November 20, 2011
There’s a new GAO report out this week by the indefatigable Phillip Herr. It’s called “Action Needed to Maximize Cost-Saving Potential of Alternatives to Post Offices.” In this week’s Federal Eye column for the Washington Post, Ed O’Keefe writes about the report and poses the question, “How bad is it at the post office? Here are the numbers.”
Citing Herr’s report, O’Keefe writes: “There were 59 million fewer visits to post offices in 2010 than in 2009, and visits are down 21 percent over the last decade, according to a new Government Accountability Office report. (Ironically — despite searching high and low for a number — the report doesn’t actually say how many visits were recorded in 2010.)”
The reason O’Keefe couldn’t find the number of post office visits in the GAO report is that Herr doesn’t say how many there were, and despite being heavily footnoted, the report doesn’t say where the number 59 million came from.
So, how many people do visit the post office every year?
The Postal Facts Page
O’Keefe is a busy fellow, so apparently he didn’t have time to Google around for an answer to his question. The “Postal Facts” page of the USPS website provides a table with all sorts of data, including annual visits to the post office. (Click on the chart for a larger view, and click on the chart to come back.)
The line for "Total Customer Visits" says there were 1.12 billion visits in 2009 and 1.07 billion in 2010. The decline comes to 50 million (about 5%) — a little less than Herr’s GAO report mentions, but close enough. The table also says there were 1.36 billion visits in 2001, and that would account for the 21% drop over the last decade that Herr cites and O’Keefe repeats.
The Postal Facts page thus provides the numbers on which Herr may have based his claim that visits were down 59 million in 2010, but this just raises another question: Where did the Postal Service come up with its numbers? The Postal Facts page doesn’t say.
Annual Customer Visits to POS Locations
The number of people visiting post offices has become one of the issues being examined in hearings before the Postal Regulatory Commission, now working on an Advisory Opinion on the Retail Access Optimization Initiative (RAOI). After all, if you’re going to close 3,650 post offices — and plan to close a total of 15,000 — it only makes sense to consider how many people use the post office.
In fact, one of the justifications for closing thousands of post offices is that people are visiting the post office much less frequently than they used to. According to the Postal Service, the brick-and-mortar post office is essentially a thing of the past.
In his opening testimony before the PRC on the RAOI, James Boldt, the man running the show, said this: “Customer behavior is also changing. With advances in technology and other product innovations, customers are choosing alternatives to traditional brick-and-mortar retail facilities when possible and instead are attracted to other channels developed by the Postal Service.”
To illustrate his point, Boldt provided the following chart:
The point of the chart was to show that visits to the post office have been steadily declining, and the way the chart cuts off the bottom of the vertical axis, it actually looks like people soon won’t be going to the post office at all.
It wasn’t clear from the chart how these annual visits were being counted, so the National Association of Postmasters (NAPUS) put several interrogatories to Boldt about it. It turns out that only about 15,500 post offices have a Point of Sale (POS) terminal to count window transactions, so the chart doesn’t show the picture for all 32,000 post offices. Plus, the POS terminal doesn’t count many kinds of visits to the post office, like when you go check your p.o. box or pick up a flat-rate box (PRC hearing transcript, Sept. 8, 2011, p. 339).
Actually, it's not even clear what Boldt's chart is showing to begin with. It's supposedly showing annual visits to a POS location, but it can't mean that a thousand people a year visit each location. If you multiply the 15,500 POS locations times the 965 annual visits in 2010, you get about 15 million visits. Since only half the country’s post offices have a POS terminal, let’s double that number for the whole country, which gives us about 30 million visits. But that’s a tiny fraction of the estimated 1.07 billion visits in 2010 shown on the Postal Facts page. So what exactly is Boldt’s chart showing if not annual visits? And why is the label on the vertical axis blacked out?
There’s another version of the chart in a USPS briefing presentation (from April 2011). As with Boldt’s chart, the purpose is to illustrate that “customers visits are diminishing at Post Offices, with internet diversion, competition, and the expansion of Postal Access points outside of traditional Post Offices.” Here’s the briefing presentation version:
Unlike Boldt’s chart, the briefing chart has the vertical axis labeled, with “pieces (m).” Perhaps this refers to the number of pieces of mail that were handled in retail transactions at each of the post offices with a POS terminal, measured in thousands (m). That would mean, then, that Boldt’s chart did not really show the number of customer visits at all. It was showing the number of pieces handled in these visits — about 15 billion pieces at 15,500 locations. That number is at least in the ballpark, considering that the annual volume of mail is about 170 billion, much of it entering the system not at post offices but at Bulk Mail Entry Units.
While all this may explain Boldt’s chart, we’re back to the question: Where did the Postal Service’s “Postal Facts” come up with its numbers purporting to show a drop in visits, a "fact" now being repeated by the GAO to Congress, the Washington Post, and numerous other news agencies?
