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Dead Letter Offices?

Budget Woes May Bring Post Office Closings

Is your neighborhood post office in danger of disappearing? It could happen as the U.S. Postal Service considers deep service cuts to attack its huge budget deficit.

The USPS has released a preliminary list of 677 postal stations and branches, mostly in big cities and suburbs, that it is studying whether to close. Eventually, the list may expand to include more of the 4,800 branch stations nationwide. The study doesn’t involve the service’s 27,000 main post offices.

On July 2, the service took a required step toward closings by asking the Postal Regulatory Commission to decide whether its consolidation plan will cause “a substantially nationwide change in the nature of postal services.”

“It definitely could have a large impact for a lot of people,” Robert N. Sidman, a commission attorney appointed as the general public’s representative in the case, said in an interview Monday.

Neighborhood impact

A few neighborhoods could see their post offices closed as early as this fall, Sidman said. That could inconvenience some people accustomed to visiting their local branches for mailing services, and could lead to changes in delivery routes. People with post-office boxes in their local branches could also be affected.

Yet another side effect could be a faster decline in the number of blue USPS collection boxes on the streets, Sidman said, which in turn could result in earlier collection times at the boxes that remain.

Postal customers will have a say

Sidman said local postal customers will have a chance to sound off before any particular branch or station is closed.

Mail service is a politically volatile topic, and Congress is also jumping into the debate. A hearing on the consolidation plan is scheduled for July 30 before a panel of the House Committee on Government Oversight and Reform. According to a Congressional Research Service analysis, options for Congress include passing a law to forbid any closings or acting to ease the financial pressure on the USPS.

The Postal Service has not estimated how much spending the closings could save. The move is just one of its major budget-cutting steps under way. The service reported a $2.4 billion loss in the quarter ending June 30, and by some estimates is on track to lose about $7 billion this fiscal year.

Recession takes its toll on industry

“The economic recession has been tough on the mailing industry, and we have seen an unprecedented decline in mail volumes and revenue,” Postmaster General John Potter said at a May 6 meeting of the USPS Board of Governors.

The service reported that its total mail volume in the second quarter fell 14.7 percent from the previous year. And even before the recession hit, it was fighting a swarm of negative economic trends.

With the advent of e-mail and electronic bill payments, the volume of full-fare first-class mail has been declining steadily since 2001, and last year reached a level not seen since 1992. The USPS long ago surrendered a big chunk of its lucrative package delivery service to private companies. And the oil price spike that preceded the recession was painful for a service that delivers to 87 million points from Maine to Hawaii. In the face of these pressures, Potter told the board of governors in May, “we are aggressively realigning our costs.”

Impact on employees

The USPS says its internal efforts to match work hours to mail volume is on pace to cut 100 million hours this fiscal year—equal to 57,000 full-time employees. In addition, about 2,500 postal employees recently accepted early retirement offers.

The Postal Service supports a bill already approved by a House committee that would let it change the way it funds retiree health benefits. That could produce $2.3 billion in savings.

Reduce delivery service to five days

But Congress may balk at another major cost cut the USPS has requested—reducing delivery service from six days to five. TheFederal Timesnewspaper reported July 14 that a group of postal service managers has been working for three months on the logistical changes that would be needed if one delivery day were dropped. Estimates of the savings range from $1.5 billion to $3.5 billion.

The idea is strongly opposed by postal unions, while major mailers such as direct-marketing advertisers have remained noncommittal while they study it. Most members of Congress have been opposed, but a recent poll reflecting a surprising level of public acceptance could change lawmakers’ attitudes. In a Gallup poll conducted last month, 66 percent of respondents said they favored or strongly favored five-day delivery as a way to help the Postal Service solve its financial problems. That compared with the support of 38 percent for increasing stamp prices, 17 percent for laying off more postal employees, and just 11 percent for closing their own local post office.

Older people may have more to lose than others from postal service cutbacks, because they are less likely to use the Internet to communicate. The Census Bureau reported that only 20.6 percent of people age 55 or older who were surveyed in 2007 had used the Internet within the past 30 days, far less than other age groups.

Art Dalglish is an editor at the AARP Bulletin.

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