The corporatization of the Postal Service: Post office closures, suspensions, relocations, and reductions in 2013
January 7, 2014
One of the most persistent refrains in the debate about the Postal Service is that it needs to act more like a business. That means different things to different people, but for many, the model for where the Postal Service needs to go is to be found in Europe. In the EU countries, where the process of liberalization has been going on for fifteen years, the government monopolies have come to an end and the marketplace has been opened to more competition. According to free-market doctrine, the competiton was supposed to lead to lower prices and better services, but things haven't quite worked out that way.
According to a new report on the recent history of postal systems in Europe, “liberalization has not improved services and reduced prices as promised by the European Commission and others.” Instead, in countries where the postal systems have been deregulated and privatized, large corporations have come out the winners and average citizens and postal workers have come out the losers.
Consumers see their post offices close and get replaced by postal counters in private businesses. The mail is delivered only two or three days a week and primarily in highly populated areas. For postal workers, liberalization has led to lower wages and more part-time and self-employed contract jobs with little security and few benefits.
While consumers and workers get the short end, large mailers get their mail picked up more frequently, and in many cases their rates have gone down thanks to lower labor costs, cutbacks in postal services for the general public, and the special deals mailers can negotiate with the carriers. The private shareholders in the former public monopolies and the executives of postal businesses are also coming out ahead. Even with declining volumes in letter mail, there are big profits to be had in the mail industry.
The corporatization of the Postal Service
The citizens of the United States have never voted to privatize the Postal Service, but the process of corporatization has been going on for a long time. With each passing year, the Postal Service acts less and less like a public service and more and more "like a business." The scenario that has played out in Europe is playing out in the U.S., just in its own way.
Since 2000, the total number of USPS employees has been reduced by a third, and part-time workers now comprise over 20 percent of the workforce. The Postal Service outsources wherever it can — over $12 billion of its $65 billion in annual expenses go to private contractors and suppliers. Over half of the Postal Service's processing plants have been consolidated, while the workshare system has led to the creation of a huge private-sector consolidation industry, with companies like Pitney Bowes and Quad/Graphics reaping huge profits.
Consumers aren't seeing post offices closing by the thousands, but the hours are being reduced, sometimes to two or four hours a day. A huge network of "alternate retail access points" has been developed to replace brick-and-mortar post offices. Collection boxes are being removed from city streets, the speed and reliability of mail delivery are going down, more customers are getting cluster boxes, postal properties paid for by taxpayers are being sold off, and the lines at post offices are as long as ever, maybe longer.
The Postal Service and Congressional leaders typically blame the service cutbacks and downsizing on the big drop in mail volumes, but the transition toward a corporatized postal system predates declining volumes by a long time. As Christopher Shaw tells it in Preserving the People’s Post Office, there’s nothing new about efforts to close post offices, reduce window hours, get rid of collection boxes, shift to cluster boxes, and everything else we’ve been seeing.
The first big step toward corporatization was the 1970 Postal Reorganization Act, which turned the Department of the Post Office into the Postal Service. The process got a big boost in 2003, when President Bush appointed a Commission on the Postal Service. Its report, which seems to have served as a blueprint for Darrell Issa’s postal reform agenda, said that while the country wasn't ready for postal privatization the Postal Service should be run more like a private business. The Commission recommended expanding retail services to private stores, making it easier to close post offices, outsourcing more to the private sector, offering more workshare discounts, setting up a BRAC-like commission to consolidate processing plants, “rightsizing” the workforce, and disposing of postal real estate to “provide benefits to the public in the form of moderated rate increases.”
Many of these recommendations were implemented in the 2006 Postal Accountability and Enhancement Act. For example, PAEA directed the Postal Service to expand “alternate retail options” like vending machines, kiosks, the Internet, and “retail facilities in which overhead costs are shared with private businesses" (sec. 302). These alternatives were not intended simply to improve consumers’ access to postal services. They were about developing an infrastructure that would make it easier to close post offices.
Bush’s Commission came out with its report in 2003, when mail volumes were increasing. PAEA was enacted in 2006 — the year Shaw’s book was published — when mail volumes were at their peak. Declining mail volumes thus had little if anything to do with the rationale for cutting services and closing facilities.
The rationale then, as it is now, was about something else. As Shaw makes clear in his book, the goal has always been to commercialize, corporatize, and eventually privatize the Postal Service in order to enhance the profits and wealth of the corporate stakeholders of the mail industry.
