News Analysis
Blame the recession, e-mail, or unrealistic policies, but the post office has lost about $20 billion since 2007. For the first half of 2011 alone, the U.S. Postal Service (USPS) reported a net loss $5.6 billion, and projects it will lose close to $8 billion total by year’s end.
Deep in the red for years, the mail agency announced that they intend to make big cutbacks—3,653 post offices across the country are targeted for closure. The USPS reports a dramatic drop in mail volume in recent years, as well as an increasing use of online postal purchases and self-service kiosks, making it difficult to justify keeping open all of its nearly 32,000 retail stores.
According to Postmaster General Patrick Donahoe, more than a third of the Postal Service’s retail revenue now comes from expanded access locations—found in stores such as supermarkets, office supplies, and pharmacies—in over 70,000 locations nationwide. In an effort to tailor itself to changing customer habits, the USPS plans to contract its business out to even more of these third-party retailers.
“The Postal Service of the future will be smaller, leaner, and more competitive, and it will continue to drive commerce, serve communities, and deliver value,” said Postmaster Donahoe in a statement. About 2,500 post offices potentially qualify for what officials have dubbed the village post office.
While village post offices will replace some branches, other communities may lose their postal service entirely. Over the next few months, the USPS will determine which of the 3,653 post offices across the country will be replaced with a third-party village store, and which communities will be forced to travel to a neighboring town for postal service. It may cut costs, but some believe that the USPS strategy will most adversely affect customers that still rely heavily on postal services.
The American Postal Workers Union President Cliff Guffey says that closing post offices and slashing service to the American people is not the answer to the USPS financial crisis. According to Guffey, the USPS cannot “cut their way to fiscal health.”
In a Subcommittee on Federal Workforce, USPS, and Labor Policy in June, Guffey argued that the Postal Service receives no subsidy from the federal government, only compensation for services rendered. However, they remain at the mercy of government policy—USPS rates since 1972 have only been allowed to rise at the pace of inflation. Guffey believes that much of the Postal Service’s problems originate from an “unrealistic and artificial” cap on postal prices and excessive workshare discounts that prevent it from being a profitable business.
“If the Postal Service is to act in a businesslike manner, as its critics have so often implored it to do, it should be permitted to charge businesslike rates as other national posts are permitted to do,” Guffey told lawmakers.
According to Guffey, congressional demands are also to blame for the Post Office debt crisis. He says that lawmakers forced a $5.5 billion requirement to prefund a 75-year retiree health care liability over a 10-year period—an obligation that no other government agency or private company is forced to bear.
Since early 2010, the USPS has urged Congress to eliminate the prefunding of retiree health benefits, but lawmakers haven’t backed down. According to Guffey, Congress has even refused to allow the USPS to apply billions of dollars in overpayments to its pension funds to the prefunding requirement.
Guffey believes that the federal government is forcing the Postal Service into bankruptcy by holding billions of dollars of USPS money. According to him, closing branches is a misguided strategy, and the village post office is “just a warm and fuzzy name for privatizing the USPS.”
“The Post Office provides a unique public service that is still a necessity for many people,” Guffey said in a statement. “It is a focal point of many small communities; it is ‘where the flag flies;' it is where the government provides support for the community.”
Deep in the red for years, the mail agency announced that they intend to make big cutbacks—3,653 post offices across the country are targeted for closure. The USPS reports a dramatic drop in mail volume in recent years, as well as an increasing use of online postal purchases and self-service kiosks, making it difficult to justify keeping open all of its nearly 32,000 retail stores.
According to Postmaster General Patrick Donahoe, more than a third of the Postal Service’s retail revenue now comes from expanded access locations—found in stores such as supermarkets, office supplies, and pharmacies—in over 70,000 locations nationwide. In an effort to tailor itself to changing customer habits, the USPS plans to contract its business out to even more of these third-party retailers.
“The Postal Service of the future will be smaller, leaner, and more competitive, and it will continue to drive commerce, serve communities, and deliver value,” said Postmaster Donahoe in a statement. About 2,500 post offices potentially qualify for what officials have dubbed the village post office.
While village post offices will replace some branches, other communities may lose their postal service entirely. Over the next few months, the USPS will determine which of the 3,653 post offices across the country will be replaced with a third-party village store, and which communities will be forced to travel to a neighboring town for postal service. It may cut costs, but some believe that the USPS strategy will most adversely affect customers that still rely heavily on postal services.
The American Postal Workers Union President Cliff Guffey says that closing post offices and slashing service to the American people is not the answer to the USPS financial crisis. According to Guffey, the USPS cannot “cut their way to fiscal health.”
In a Subcommittee on Federal Workforce, USPS, and Labor Policy in June, Guffey argued that the Postal Service receives no subsidy from the federal government, only compensation for services rendered. However, they remain at the mercy of government policy—USPS rates since 1972 have only been allowed to rise at the pace of inflation. Guffey believes that much of the Postal Service’s problems originate from an “unrealistic and artificial” cap on postal prices and excessive workshare discounts that prevent it from being a profitable business.
“If the Postal Service is to act in a businesslike manner, as its critics have so often implored it to do, it should be permitted to charge businesslike rates as other national posts are permitted to do,” Guffey told lawmakers.
According to Guffey, congressional demands are also to blame for the Post Office debt crisis. He says that lawmakers forced a $5.5 billion requirement to prefund a 75-year retiree health care liability over a 10-year period—an obligation that no other government agency or private company is forced to bear.
Since early 2010, the USPS has urged Congress to eliminate the prefunding of retiree health benefits, but lawmakers haven’t backed down. According to Guffey, Congress has even refused to allow the USPS to apply billions of dollars in overpayments to its pension funds to the prefunding requirement.
Guffey believes that the federal government is forcing the Postal Service into bankruptcy by holding billions of dollars of USPS money. According to him, closing branches is a misguided strategy, and the village post office is “just a warm and fuzzy name for privatizing the USPS.”
“The Post Office provides a unique public service that is still a necessity for many people,” Guffey said in a statement. “It is a focal point of many small communities; it is ‘where the flag flies;' it is where the government provides support for the community.”
