The United States Postal Service is under a financial weight that must feel like a postman’s mail bag at Christmas.

The USPS loses $25 million every day and has run $41 billion in the red over the last five years.  The decline in the demand for snail mail (particularly the most profitable First Class mailings), and the economic downturn have contributed to the spiral toward financial collapse.

Postal Service mail volume has dropped from a peak of 213 billion pieces in 2006 to fewer than 180 billion today.

Additionally, the USPS is required by law to pre-fund retiree benefits, at a cost of about $5 billion annually.  That guarantees the solvency of the retirement programs for generations to come.  It’s possible that the payment schedule could be spread over a longer period, easing the annual burden, but that would take an act of Congress.

But in the meantime, Postmaster General Patrick Donahoe has proposed modifying Saturday delivery.  Mail carriers would no longer deliver regular mail and periodicals on Saturday, although packages–including prescriptions—and priority mail would still show up in the mailbox.

Naturally, this is controversial.

West Virginia 3rd District Congressman Nick Rahall is particularly upset.  He told me on Metronews Talkline Thursday that Donahoe is willfully ignoring an appropriations rider that Congress has passed every year since 1986 that requires 6-day mail delivery.

“They’re taking the law into their own hands,” Rahall fumed.  “We just can’t stand by and allow this to occur.”

But the Postal Service is in a tough spot.

Congress separated out the old Post Office Department in 1971, creating the current USPS, a quasi-public/private agency that is supposed to pay its own way.  Since then, the USPS has struggled to operate like a private business while continuing to answer to the whims of Congress.

As one former postmaster told me, it’s like trying to run a business with 500 CEO’s.

Postmaster Donahoe can expect a fight, but he’s on the right track.  Cutting the Saturday service will save about $2 billion a year.  That doesn’t solve all the financial problems, but it’s a start.

Donahoe should also take a hard look at the employee costs, which make up 80 percent of the Postal Service’s budget.  The agency may be able to close some post offices.  And Congress should review the amortization schedule for the pension benefits.

Changes are necessary if we want to keep this vital service.  The Saturday cut will upset a lot of folks, but as Donahoe accurately said, “It’s a reasonable business action and common sense; when revenue drops you have to make changes.  You can’t run away from it.”

Washington could use more of that kind of thinking.

 

 

 

 

 

 

 

 

 

 

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Comments

  • mntnman

    Finally, acting like a business and making a sound business decision. On to solvency.

  • DWM

    Hop,

    The USPS provides a great service and no one will miss the loss of Saturday service. What they really need to do is allow them to be a free enterprise and have no government involvement. If they did, there is no doubt in my mind they could cut costs and improve service.

  • Patchy

    The USPS are in a tough spot in part because they interact with the public in the millions every day. Like McDonald's, Starbucks and Walmart, their ubiquity leads to a surfeit of opinion on their organization and operations.

    But have the Posties ever considered replacing one of their advertising posters for Eid and Kwanzaa stamps with a mirror and contemplating their reflection?

    It's a cliche to say that prices go up while service goes down, but it remains a truism. Why?

    Junk mail has always been an annoyance. In the age of e-mail it is also an insulting redundancy. Yet the USPS continues to lower rates and deliver more of this rubbish. They refuse to offer a simple opt-in/opt-out that could prevent the shockingly wasteful cycle of glossy paper printed, delivered to the USPS, delivered to mailboxes and immediately discarded to be carted off to a landfill. The open secret is that all this dross pays the bills, but that doesn't excuse the hypocrisy of the USPS and its supporters who pay lip service to environmentalism and recycling. One should not need to recycle that which should never have been created in the first place.

    Pro-USPS say: a flat-rate stamp to deliver mail anywhere in the union is a good, equitable and just thing. Economic realists say: sheer madness. People accept that shipping UPS/FedEx packages to Oregon should cost more than shipping them to Ohio and pay the difference willingly. They grasp the concepts of variable costs associated with fuel, logistics, labor, etc. We'll leave the issue of flat-rate postage as a metaphor for collectivism for another day.

    Two heart muscle cells, when placed together in a lab dish, will soon begin beating in sync. Two government workers, when encountering each other on or off the clock, will immediately strike up a conversation about retirement, benefits, vacation, etc. The McDonald's, Starbucks and Walmart workers talk about pricing, customer service and turnaround times. If we are to believe the PR about the USPS as a self-sustaining entity then why do they look to their sclerotic DC bureaucratic brethren for guidance rather than emulating profitable private-sector dynamos?

