After 10 months of angst and outrage that spanned from rural Montana to Capitol Hill, the U.S. Postal Service announced Wednesday that the 3,700 post offices targeted in May for closing will remain open .
Instead, USPS plans to reduce the hours of operation at 13,000 rural post offices from a full eight-hour day to between two and six open hours per day, a move that the struggling mail service claims will save about $500 million per year.
"This is a win-win," Postmaster General Patrick Donahoe said at a news conference Wednesday. "The bottom line is that any rural community that wants to retain their post office will be doing that."
Under the new plan, about 9,000 current full-time postal employees will be reduced to part time and lose their benefits after the offices they work at are put got to two to four open hours per day.
Another 4,000 full-time employees will see their hours reduced to part-time, but will retain their benefits. These workers will be at post offices whose hours are reduced to six hours per day.
"If we can shrink the labor cost we can keep the building open, that's not hard to do, and ensure that customers have access," Donahoe said.
Even though many post offices will have vastly reduced operating hours, people will still be able to access their P.O. boxes all day.
"We think this is the responsible thing to do," Donahoe said. "Any company that listens to their customers would come up with a good solution like this."
But House Oversight Committee Chairman Darrell Issa, who has co-sponsored a postal reform bill in the House, said today's plan only addresses a small fraction of the Postal Service's massive budget shortfall. Rural post offices that will be impacted by the plan account for less than one-eighth of the $5 billion USPS spends each year on operating post offices, Issa said in a statement.
"To achieve real savings creating long-term solvency, the Postal Service needs to focus on consolidation in more populated areas where the greatest opportunities for cost reduction exist," Issa said.
Under the plan announced last summer, the Postal Service was reviewing 800 urban post offices for possible closure. All of those city offices, many of which are clustered within blocks of each other, will remain untouched under the current plan.
The postmaster general noted that USPS's plan to reduce operating hours achieves only a fraction of the $22.5 billion in cuts necessary to put the Postal Service back in the black. The USPS has posted a multi-billion budget shortfall last year in part because first class mail volume has plummeted 28 percent over the past decade.
Donahoe is also pushing for a plan to reduce mail delivery to five days per week and reform the postal employee retirement system, but has to have Congressional approval to implement either item. Postal reform is currently caught in a tug-of-war between the House and the Senate.
"This is just part of the way there and it's just part of an overall plant to address all of the issues we have from a cost standpoint," Donahoe said.
The postmaster general set a goal for Congress to pass, and the president to sign, comprehensive postal reform by this summer.
"Whether it's a Senate or a House issue, let's take that off the table," Donahoe said today. "Let's get this legislation done."
The Postal Service aims to start reducing office hours at selected rural post offices starting around Labor Day and have all 13,000 offices now under review operating under reduced hours, consolidated with a nearby post office or local business or closed in favor of rural delivery by the fall of 2014.
"We will not consolidate rural post offices without first having sought community input and we will only consolidate post offices if the community has a strong preference to do so," said Megan Brennan, the postal service's chief operating officer. "Our goal is to keep open as many rural post offices as possible."
Brennan said she expects that "very few" of these small-town post offices will close as communities opt for shorter hours instead.
One in four post offices bring in, on average, a mere $52 in revenue per day and serves about four people. A full quarter of the 31,000 post offices operated by USPS operate at a loss and the 13,000 offices now under review have less than one hour of work per day, on average, Donahoe said.
He said that by reducing operating hours and thus the number of hours people work and the number of employees receiving benefits, the postal service will cut operating costs at rural post offices by 40 percent.
Since USPS announced their decision to begin cutting post offices in July, 500 have already closed and will remain closed under the new plan. But the 400 offices that had been targeted for elimination will now remain open and operate for between two and six hours per day.