Tags: Postal | service | crisis | saturday | delivery | Q&A

How Did the Postal Service Get in This Fix?

Tuesday, 02 Mar 2010 02:21 PM

The Postal Service unveiled a 10-year plan Tuesday for coping with its financially strapped future. Some questions and answers:

Q. How did the post office get in this fix?

A. Americans have been rapidly switching from the mail to the Internet for communications. The post office tried to refocus more on business mail and advertising, but the recession caused that to be cut also, and studies show little chance of mail volume getting back to former levels.

Q. How bad is it?

A. The agency faces a possible loss of $7 billion this year and total losses of $238 billion over a decade if nothing is done.

Q. Don't they get a subsidy for operations from the taxpayers?

A. No, that ended decades ago and in the current financial situation Congress is unlikely to restore it.

Q. Why is the post office so eager to eliminate Saturday delivery?

A. It's one of the most effective ways for them to save money. Right now it takes six mail carriers to cover five delivery routes — one per route to deliver five days, and one to work each route one day. Cut out that sixth day and you only need five carriers to serve five routes.

Q. Why make the changes now instead of putting them off?

A. The post office will have 300,000 people eligible to retire in next 10 years. Six-day delivery would mean hiring new carriers. Then, if there are future cutbacks, those workers might have to be laid off. The postal service wants to avoid that.

Q. Will post offices close on Saturday?

A. No, people will still be able to go there to mail items and check their post office boxes.

Q. I hear there's a problem with their retiree health-benefit payments.

A. A couple of years ago Congress required the post office to pay about $5.5 billion annually into a fund to prepay health benefits for retirees. Most agencies handle that cost on a pay-as-you-go basis and that's what the post office wants to return to. The problem is what's called "scoring"; if they stop making those payments it will be recorded as a loss to the government, making the federal deficit look bigger on paper.

Q. Can't they just cut staff?

A. They have gone from a peak of 800,000 workers to about 600,000 now, and plan further reductions, but you can only cut so much and still deliver the mail. They will be negotiating new union contracts this year and next, and hope to be able to use more part-time people.

Q. Will my local post office be closed?

A. Congress limits the closing of post offices. There is a proposal to open postal counters in places like convenience stores, supermarkets and office supply stores. If that works, then some local post offices could be closed.

Q. Why not sell the post office to a private company?

A. There isn't much demand to buy a business that is losing so much money. Plus, few private businesses would want to take on the requirement for universal service — to serve every address in the country at the same price.

Q. The Pony Express is famous for carrying the mail. Why doesn't the post office follow its example?

A. Because, while it was colorful, the Pony Express never made a profit and went bankrupt after less than two years of operation.

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