July 26, 2011 -- The U.S. Postal Service announced today that it is considering closing about 3,700 post offices over the next year because of falling revenues.
Facing an $8.3 billion budget deficit this year, closing post offices is one of several proposals the Postal Service has put forth recently to cut costs. Last week for example, Postmaster General Pat Donahoe announced plans to stop mail delivery on Saturdays, a move he says could save $3 billion annually.
"We are losing revenue as we speak," Donahoe said. "We do not want taxpayer money. We want to be self-sufficient. So like any other business, you have to make choices."
Post offices in every state except Delaware are up for closure and will be reviewed according to how much money they bring in, how many hours of work are performed there each day and how close they are to other post offices.
Dean Granholm, the vice president for delivery and post office operations, said the first wave of closings would begin this fall. He estimated that about 3,000 postmasters, 500 station managers and between 500 and 1,000 postal clerks could lose their jobs.
Of the nearly 3,700 proposed post office closures, slightly more than 3,000 of them have annual revenue of less than $27,500, and a workload of less than two hours per day. Compared with the $100,000 or so it takes to run a post office, many of them are not even breaking even, Granholm said.
"We made heroic efforts to take costs out of the system while still providing service," Donahoe said. "[But] the volume continues to drop off, especially profitable volume, like first class mail, and believe me that's what drives this whole thing."
The Postal Service has more retail locations -- 32,000 -- than any other private business in the United States -- more than every Walmart store, Starbucks and McDonald's combined.
Because many of the proposed closings are in rural areas where there is not another post office nearby, the Postal Service plans to partner with community businesses to create what it calls village post offices -- which will sell stamps and ship packages -- within grocery stores, gas stations, libraries and town halls.
Village post offices will not provide the full range of services, though. Most will not offer custom shipping options, only flat-rate shipping, and few will provide passport services. But because they would not be run by Postal Service staff, USPS would save substantially on labor costs, which accounts for the largest portion of most post office budgets. Granholm said USPS expects to open about 2,500 village post offices within a year.
These changes do not have to be approved by Congress, although it would have to approve a move to five-day delivery.
Post offices have always been a bit of a pet issue for congressmen. While Congress does not legislate funds for the Postal Service because it does not receive tax money, congressmen can control the naming of post offices. And name them they do.
So far in 2011, lawmakers proposed almost 50 bills to rename post offices. And out of the 23 laws that President Obama has signed this year, three of them were to name post offices. That's 13 percent of all legislation passed by the government this year that was dedicated solely to the naming of post offices.
Donahoe said the Postal Service is delivering personalized letters to every member of Congress detailing the proposed changes and outlining exactly how many post offices will be closed in their respective districts. Delaware is the only state that does not have any proposed closures.
Sen.Ton Carper, D-Del., and the chairman of the subcommittee that oversees the Postal Service, has sponsored a bill to legislate the changes USPS is pushing for, such as eliminating Saturday delivery.
"The Postal Service is facing a dire fiscal crisis and two challenges -- the rapid transition to electronic communications and the lingering after effects of the Great Recession -- which threaten its very existence. In order to survive, let alone thrive in the 21st century, all options have to be considered and the Postal Service has to modernize the way it does business, including where and when it does business," Carper said today in a statement.
Rep. Darrell Issa, R-Calif., the chairman of the House Oversight Committee, which oversees the Postal Service, has taken a distinctly different approach to postal reform.
His bill proposes that Congress appoint a committee to take over control of USPS until its books are back in the black. Issa said in a statement today that the Postal Service needed to take even more drastic measures than closing post offices to reach fiscal solvency.
"The Postal Service has 170,000 more employees on the payroll than needed to deliver the mail. Mail volume has dropped 20 percent in the last five years because of new technology," Issa said. "Today's announcement is a step in the right direction. There are, however, many difficult decisions ahead that must be made to improve operations, reduce costs and return the Postal Service to financial solvency."