“Neither rain, nor snow, nor sleet, nor hail shall keep the postmen from their appointed rounds” – but lack of money may!

Facing $15 billion in debt and on the verge of bankruptcy, the US Postal Service has about maxed out their credit card.  In the age of email, Facebook and Twitter, not to mention FedEx and United Parcel Post, the US Post Office announced last week that it lost $5.1 billion in the last year.

The postal service can’t keep limping along year after year. . . Changes are coming and you better plan on an extra few days for delivery of those birthday cards.  Struggling to stay afloat, the USPS is finalizing their budget cuts.  Higher rates are obviously part of the plan – as of January 22, a first-class stamp will cost 45 cents and I wouldn’t be surprised if that increase quickly grows to 50 cents or more.

Another part of the post office plan includes closing half of the country’s mail processing centers. It’s expected that 250 of the 500 processing centers may close as early as March. The Post Office has not released the list of potential processing center closures – I wonder if Southeastern PO will be on the list. The consolidation of the mail processing centers is in addition to the planned closing of 3,700 local post offices – didn’t St. Davids Post Office recently have its last day.  The closing of post offices and processing centers means major job losses. It is expected that as many as 100,000 post office workers may lose their jobs due to the various closures.

We should prepare ourselves for a slowdown in our first-class mail service.  According to the news, the USPS is pushing ahead with cuts to first-class mail that by next spring will slow delivery and will eliminate any chance for stamped letters to arrive the next day.  I don’t know about you, but I don’t remember the last time I mailed something and it was received the next day.

In some important respects, the problems facing the USPS mirror those of private firms in sectors affected by technological change.  The rise of email, instant messaging, online banking, and other forms of electronic communication have dramatically reduced demand for the Post Office’s core business — the transportation of letters.

But technology alone does not account for the financial woes of the Post Office.  Congress has mandated that the USPS must annually prepay $4.5 billion in health retirement benefits that go beyond what would be required of a private firm. Back on September 4, 2011, the New York Times reported (“Postal Service Is Nearing Default as Losses Mount”) that the Post Office is close to default unless Congress intervenes.

The report cites that 80% of the postal service’s cost is labor, as compared with only 53% at UPS and 32% at FedEx.  It also cites that postal workers get more generous health benefits than even most other federal employees. Is the solution for Congress to bail out the Post Office.  But if Congress were to intervene, what form of bailout?  What about privatization of the Post Office?

“Neither rain, nor snow, nor sleet, nor hail shall keep the postmen from their appointed rounds” – but the lack of money may!

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  1. According to the Philadelphia Business Journal, the Southeastern Processing Facility is slated to close. The good news is that the Post Office portion of the facility, the part which caters to customers seeking to mail letters and packages, will remain open. Here is the link to the story: http://www.bizjournals.com/philadelphia/news/2011/12/06/chester-county-site-could-be-among-big.html

    As for privatzing the Postal Service: That would be a tough idea to get any legislative agreement support behind. Not only is the Postal Service one of the few government agencies explicitly authorized by the United States Constitution (Article 1), but it is under a mandate to provide universal service throughout the country.

    The minute you privatize, the Postal Service would either cut service to many remote areas (i.e. nearly all of Alaska, Montana, North Dakota, etc.), or would start charging higher fees for delivery to those parts of the country. I highly doubt that the Senators and Congressmen/women (whether they be Republican or Democrat) from our nation’s rural states would be willing to risk such an outcome.

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