The Household Diary Survey
Perhaps the numbers were derived from another source, the survey of US households the USPS conducts each year. This “Household Diary Survey” (HDS) questions some 8,500 families over the telephone or Internet about their postal habits. The 2010 report shows the following chart:
The chart shows that the percentage of households visiting the post office every month is substantial — 83% in 2010. The survey doesn't tell us the total number of visits per year, but we can develop an estimate. If we take the lowest number in each range (1, 3, 7), we find that the average US household visits a post office at least 2.5 times a month. There are 115 million households in the U.S. That comes to over 3.5 billion visits a year. That’s more than three times as many as "Postal Facts" indicates.
Even that number may underestimate the total annual visits to the post office. Think about the people with p.o. boxes, who go to the post office almost every day. According to this OIG report, there are 21 million post office boxes, of which 14.4 million are occupied. If those boxholders checked their boxes five days a week, that would come to 3.6 billion visits a year.
But we could be talking about even bigger numbers. According to a new survey conducted by the American Consumer institute, the average consumer visits the post office more than four times per month. There are over 234 million people over 18 in the US. That would come to over 11 billion visits a year.
In other words, the number of visits to the post office each year is huge — on the order of several billion. So it looks like the Postal Facts page, with its number 1.07 billion visits in 2010, has grossly underestimated the frequency people use the post office. And it is just ludicrous to think that the Postal Service has such a firm grasp of the numbers that it knows visits declined by 5% in 2010. There's no evidence that visits to the post office are even declining at all.
Take another look at the Household Survey chart. Rather than showing a decline from 2009 to 2010, the HDS chart shows just the opposite. It says that the number of visits was fairly stable from 2009 to 2010. In fact, the numbers for those visiting a post office more than a couple of times a year went up: The percent of US households visiting 3 to 6 times rose from 30% to 33%, and for 7 or more times, from 18% to 19%. As the survey report observes, "Even with the continued availability of mail-related products and services through alternative modes (such as Internet orders), in-person visits to postal facilities remain stable."
So how could Boldt testify to a sharp decline in visits when the Household Diary report shows an increase in visits?
Explaining the Inconsistencies
NAPUS asked Boldt just that question in one of its interrogatories. Boldt explained the inconsistency by making two points. First, the Household Survey questioned customers on the phone or Internet about the range of frequency of their visits, but “they were not asked to recall or provide evidence of the actual number of visits.” In other words, the survey dealt with ranges, not specific numbers, and it’s possible people made erroneous claims (they weren’t asked to “provide evidence”).
November 17, 2011
Yesterday, the Postal Regulatory Commission rejected three more appeals to save post offices — in Minneapolis, NC; Chillicothe, IA; and Pilot Grove, IA. But the PRC finally ruled in favor of a community seeking to save its post office. The ruling on Innis, Louisiana, “remands” the “Final Determination” to close the post office back to the Postal Service for further consideration. That may or may not save the Innis post office, but it could be a sign that momentum is shifting at the PRC. Aside from PRC Chairman Ruth Goldway, who has dissented on a few cases*, the Commissioners had shown few signs that they were prepared to reject a Postal Service decision to close a post office.
When the Postal Service issues a Final Determination to close an office, the community can appeal to the PRC. The PRC can’t overturn the decision, but it can “remand” the decision and tell the Postal Service to take another look and provide more evidence if it wants to proceed with the closing. Recently, the PRC has been very reluctant to exercise even this limited power.
While orders to remand were not uncommon back in the 1980s and 1990s, they've become rare over the past decade or so. In 2000, there was the Roanoke, West Virginia decision; in 2006, the Observatory Finance Station (Pittsburgh, PA); in 2009, the decisions on Hacker Valley, WV and Cranberry, PA, both of which involved using improper "emergency suspension" procedures; and in 2010 there was the case of the suspended Rentiesville, Oklahoma post office, which actually closed in 1998. That's about it for successful appeals since 2000.
Over the past few months, the PRC had ruled on some ten appeals, and in every case it either affirmed the decision, effectively closing the post office, or dismissed the case. The causes for dismissals have varied. In a couple of cases, it was because the Postal Service hadn’t definitively closed the post office yet, as in Still Pond MD, where the post office has been closed under an emergency suspension but not formally discontinued. In a couple of cases, the Postal Service actually changed its mind and withdrew the Final Determination notice — more on that a little later.
For a while, it looked as if the PRC was going to affirm every closing decision, and one had to wonder, what would it take for the Commissioners to rule in favor of a community trying to save its post office? Chairman Goldway has dissented several times, arguing that the Postal Service’s case was flawed, but her fellow commissioners, aside from expressing reservations in a few concurring opinions, have shown few signs that they were ready to rule against the Postal Service.
Then yesterday the Postal Regulatory Commission remanded the decision to close the post office in Innis, Louisiana, back to the Postal Service. The Innis decision may be a major breakthrough. It’s worth taking a closer look at the case, since the ruling may help other communities craft their appeals cases. It may also be a sign that the PRC is looking more critically at the Postal Service’s decision-making process, which bears not only on appeals cases but the Retail Access Optimization Initiative (RAOI). The Advisory Opinion on the RAOI plan to close up to 3,650 post offices should be coming out in mid-December, hopefully before Christmas, as we learned yesterday in a public hearing held by the PRC. (The podcast is here.)