Regarding the sale and preservation of historic post offices and their art: An open letter to the Inspector General
January 5, 2013
Last summer, the USPS Office of Inspector General announced that it was doing an audit investigation on the preservation and disposal of historic post offices. The audit was due out in October, but the release has been postponed until later this year. The audit announcement itself has been removed from the OIG’s website, but there’s an archived version with some of the comments that had been received here.
Gray Brechin, Project Scholar of The Living New Deal Project at U.C. Berkeley, has been lecturing, writing, and organizing to stop the sale of historic post offices, many of them built during the New Deal. He recently submitted comments to the OIG concerning the audit. Here’s Dr. Brechin’s letter to the IG.
Dear Inspector General Williams:
The USPS is, effectively, selling the public’s art collection along with the historic buildings for which it should be a responsible steward. Although these works of art that were commissioned by the U.S. Treasury and paid for by American taxpayers — including architecture — are theoretically protected by preservation covenants held by third parties, in many instances such as Venice, CA, Birmingham, MI, and Palm Beach, FL, they are no longer freely accessible to the public and have thus become the de facto possessions of those who have bought the buildings containing them.
Moreover, virtually no consideration has been given to the fact that these unique works of art were commissioned for specific places and spaces. Thus, to radically change the function of the building for which they were intended — to convert a public postal lobby into an office building, for example — diminishes their worth. This is especially the case if, as so many murals and sculptures do, the art commemorates the history of the postal service and the often heroic work of its employees.
The art works were also not designed to be portable, so moving them to other locations — as in Ukiah, CA, and Bethesda, MD — also diminishes their value, especially if they were designed to have a sequential narrative that may be scrambled once removed from the space for which they were intended. In a case such as “America Under the Palms” in the Princeton, NJ post office, the artist designed the mural to accommodate architectural features such as a postmaster’s door and/or a vaulted ceiling that will ill suit any other location to which the art might be moved.
Furthermore, although I believe that Dallan Wordekemper has been conscientious in his attempts to restore art works and locate those that have been lost, the parameters of his employment as both Real Estate Specialist and Federal Preservation Officer pose a conflict of interest in which the demands of the former may override those of the latter, especially when his superiors in the USPS are monetizing the public’s assets in order to sell them.
As Jill Korte has remarked in her comments on this audit: “The Federal Preservation Officer (FPO) appears to have sole discretion in deciding whether New Deal artwork in U.S. Post Offices may be removed, sold, lent, or otherwise disposed of. There is a total lack of transparency. USPS staff and the general public cannot possibly determine from [USPS] Handbook RE-1 the basis upon which the USPS FPO decides it is proper to remove, sell, loan, or otherwise dispose of post office New Deal artwork.”
As with so much else in the current management of the USPS, these decisions that seriously affect the public’s interest and property are made in total opacity with no chance of appeal.
Finally, it has long been my worry that the USPS would — using the excuse of the fiscal exigencies imposed upon it by Congress — sell those artworks since its management claims to own them. The public must have access to the appraised value of the artworks apparently compiled by the USPS.
As to the question posed in the audit announcement, “Considering its financial constraints, what should the Postal Service’s role be in maintaining historic assets?” it should engage in long-term leases rather than sales of surplus space to insure a continual revenue stream while maintaining essential retail services in the buildings for which those services were intended. It should also offer more services — such as postal banking — rather than less and poorer in demeaning spaces.
The current contraction of services under PMG Donahoe is nothing less than an engineered death spiral that will result in the liquidation of the USPS, including the historic assets that it should hold in trust for those who paid for them.
Gray Brechin, Ph.D.
(Photo credit: Edward Biberman's "Story of Venice" mural, from the Venice, California post office, now under restoration by the new owner of the building, Joel Silver, and to be available for viewing "by appointment")
January 1, 2014
BY MARK JAMISON
Here’s a resolution for the New Year: Support the people’s post office.
That means working to preserve an essential national infrastructure and rejecting initiatives to dismantle it, like closing post offices and cutting window hours, delivering the mail fewer days of the week, and converting customers to cluster boxes.
It means working to ensure that the post office continues to be a good place to work — with job security, decent wages, and good benefits — and remembering that the post office provides jobs to thousands of veterans, minorities, the disabled, and women.
It means doing your postal business at your local post office, not some Village Post Office or the postal counter in Staples, and it means challenging workshare discounts, outsourcing, and all the other forms of piecemeal privatization.
