Budget Crunch Threatens U.S. Postal Service

The U.S. mail struggles for survival in an age of email, and with crippling overhead

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A daunting deficit and burdensome worker contracts could do what rain, sleet, snow and hail could not. Namely, stop the mail.

The U.S. Postal Service, already facing drastic cuts, doesn't have the $5.5 billion it needs to make a pension payment later this month, and could shut down entirely early next year without action from Congress to save it. The New York Times reports that the problem is partly technological. Email is cheaper and quicker than mail, and electronic documents in business applications have shrunk the volume of material the postal service handles. The 167 billion pieces of mail the Postal Service will process this year sounds impressive, but represents a 22 percent drop from just five years ago, The Times reports. It's a trend that appears likely to continue.

Those changes coincide with labor agreements that may not be sustainable.

As any computer user knows, the Internet revolution has led to people and businesses sending far less conventional mail.
At the same time, decades of contractual promises made to unionized workers, including no-layoff clauses, are increasing the post office’s costs. Labor represents 80 percent of the agency’s expenses, compared with 53 percent at United Parcel Service and 32 percent at FedEx, its two biggest private competitors. Postal workers also receive more generous health benefits than most other federal employees.

Postal Service leadership now hope to cut $20 billion from the agency's $75 billion in annual costs by 2015, by shuttering post offices, laying off workers, and ending Saturday mail delivery, among other major changes. (The proposals have long been brewing, and are helped by recent findings of budgetary waste within the agency.) None of this will be easy to sell politically. Even the most die-hard deficit hawk tends to believe his post office should remain open.

Senator Susan Collins of Maine, like many lawmakers from rural states, vigorously opposes ending Saturday delivery, which would trim only 2 percent from the agency’s budget. Ms. Collins, the ranking Republican on the committee overseeing the postal service, said the cutback would be tough on people in small towns who receive prescriptions and newspapers by mail.
“The postmaster general has focused on several approaches that I believe will be counterproductive,” she said. “They risk producing a death spiral where the postal service reduces service and drives away more customers.”
The post office’s powerful unions are angry and alarmed about the planned layoffs. “We’re going to fight this and we’re going to fight it hard,” said Cliff Guffey, president of the American Postal Workers Union, which represents 207,000 mail sorters and post office clerks. “It’s illegal for them to abrogate our contract.”

Collins, the co-chairwoman of the Senate Committee on Homeland Security and Government Affairs, will hold a hearing on the postal service budget dilemma on Tuesday in Washington.

This article is from the archive of our partner The Wire.