The petitioners appealing the Innis decision argued that the Postal Service did not sufficiently consider the effects of closing the post office on the community, and they pointed to erroneous estimates provided by the Postal Service on the potential for population and economic growth in Innis. They also argued that the Postal Service had not given sufficient consideration to the closing’s impact on postal services. For example, there are 89 post office boxes in Innis, but room for only 56 at the post office where Innis customers are being directed. The neighboring post offices are also described as “located at cross roads in the middle of nowhere,” whereas Innis is a bona fide community. The PRC ruling found merit in these arguments, observing in its analysis that “the Commission cannot conclude that the Postal Service has given adequate consideration to the closing of the Innis post office on the community.”
The appeal also claimed the Postal Service’s estimate of cost savings was flawed. Innis had been without a postmaster since 2008, and revenues were pretty low and declining over the past three years. But the petitioners argued that the revenue declines were due at least partly to the fact that customers were taking their business elsewhere because of the “subpar performance” of the Office-in-Charge, who was eventually removed from the position.
According to the financial analysis, the Postal Service will save the employee salaries and benefits ($33,404) and annual rent ($2,400). The Postal Service did not figure in additional costs for the carriers because they already cover the territory, nor did it consider the loss in revenue from post office boxes that don’t move to another post office. The PRC observed that “the economic study should have included a more accurate analysis of the additional costs for rural delivery to the customers affected.”
Finally, the community proposed an alternate plan that involved closing two adjacent post offices in other communities, and the Postal Service seemed to like that idea, but then it was dropped with no explanation. The PRC felt that “having recognized possible merit in the alternative,” the Postal Serviced should have offered “an explanation for rejecting that alternative.”
Overall, it’s not quite clear why the Innis appeal was much stronger than many others that the PRC has rejected, like the appeal for the post office in Gwynedd, Pennsylvania, and Akron, Ohion. But it’s a welcome sign that the tide may be turning at the PRC, at least a little.
It wasn’t all good news at the PRC yesterday. The Commissioners affirmed the Postal Service’s decision to close the post offices in Minneapolis, North Carolina; Chillicothe, Iowa; and Pilot Grove, Iowa. Those post offices will now close, although it’s not clear if they will benefit by the suspension on closings that goes into effect on Friday of this week, which would at least keep them open through the holidays.
The vast majority of appeals are still open cases, and their number just keeps increasing in a totally unprecedented fashion. Here are some materials on the history of appeals:
November 17, 2011
There's an excellent piece in Time.com today entitled "How the U.S. Postal Service Fell Apart," by Josh Sanburn. Unlike most articles in the mainstream media, this one takes a thoughtfully balanced approach to the story. Postmaster General Donahoe is there to provide the Postal Service’s view, but there are also interviews and a narrative line that tell another side of the story.
Sanburn explains that the Postal Service is not in financial straits simply because of the Internet — the usual line that comes out of L'Enfant Plaza and that gets repeated in every media report — but rather because of the "toxic combination" of several additional factors, like the poor economy and congressional mandates on retirement and health benefit funds. The article also explains how closing thousands of post offices will have virtually no impact on solving the Postal Service’s budget crisis.
What’s best about the article, though, is the way it shows some appreciation for the postal system, something sorely missing in most news articles, which tend to paint the Postal Service as "irrelevant" and "obsolete," a doomed "dinosaur" headed for extinction, inevitably going the way of the Pony Express.
“It wouldn't be far-fetched to argue that the postal service has been the most important institution in our country's history,” writes Sanburn. The Founding Fathers thought the post office was important enough to include in the Constitution, the postal system delivered newspapers that helped keep people informed during the early years of the new nation, the Postal Service will do amazing things to get the mail delivered (like using mules, boats, and snowmobiles), and it still gets a letter anywhere you want for just 44 cents. The Postal Service has also provided jobs, thousands and thousands of them, and for a long time, the postal service was the largest public-sector employer in the country.
Sanburn goes back to the wildcat postal workers strike in the late 1960s to explain how the Department of the Post Office got turned into the US Postal Service in 1970. That’s basically when an essential government institution was transformed into a quasi-government entity that has been pushed to act more and more “like a business.”
The desire to see the Postal Service as nothing but a business now threatens the Postal Service itself, and many of its recent actions — like planning to close thousands of post offices — seem downright self-destructive. The Postmaster General is quoted in the article as saying that after it finishes with the 3,650 post offices now under closure study, the Postal Service will look at closing many more — a total of some 15,000 post offices — half the country's post offices.
If that were to happen, it would basically gut the Postal Service, prepare the way for privatization, and mean the end of one of the country's most valuable institutions.
It’s an interesting article. Check it out here.
(Photo credit: Mailmen starting their rounds at Christmas time, 1955, in front of the New York City main post office, now sold.)
November 15, 2011
Yesterday postal workers and neighbors fought back against the United States Postal Service over its plan to close the mail processing facility in Roanoke, Virginia. Roanoke.com has the story.
Note that according to the TV report, the District Manager told the crowd that over the last ten years, first-class mail volume has dropped 50%. But there were 104 billion pieces of first-class in 2000, and 78 billion in 2010. That's a drop of 25%. Where did the DM come up with his number? Out of thin air?