the USPS people are laid off, after all. How's that for 'extreme'? ;)

[Psephos]

65. It's a thought experiment to clarify why cutting mail volume without cutting fixed costs won't work.

The problem established in the original post is that the Post Office has a structural economic problem. I've been trying to show why decreasing the Post Office's revenue will worsen its economic position. It's not just my opinion, but instead, a rehash of the same arguments the Postmaster General has been making - that technology is slowly making the Post Office's core business obsolete, and that its year-by-year revenues and mail volume are in a steep decline with no relief in sight.

So, that's the economic problem.

That much said, I DO agree with you that the whole idea of printing and mailing vast amounts of paper that only a percentage of recipients ever look at is dumb. The problem is, if you don't replace the revenue associated with mail advertising, then there isn't enough money left to maintain the unprofitable parts of the business, including running all the little post offices out in the small towns and rural villages. They will go away. So will six days per week delivery...it would probably go to three days a week. Regular mail rates would jump a lot - probably about double, more or less...and as the draconian price raises cut existing business even more, the price would keep going up in a desperate push to stay solvent. In-door or home-side mailbox delivery would cease; it would be replaced by mail delivered at best to curbside, and more likely, to a neighborhood center where 100 little mailboxes would be clustered, as they do now in apartment complexes. Post office hours in those offices that stay open would be curtailed. Many carriers would lose their jobs, as the job becomes more and more like a truck delivery route.

So, the real solution (as with any business in decline) is how do you raise revenues? Either you increase volume of business, or increase prices, or increase both. Cost cutting can help a bit, but cannot save a dying business.

This is more than an academic exercise. If the Post Office can't adapt to a changing world, it will die, and its huge underfunded retiree and benefit liabilities will be passed off to people who did not create those liabilities - us.

[No Elephants]

72. Lower rate is still a lower rate Frrame it as you will, they still pay less than $.44 per oz., as

we do. So, who's been subsidizing whom is a pretty arbitrary call.

Problem in reatively recent years is that people who had been paying full price have turned to fax and email.

[glinda]

33. Excellent point.

[EnviroBat]

78. THANK YOU!!!

I swear if it weren't for the pounds of utter bullshit that get jammed into my mailbox every week, the god damn post office wouldn't exist! Charge these fuckers for generating the metric tons of trash that the postal carriers are forced to hand deliver every fucking day. Ridiculous bullshit!

[hay rick]

19. Losses due to prefunding of retiree health care benefits.

NALC (National Association of Letter Carriers) fact sheet on USPS financial problems: http://www.nalc.org/depart/legpol/pdf/usps_financial_challenges_revised.pdf

From the article:

• The Postal Service averaged about $2.3 billion a year in profits from
2003 to 2006. It did not have to pre-fund retiree health benefits in
those years.
• The Postal Service ran surpluses in 2007 ($3.3 billion) and 2008 ($2.8
billion), which were erased because it had to set aside $5.5 billion each
year to pre-fund retiree health benefits.
• In 2009 the Postal Service lost $2.4 billion after a $1.4 billion payment
to pre-fund retiree health benefits. This loss was largely due to its revenue
plummeting more than 9% from the year before during the worst
recession in 80 years.
• From 2011 to 2017 the congressional mandate to pre-fund retiree
health benefits will consume 9% of the Postal Service’s annual
budget. Yet these benefits will be spent out over 75 years. No business
could survive long with such a burden even in good times.

The WSJ mentions the problem deep in the article:

Along with shifting consumer behavior, the agency is saddled with billions in unusually burdensome retiree health costs, the inspector general said. Historically, the postal service, which employs 532,800 workers, paid for retiree health benefits when they came due. But postal reform law passed by Congress in 2006 mandated the agency to plan ahead by pre-funding retiree health benefits at around $5 billion a year for 10 years starting in 2007. "No other federal agency or private sector companies have a similar burden," Mr. Donahoe testified.

Both Sens. Collins and Carper have introduced legislation addressing retiree-health funding.

The pre-funding obligation contributed heavily to recent record losses, and has forced the postal service to borrow from the federal government to meet shortfalls, he said. The agency now owes the U.S. Treasury $12 billion, and said it expects to max out its statutory $15 billion line of credit by the year's end.

[glinda]

34. If we had a decent HC policy they wouldn't be using this.

[n2doc]

20. How much money does the military make?

Perhaps there are bigger money losers out there. Like endless war.

[hay rick]

27. There you go

trying to put a dollar value on our security. I cast aspersions in the general direction of your patriotism...

[Plucketeer]

28. You said it!

How MANY losses in all facets of government, could we erase if we stopped throwing money away in these stupid conflicts?????? Shen the HELL will people wake up and squeeze their "reps" balls!? It's time to KILL the military-industrial insanity!



