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(from NYPost.com) WASHINGTON (AP) – The cash-strapped US Postal Service said Monday it is seeking to move quickly to close 252 mail processing centers and slow first-class delivery next spring, citing steadily declining mail volume.
The cuts are part of $3 billion in reductions aimed at helping the agency avert bankruptcy next year. It would virtually eliminate the chance for stamped letters to arrive the next day, a change in first-class delivery standards that have been in place since 1971.
The plant closures are expected to result in the elimination of roughly 28,000 jobs nationwide.
At a news briefing, postal vice president David Williams stressed the move was necessary to cut costs as more people turn to the Internet for email communications and bill payment. After reaching a peak of 98 million in 2006, first-class mail volume is now at 78 million. It is projected to drop by roughly half by 2020.
“Are we writing off first class mail? No,” Williams said. “Customers are making their choices, and what we are doing is responding to the current market conditions and placing the postal service on a path to allow us to respond to future changes.”
The cuts, now being finalized, would close 252 out of 461 mail processing centers across the country starting next April. Because the consolidations typically would lengthen the distance mail travels from post office to processing center, the agency also would lower delivery standards.
Currently, first-class mail is supposed to be delivered to homes and businesses within the continental US in one day to three days. That will lengthen to two days to three days, meaning mailers no longer could expect next-day delivery in surrounding communities. Periodicals could take between two days and nine days.
Williams said in certain narrow situations first-class mail might be delivered the next day — if, for example, newspapers, magazines or other bulk mailers are able to meet new tighter deadlines and drop off shipments directly at the processing centers that remain open.
But in the vast majority of cases, everyday users of first-class mail will see delays of one or two days, including those who pay bills by check, send birthday cards, write letters, or receive prescription drugs or Netflix DVDs by mail.
After five years in the red [losing money], the post office faces imminent default this month on a $5.5 billion annual payment to the Treasury for retiree health benefits. It is projected to have a record loss of $14.1 billion next year. The Postal Service has said the agency must make cuts of $20 billion by 2015 to be profitable.
It already has announced a 1-cent increase in first-class mail to 45 cents beginning Jan. 22.
Separate bills that have passed House and Senate committees would give the Postal Service more authority and liquidity to stave off immediate bankruptcy. But prospects are somewhat dim for final congressional action on those bills anytime soon, especially if the measures are seen in an election year as promoting layoffs and cuts to neighborhood post offices.
On Monday, the Postal Service said it welcomed congressional changes that would give it more authority to reduce delivery to five days a week, raise stamp prices and reduce health care and other labor costs. But the Postal Service said it was opposed to provisions in both the House and Senate measures that would require additional layers of review before it could close post offices and processing centers.
“Speed is very important to the Postal Service in our ability to capture savings,” Williams said.
Maine Sen. Susan Collins, the top Republican on the Senate committee that oversees the post office, believes the agency is taking the wrong approach. She says service cuts will only push more consumers to online bill payment or private carriers such as UPS or FedEx, leading to lower revenue in the future.
Reprinted here for educational purposes only. May not be reproduced on other websites without permission from The New York Post.
Questions
1. Why is the U.S. Postal Service making cuts (announced by the agency today)?
2. What specific cuts/closures will be made?
3. How will these changes affect customers?
4. How will the changes affect magazine/periodical customers?
5. a) Define “in the red” as used in para. 10.
b) The postal service is losing business, due to the internet, as more people pay bills, etc. online. Read “Salaries and Benefits of Postal Employees” under “Background” below. Do you think the salaries and benefits (including pension payouts) of postal employees/retirees affect the postal services’ budget negatively compared to those of private businesses? Explain your answer.
c) Ask a parent the same question.
6. Do you think closing processing centers and post offices, and reducing the amount/quality of service is the best way for the postal service to save itself? Explain your answer.
Background
The United States Postal Service (USPS) is an independent agency of the United States government responsible for providing postal service in the United States. It is one of the few government agencies explicitly authorized by the United States Constitution.
The USPS employs over 574,000 workers and operates over 218,000 vehicles. It is the second largest employer in the United States. The USPS is the operator of the largest vehicle fleet in the world. The USPS is legally obligated to serve all Americans, regardless of geography, at uniform price and quality.
(from wikipedia)
The Modern Postal Service: Agency or Business? (from about.com)
- Until adoption of the Postal Reorganization Act of 1970, the U.S. Postal Service functioned as a regular, tax-supported, agency of the federal government.
- According to the laws under which it now operates, the U.S. Postal Service is a semi-independent federal agency, mandated to be revenue-neutral. That is, it is supposed to break even, not make a profit.
- In 1982, U.S. postage stamps became “postal products,” rather than a form of taxation. Since then, the bulk of the cost of operating the postal system has been paid for by customers through the sale of “postal products” and services rather than taxes.
