Postal Service Delivers Message of Debt, Decline and Downsizing

Did you know Benjamin Franklin was our country’s first postmaster general? Franklin received this  appointment on July 26, 1775, after successfully establishing a national postal service. In fact, two  hundred years later, one of Franklin’s former homes was converted into a post office, opening on July  26, 1975. The building has housed the post office (as well as a museum detailing the history of the postal  service) for 36 years. It is the only post office in the country that does not fly an American flag, because
when the postal service was established, the American flag did not yet exist. Unfortunately, this July 26  the Ben Franklin Post Office received news that it would most likely be shut down, joining the ranks of  thousands of other post offices across the nation currently on the chopping block. Happy Anniversary?  Not so much.

Currently, the US Postal Service has roughly 32,000 retail locations; 3,700 of those are under review  for possible closure at this time. The offices targeted met one or more of the following criteria: the  location has shown significant decrease in foot traffic; the location has shown diminished retail sales;  the community where the office is located has other options for mail distribution. That last part  basically means there is another location in town, whether that be a grocery store, coffee shop, or other  business, that could provide some postal services to the community. This may sound strange to some,  but it actually aligns closely to the origins of the postal service, when people conducted their postal  business via the local general store. Given this criteria, it is not surprising that many of the locations  slated for review and possible closure are in small towns and rural communities.

As painful as this will be for those communities, the decision to close post offices across the country  should not be an unexpected one. The USPS lost an unfathomable $8 billion last year alone. The most  recent financial projections indicate the USPS will reach its statutory borrowing limit by the end of  the fiscal year, meaning it could be forced to default on some of its financial obligations to the federal  government on Sept. 30, 2011. Why is the Postal Service losing money?

  • The sharp drop in first-class mail/stamps due to the growth of the Internet and other  technologies. People email instead of writing letters, they order online instead of mailing in  catalog orders, and they pay bills electronically versus mailing them. Ten years ago, five percent  of bills were paid online; today, fifty percent of bills are paid via the Internet.
  • Advertising mail is down, due to the economic recession. Companies suffering profit losses are  curtailing their mass-mailers and replacing them with online deals and printable coupons.
  • Competition from other delivery companies, such as FedEx and UPS.
  • Staggering benefit obligations–The Postal Service has asked Congress to ease the requirement  for an annual $5.5 billion payment to fund future retiree health benefits. The USPS is the only  government agency required to make up-front payments to cover expected health care costs for  future retirees.

In addition to reviewing 11% of the nation’s post office for possible closure, the Postal Service is looking  at other cost cutting measures. Many locations have already made staffing cuts. Postmaster General  Patrick Donahoe has stated that ending Saturday mail delivery is a real possibility, pointing out that  cutting Saturday mail would save the organization $3.1 billion per year. Going further, Donahoe says  that the country may ultimately see a move to mail delivery three days a week sometime in the next  fifteen years. Along with cost-cutting measures, the USPS intends to raise the price of stamps in the near  future, as an attempt to increase profits.

Public reaction to the latest developments has been mixed. Some say that the cuts don’t go far enough,  suggesting that the USPS should go to three-day delivery sooner rather than later. If they know that  it will decrease costs, why wait? Others are concerned that the already high unemployment numbers  will increase, as mail carriers and other postal employees lose their jobs through these downsizing  measures. No proposal will please everyone, but considering the current economic state of the USPS,  changes have to be made–our country cannot afford to keep putting money into an organization that is  losing billions of dollars a year.

How would you solve the problems of the USPS? Do you get your mail every day, or let it slide for a few  days? How many of you get more junk mail than ‘real’ mail in your mailbox? Conversely, do you enjoy  getting mail each day and want to keep 6-day mail delivery? Share your thoughts with us!