    • Hop'sHip

      How many Walmart workers have you talked with, Patchy? I have experienced good and lousy service from USPS workers and the same from UPS and Fed Express workers. I refuse to draw broad conclusions about groups of people based on such anectdotal experience.

  • jethro

    my rural carrier is friendly enough but like most government type workers they have poor attitudes are generally rude and really dont care about customer service. that includes city and county government workers. i know that not all are that way but that is the perception. one or two bad apples spoil the whole bunch

  • steve

    you will find that online ordering has assisted in slowing the postal service down--there is not even an option listed on most websiteds that allow you to ship by the postal service. it is either fed ex or ups.

    • Wowbagger

      Really recently there has been a resurgence in shipping using the postal service. I now receive a lot of mail shipments.

      Also, it is easier to use their flat rate boxes, print your own postage at usps.com, stick it on, and drop the box at the post office than to drive to a UPS pickup location.

      FEDEX in the Clarksburg area is so lousy I wouldn't consider them.

  • jay zoom

    one more request on a different note whats your take on the mountaineers recruiting class for 2013 and where were the ranked nationally as well I know they were ranked 5th in the big 12. thanks

  • jay zoom

    why would nick rahall make the statements he did. lets face it the usps gets no funding from the u.s. government they have to do something to make ends meet. if the jerks in washington are against this then fund the usps to a certain degree rather then send the money to some country overseas to bail them out who probably has no use for us anyway. lets say rahall runs a business that loses $500.000 dollars a year he'd close it in a heartbeat. lets the usps stop delivvery on saturdays keep the lobbies open for people at the local post office to pick their mail. ad be done with it. a for washington tell rahall to get get down to the business needed accomplished like pass a budget next time you talk to him. I have sent an email to the man also. thanks hoppy have a nice day

  • thornton

    Doubt the Saturday loss will help the financial bottom line appreciably or for long but I would welcome the weekend delivery gone.

    Politicos fighting the loss do so for votes...I put that thinking in the same file as the junk mail.

    Basically, if you can live with all the bored dogs on a Saturday....this issue is much ado about little....in either direction.

  • Tag

    Congress has seen this coming for some time and, as usual, has done nothing but blow hot air. (see N.J. Rahall) Solving this problem is fairly simple if treated like a private entity. As postal workers retire, through attrition replace them with subcontractors. No retirement, no benefits, just a nice pay check. Secondly, close many of the rural post offices and lastly, eliminate Saturday delivery.

    • GregG

      GREAT IDEA TAG!!! Hell, why don't we just pull everyones retirement and medical benefits. We'll just "subcontract" this whole damn country!!! Doctors, police, teachers etc....who needs them! We can replace them with wife beaters, child molesters and anyone with experience in meth cooking. We can even pay them with oxycodone and a 12 pack.

      • wirerowe

        Greg I don't think your idea is the best way to approach this issue.

        • GregG

          That was my sarcastic reply to Tag. I'm fully aware of how this endless "subcontracting" and taking of employee benefits and healthcare is killing this country. I have enough sense to know that without a well compensated working middle class this country will not survive. Sadly, many do not.

          • Uncle Fester

            Yeah, especially that moron Obama.

      • CaptainQ

        The 'subcontracting of America' is already well underway, GregG, thanks to businesses of ALL sizes trying their best to avoid as much of the provisions of the ObamaCare Law they can.

        This is why in the near future there will be far MORE 'independent contractors' hired by companies as well as fewer hourly wage jobs of ALL kinds (white and blue collar) that allow 30 hours a week or over, so these businesses can 'dodge' having to pay for mandated employee health insurance. It's like what happened in Hawaii many years ago when their state government passed a law stating all employees working 20 hours a week or over had to be covered by employer health insurance. POOF! Instantly all those jobs became '19 hour a week' positions placing a huge hardship on a large segment of the 'working poor' in that state.

        This is just one of the many unintended 'negative consequences' the new ObamaCare Law will saddle the working poor and small/mid-size businesses with.

        God help us all.

  • NorthernWVman

    IMHO I think the USPS is doing a fine job. If this is a public/private business and they are still solvent to this point that has to say something great about the administration. No mail delivery except scripts and first class on Saturday. Sounds fine with me. Besides that is an extra day for some postal workers to be able to spend with their families.