- According to the costs of operations, U.S. Postal Service rates are set by the Postal Regulatory Commission according to the recommendations of the Postal Board of Governors.
SALARIES AND BENEFITS OF U.S. POSTAL EMPLOYEES: (from ehow.com)
Compensation
Postal Service salaries vary by job duty. …Postal Service mail carriers earned a median salary of $50,888 in 2009. Mail processing clerks earned a median salary of $50,914. The highest paying jobs in the Postal Service are those of postmasters and mail superintendents, who earned a median salary of $70,541 in 2009. Most Postal Service employees receive regular compensation increases. Additionally, Postal Service employees earn more for working night shifts, Sundays and any overtime.
Insurance
The Postal Service offers health insurance through the Federal Employees Health Benefits (FEHB) program. The government pays most of the premiums for its workers’ insurance policies. Postal Service employees also receive life insurance policies through the Federal Employees’ Group Life Insurance (FEGLI) program.
Time Off
The Postal Service offers 10 paid holidays per year to employees. Employees are also entitled to paid vacations. For the first three years a person is employed full time by the Postal Service, he receives 13 days of paid vacation. After the three-year mark, vacation is increased to 20 paid days. After 15 years of service, employees are given up to 26 days of vacation. Postal Service employees also receive 13 days of paid sick leave.
Pension
Unlike many private companies, the Postal Service still offers a traditional pension to its employees through the federal retirement program administered through the U.S. Office of Personnel Management.
Savings Plans
The Postal Service offers two savings plans. The first is a traditional Flexible Spending Account, which allows employees to save money tax-free in order to pay for health care services and day care. Employees are eligible for this plan after one year of service. The Postal Service also offers a Thrift Savings Plan, a retirement plan in which employees may save money and receive up to 5 percent in matching contributions from the Postal Service.
Resources
from an Associated Press article posted at yahoonews:
Technically, the Postal Service must await an advisory opinion from the independent Postal Regulatory Commission before it can begin closing local post offices and processing centers. But such opinions are nonbinding, and Postmaster General Patrick Donahoe is making clear the agency will proceed with reductions once the opinion is released next March.
“The things I have control over here at the Postal Service, we have to do,” he said, describing the cuts as a necessary business decision. “If we do nothing, we will have a death spiral.”
The Postal Service initially announced in September it was studying the possibility of closing the processing centers and published a notice in the Federal Register seeking comments. Within 30 days, the plan elicited nearly 4,400 public comments, mostly in opposition.
Among them:
-Small-town mayors and legislators in states including Illinois, Missouri, Ohio and Pennsylvania cited the economic harm if postal offices were to close, eliminating jobs and reducing service. Small-business owners in many other states also were worried.
“It’s kind of a lifeline,” said William C. Snodgrass, who owns a USave Pharmacy in North Platte, Neb., referring to next-day first-class delivery. His store mails hundreds of prescriptions a week to residents in mostly rural areas of the state that lack local pharmacies. If first-class delivery were lengthened to three days and Saturday mail service also were suspended, a resident might not get a shipment mailed on Wednesday until the following week.
“A lot of people in these communities are 65 or 70 years old, and transportation is an issue for them,” said Snodgrass, who hasn’t decided whether he will have to switch to a private carrier such as UPS for one-day delivery. That would mean passing along higher shipping costs to customers. “It’s impossible for many of my customers to drive 100 miles, especially in the winter, to get the medications they need.”
-ESPN The Magazine and Crain Communications, which prints some 27 trade and consumer publications, said delays to first-class delivery could ruin the value of their news. Their magazines are typically printed at week’s end with mail arrival timed for weekend sports events or the Monday start of the work week. Newspapers, already struggling in the Internet age, also could suffer.
“No one wants to receive Tuesday’s issue, containing news of Monday’s events, on Wednesday,” said Paul Boyle, a senior vice president of the Newspaper Association of America, which represents nearly 2,000 newspapers in the U.S. and Canada. “Especially in rural areas where there might not be broadband access for Internet news, it will hurt the ability of newspapers to reach customers who pretty much rely on the printed newspaper to stay connected to their communities.”
-AT&T, which mails approximately 55 million customer billing statements each month, wants assurances that the Postal Service will widely publicize and educate the public about changes to avoid confusion over delivery that might lead to delinquent payments. The company is also concerned that after extensive cuts the Postal Service might realize it cannot meet a relaxed standard of two-to-three day delivery.
-Other companies standing to lose include Netflix, which offers monthly pricing plans for unlimited DVDs by mail, sent one disc or two at a time. Longer delivery times would mean fewer opportunities to receive discs each month, effectively a price increase. Netflix in recent months has been vigorously promoting its video streaming service as an alternative.
Visit the USPS website at: usps.com.
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