GOP JOBS PLAN

[greiner3]

22. This was tried some years ago;

So many 'brick and mortar' post offices that would be on the chopping block are run by postmasters that have huge political clout in their locals. Just try and take away their political perks and the shouting will be heard in Washington.

[HowHasItComeToThis]

36. THIS IS A WALL STREET JOURNAL HIT ARTICLE

[TuxedoKat]

37. In my town there are two small post offices

less than a mile a part, then another bigger one about 3-4 miles away. Seems like they could close one of the two small ones to save money and the one or two employees at the smallest one could be reassigned to the other ones. It's sad but if it helps them save money and no loss of jobs then it should probably be done.

[Nikia]

74. A lot of the post offices they are talking about are in rural areas

There isn't another post office for dozens of miles.

[TuxedoKat]

75. Yes

The funny thing is that we are fairly rural here and have so many PO's in such close proximity. In the larger towns around here I've never seen so many POs so close together.

[defendandprotect]

38. Granted e-mail is killing snail mail ... but not packages and we aren't competing with FED EX ..

and other package deliverers --

PLUS we aren't charging for all of that advertising/catalogue crap that's

getting dumped first on our post offices every day -- and then on us --

and then filling the garbage heaps!!

[hay rick]

42. Fed Ex is USPS' largest vendor.

USPS provides "final mile" delivery for Fed Ex and UPS for many packages. They pick up and route the packages through their delivery networks, dropping them off at local post offices and the postal service then delivers the packages to the mailbox or door.

USPS also moves a lot of their mail and packages through their air fleets.

Both companies exert influence on the rate-setting process and also other postal business decisions made by the Board of Governors and the Postal Regulatory Commission.

[Tierra_y_Libertad]

43. It's time for the unions to call for a strike.

It won't take much. Just shut down the hub cities like we did in 1970 and demand that congress fund the P.O. adequately.

[dixiegrrrrl]

44. Do you think that would work in this political climate?

Is it possible there would a "Reagan" re-action?

[Tierra_y_Libertad]

45. Nixon brought in the army to try and deliver the mail.

A monumental flop. It was a wildcat strike and the major hubs went out. It would still work today because the economy still depends on paper mail to collect it's dough. The unions are just too chickenshit to do it.

[Abq_Sarah]

47. A wildcat strike would be disasterous right now

We have an unfriendly House, a wishy-washy Senate and a nation with a high unemployment rate. People are pissed off and are not likely to be sympathetic.

[Tierra_y_Libertad]

52. No it wouldn't. They'd have to cave or watch the economy collapse.

Just think of how many bills you pay by snail mail..then multiply by the population.

[Abq_Sarah]

56. No, they wouldn't cave

And the American people would look at the USPS strikers and say... what in the hell is your problem? You have a job. You have healthcare benefits. You have a retirement plan.

[Psephos]

61. Exactly.

It would be a battle between Haves and Have-Nots. In this case, the strikers would be seen as the Haves.

[AngryAmish]

70. 0 x 300,000,000 = 0

[Occulus]

48. It is ILLEGAL for us to strike.

I am a postal employee.

[Tierra_y_Libertad]

51. It was "illegal" when we did it in 1970 - but we did it anyway and won.

I'm a retired postal employee. The unions were recognized because of our strike.

[lonestarnot]

57. 1970. Under Nixon.

Wikipedia. "At the time, postal workers were not permitted by law to engage in collective bargaining. Striking postal workers felt wages were very low, benefits poor and working conditions unhealthy and unsafe. The U.S. Post Office Department's management was outdated and, according to workers, haphazard. Informal attempts by workers to obtain higher pay and better working conditions had proven fruitless."

So what would happen? Somebody needs to do something to make somebody shit their pants and see we are going to stop taking bullshit!

[Politicub]

49. The postal service shouldn't need to run at a profit

It's not a for-profit business. It's a national service, and one that I appreciate. The USPS has made many improvements over the past few years.

Am I the only person who likes going to the post office? :)

[WinkyDink]

53. Perhaps if the USPS didn't have to support itself.....

[truthisfreedom]

66. Raise the cost of stamps to match the cost of operations. Seriously. WTF are they thinking?

The Post Office is an institution that should not be allowed to die.

[DeSwiss]

67. K&R

Maybe they should take a page out of the CIA's book and go into the drug business. They already have the network and stations.

- They're a natural.....

[LeftishBrit]

71. Sigh - happening in Britain too!

Death by a thousand cuts.

[No Elephants]

73. When no one in America has a job, who will buy from China?