It means demanding more transparency in how the Postal Service conducts its business, questioning secret negotiated service agreements, and taking the universal service obligation seriously.
Supporting the people’s post office means fighting back against those who want to plunder and corporatize the Postal Service for their own self-interest and use it as a tool for enhancing their wealth at the public expense. And it means calling out those who care more about the postage rates they pay than the health of the postal system and the good of the country.
The rate increase
Later this month postal rates are going up by 6 percent. That may make things hard on some mailers, like community newspapers, news magazines, and non-profits. But the Great Recession has taken a huge toll on the Postal Service, and the rate system is set up to permit such increases when "exceptional circumstances" require it. The Postal Regulatory Commission therefore determined in 2011 that an exigent rate increase was justified. It was just a matter of how big or small it would be. It turned out to be very small indeed.
The Postal Service presented convincing evidence showing that from 2008 through 2014 the recession had cost it nearly $40 billion in profits, which easily justified the 4.3 percent increase it was seeking. (Another 1.7 percent increase was already permitted under the price cap.) That increase would have generated about $1.8 billion a year, money that could have been used to maintain and improve the postal infrastructure.
The mailers argued that the recession had cost the Postal Service more like $1 billion, not $40 billion, and they thought a one percent increase for just two years would be sufficient. That would have generated only about $700 million and done almost nothing to help the Postal Service’s financial situation.
In the end, the Commission granted a 4.3 percent increase for about 18 months, or until the increase has generated $2.8 billion. That may help address the liquidity problem, but it won’t do much to help maintain the postal system.
The ruling was obviously much closer to what the mailers were willing to give than what the Postal Service was asking for, so the mailers came out fine. They weren’t satisfied, though, and they immediately started complaining.
December 29, 2013
There were a couple of interesting developments this week in the story about how the Postal Service and its real estate broker CBRE are handling post office lease deals and the sales of postal properties.
On Christmas Day, the USPS Office of Inspector General posted a solicitation notice looking for a supplier to do an analysis of the fair market value of postal properties that have been sold and of properties currently leased by the Postal Service. The OIG appears to be launching an investigation (or expanding one already underway) into the central question raised by Peter Byrne’s new book on the sale of postal properties: Are the properties being sold for less than market value, often to businesses with friendly relationships with CBRE?
On another front, news media in Princeton, New Jersey, are reporting that a buyer has been found for the historic Palmer Square post office. While the sale price has not been revealed, the buyer is LCOR Ventures, which appears to be a spinoff of LCOR Inc., a large real estate company that has done several big deals with CBRE in the past. That coincidence may raise some eyebrows at the OIG.
The OIG contracts out
The OIG's solicitation notice was posted on FedBizOpps.gov on December 25. It says that the OIG is looking for “a supplier who possesses specific subject matter expertise in the area of fair market value of properties.” The notice indicates that the OIG is looking at both properties that the Postal Service leases for its post offices and the owned properties it has been disposing of. As the solicitation states, the supplier will “assess the fair market value of recently disposed U.S. Postal Service owned properties and conduct an analysis of fair market rent for markets nationwide.”
The notice explains that CBRE is the Postal Service’s exclusive real estate broker and responsible for negotiating leases and selling properties. “We would like the Supplier to perform reviews of the appraisals in order to ensure they were representative of the fair market value.”
Proposals from suppliers are due on January 10. The OIG will issue decide who to hire on or before February 10, 2014. The OIG wants the report within thirty days of the tasking date, so the OIG would have the results sometime in March.
The OIG’s website currently contains nothing about an audit into the fair-market-value question like this, so it’s not clear what the context of the solicitation notice is. It’s possible that the OIG is expanding the scope of an audit currently underway that’s looking into the preservation and disposal of historic post offices. Or it may be that the OIG is starting a new audit on the market value issue and has simply not posted anything about it on the website yet.
In all likelihood, the OIG solicitation notice came as a result of allegations made in Peter Byrne’s new book, Going Postal: U.S. Senator Dianne Feinstein’s husband sells post offices to his friends, cheap. Byrne documents numerous instances in which CBRE sold postal properties at below market value. In some cases the buyers were CBRE’s clients and business partners. The fact that the chairman of CBRE Group Inc. is Richard C. Blum, husband of Senator Dianne Feinstein, has given Byrne’s story a lot of attention, including this article in the L.A. Times. (There's a list of the properties Byrne researched here, along with a few more.)