    • Geno

      NorthernWVman, the post office is billions of dollars, from being solvent.

  • wirerowe

    The Postal service is a massive operation that does a great job. But over the past year 15 years mail volumes have dropped dramatically. After waiting too long they began cutting jobs around 2007. Fede and UPS do a good job with package and epress service should the federal goverment subsidize the USPS to compete with them? Cutting back Saturday service is a no brainer.Also reduce the amount going to prepay pensions and cut gains in total compensation package a modest amount to reduce the subsidy the feds have to pay.

    • WV Citizen

      What type of subsidy does the post office recieves? The best of my knowledge............a big fat zero,0, nada, nothing. Explain wirerowe!

      • wirerowe

        WV Citizen. The postal service loses $15 billion a year. I think that the federal government has to cover that loss. That is what I am calling a subsidy.

  • Medman

    I'm still trying to figure out how the loss of Saturday mail will truly hurt 95% of the citizens. Prescriptions not arriving by Saturday will kill people.......please? You can bet that Congress will interfere once again and make the management of USPS worse. This is exactly why the Government is incapable of running anything efficiently.

  • Wowbagger

    Hmmm...

    Gee no more junk mail through the mail slot on Saturday!

    Hoppy,

    ... Victoria's secret REALLY!

    Not the source of my junk mail problem!

  • Doug

    Doesn't matter to me cut it to four days a week. Mail delivery quality has declined as well. I didn't receive mail three days last week because of an inch of snow and then a certified letter was sent back because they "tried to deliver" on Saturday. Drivers are too lazy to walk to door for a cert letter or delivery. Mail must go through? Bull.

  • CaptainQ

    Can't blame the USPS for taking this drastic measure, though it could pose an inconvenience for many people.

    As one who lives in a VERY rural area of WV,I've already witness curtails in service last year when all of the Post Offices in our area began operating on reduced hours. Personally, I have no problem with no Saturday delivery but I know many of my neighbors are quite upset.

    Perhaps the Federal Government and Congress can 'get a clue' from the actions of the USPS. When you're facing reduced revenue and increased costs, services MUST be cut to save costs. The problem with Washington is, instead of making real budget cuts, they just keep 'borrowing' more money to make up budget shortfalls. The USPS couldn't run that way, and neither should the U.S. Government.

    • maillady

      The PMG just this past summer received a pay raise that is more than my annual salary. The postal service is so heavy in middle management and people that have nothing to do with delivery of the mail.

      I agree with Joe Manchin.....they should cut the fat, not the muscle.

      There are lots of ways to save money without taking our livlihoods away from us.

      • GregG

        Well the next time you get dog bit, twist your little ankle on the sidewalk or get stressed out and want a couple weeks off with pay then you can deal with USPS Headquarters, OSHA, the Department of Labor and your medical bills YOURSELF. I myself would think having "middle management" within the area would be more efficient and far less aggravating than trying to resolve issues online or dealing with someone in Greensboro that doesn't even know where West Virginia is located on a map. “Middle management” as you call it, hasn’t received a pay raise in 3 years, while you and other employee’s in the craft have continued to receive YOUR raises PLUS cost of living increases! Middle management already does more with less employees by performing not only their “real” job but other “middle management” work that was left behind by middle management job cuts that have already occurred, but yet the work is still there & gets done. NDCs, CSMPC, P&DC have already taken a big it in order to cut costs in order save the jobs of carriers. I would think you would be a little more appreciative. Maybe you should weigh your options - you losing out on a little OT in order to save your 40-hr a week JOB with benefits that provides for you and your family!

        • WV Citizen

          GregG
          As a retired postal employee and an former union officer the last time I check and it has been a while, the ratio of bargianing unit employees and management employees were at 13 employees per mangement employee.
          That is quite high and that type of fat needs to be trim. Plus, I betecha you still made more annually than the working stiff. Cuts has to be made and everyone at the USPS will be affectted.

        • maillady

          I never get OT. I am a Rural Carrier that does not work on an hourly wage basis. We are "evaluated" time and that is based on a 6 day work week. Maybe the wizards of smart should research what that will do to our pay system. I don't have a safe, hourly or SALARY job. In addition to the fact I provide my own personal vehicle to do my job.

      • CaptainQ

        Would be nice if SENATOR Manchin "practices what he preaches" in Washington with the Federal Budget.