August 12, 2013
One might think that a good financial report would be welcome news to postal management, but good news isn’t good when you’re trying to justify downsizing, service cuts, and more dismantling.
The third quarter financial report came out last week, and it looks like the Postal Service is having a decent year. Maybe the worst is over. Maybe the upturn in the economy will mean increases in mail volumes and revenues, and maybe it won't be necessary to end Saturday delivery or close your post office or change you over to a cluster box.
That possibility is not helpful in advancing the narrative that postal management and legislators want us to believe, so the USPS press release accompanying the new report spins the numbers to make it seem the good news isn’t so good after all. The major news outlets apparently think that reporting means paraphrasing a press release, so now millions of people are all getting the same message — things are a little better at the post office but still terrible, so the cuts must go on.
The media report the press release
The title of the press release is “Postal Service actions to improve efficiency help to lower third quarter loss.” It begins by stating, “The U.S. Postal Service ended the third quarter of its 2013 fiscal year (April 1 - June 30) with a net loss of $740 million, increasing the year-to-date net loss to $3.9 billion. Aggressive Postal Service actions to contain costs and increase efficiency, along with a decrease in workers' compensation expense due to fluctuations of discount rates, prevented the financial loss from being greater.”
There’s not a word in that opening paragraph about the real cause of the deficit — the Congressional mandate to prefund retiree health care benefits for decades into the future. The payment for the third quarter was $1.4 billion, and for the first three quarters, $4.2 billion. Were it not for this obligation, the Postal Service would have shown a profit of over $300 million for the year-to-date — and $700 million for the third quarter.
Even though they are right there in the Q3 financial report, it’s hard to find those numbers in the mainstream news media. Instead, ever dutiful, they repeat what the USPS press release says.
The New York Times article is entitled, “Postal Service is Still Losing Money, but not Quite as Much.” The Wall Street Journal says, “Postal Loss Shrinks From Year Earlier on Cost Cuts.” The Washington Post headline is "Postal Service Financials Improve, but Big Losses Continue." The AP story begins, “The Postal Service has trimmed its losses to $740 million over the last three months by consolidating processing facilities, cutting hours for workers and post offices and reducing workers’ compensation costs, the agency said Friday.”
According to the press release and the media reports, then, the Postal Service may be losing a little less money but it continues to post billion dollar losses, and it’s thanks only to the cost-cutting efforts of postal management that the losses aren’t worse. But there’s a lot more to the story, and most of it is not in the press release.
December 23, 2011
Over the past couple of weeks, numerous local news outlets around the country have published op-ed pieces and "letters to the editor" written by District Managers of the Postal Service. The writers argue that Congress needs to give the Postal Service more freedom to act like a business so that it can return to profitability. They advocate going to five-day delivery, allowing the Postal Service to more effectively manage its health care and retirement systems, optimizing the processing and delivery network, and replacing brick-and-mortar post office with postal transactions in gas stations, grocery stores and pharmacies.
The interesting thing about these opinion pieces is that, with a few minor variations, they are all the same — word for word. Fifteen District Managers submitted the same editorial to their local newspaper, signed with his or her own name, even though the piece was written by some unnamed person in postal headquarters. A few of the authors took the time to move the paragraphs around or to add a sentence or two of their own, but by and large, it's the same piece, over and over again. (Update: Make that twenty-eight DMs.)
It’s no surprise that District Managers would be handing out the company line like that. They do it all the time at public meetings about post office closings. But putting your name on an editorial that someone else wrote seems odd, to say the least. One wonders how many of those Op-Ed-page editors would have published the piece if they knew that it was written not by a respected USPS executive living in the area served by the newspaper but by an anonymous person in Washington, DC.
It’s sad to see that postal headquarters did not trust its District Managers to express their own thoughts about what’s going on. Was there really a risk that they would go off message or say the wrong thing? Couldn’t these highly paid managers (a DM gets about $170,000 a year) write their own editorials?
If the postal propaganda machine is this clumsy about putting out a message, it makes one question whether they can get anything right. Doesn’t the Postal Service have enough credibility problems already?
A couple of months ago the Postal Service issued a new "Social Media Policy" that limits the freedom of employees to express themselves on sites like Facebook and “Save the Post Office.” These guidelines have had a chilling effect and made it very difficult for postal workers to say what’s on their minds. Now it turns out even District Managers aren’t allowed to speak their minds.
The message from Headquarters to postal employees is clear: Say what we tell you to say, or keep quiet.
That might be fine if the Postal Service were a private corporation, but it’s not. It’s an agency of the United States government, and everyone — including postal workers — ought to be able to express themselves freely and to criticize the government and its agencies if they want to.
December 7, 2011
The New York Times has an opinion forum today with six contributors weighing in on the Postal Service’s plan to eliminate next-day delivery for first-class mail. One of the contributors is yours truly, Steve Hutkins of “Save the Post Office,” so many thanks to the Times and editor Katy Roberts for the opportunity to tell a different story about what’s going on. You can see the piece here, and there’s an excellent contribution from Frederic V. Rolando, president of the National Association of Letter Carriers, here.
Accompanying my piece is a graphic that shows just how badly mail volumes are dropping. The graphic seems to challenge my main point — the “crisis” of the Postal Service is a “manufactured emergency.” So let’s take a look at the chart. (Click on it to enlarge, and click to return.)
The top line shows that “the great bulk of postal volume” was “in decline even before the recession.” True, total volumes did decline a slight amount before the recession — there were 213 billion pieces in 2006, and 212.2 billion in 2007. But the dramatic fall begins in 2008, when volumes dropped to 202.7 billion, and they dropped even more precipitously in 2009, to 177.1 billion. (The recession officially began in December 2007.)
The second line in the Times’ chart is for “standard mail,” which obviously tanked during the recession. That’s because a lot of standard mail is advertising mail, and advertisers didn’t have as much money to spend during the recession. Those mail volumes are now leveling off, and they may start rising again if the economy can pick up steam.
Note that both total volume and standard mail volume are actually still up for the decade (10% and 17% respectively). Yet the number of postal workers handling all that mail has decreased dramatically since 2000. Back then, there were over 900,000 postal employees; by 2010, the workforce had been reduced to about 672,000. The Postal Service wants to cut it down to 425,000 by 2015.
The next line in the graphic is for total first-class mail, and the Times writes, “This continues to erode, as people turn to electronic means to pay bills and writer letters. About 15% of advertising mail is sent first class — that, too, is falling.”
Actually, before the recession, bulk first-class mail (much of it advertising mail) was increasing (albeit slightly) and making up for some of the loss in single-piece first-class. Like standard mail, however, bulk first-class is very vulnerable to economic bad times, so it’s been declining too as a result of the recession.
The fourth line in the chart shows something called “first-class mail: transactions,” and it’s about paying bills online. That’s down 3% over ten years — hardly anything to get alarmed about.
And finally, there’s a line showing the steady decline in personal first-class mail, down 31% since 2000. As the graphic shows, this decline has been very steady, about 3% a year, or as the Times prefers to say, it’s “shrinking relentlessly.” This is clearly about “electronic divergence” to the Internet and not the recession, but there’s nothing new about this problem, and it’s hardly an emergency that calls for draconian cuts. It’s a long-term, gradual, systemic problem that calls for long-term, gradual changes — perhaps gradual downsizing, but preferably alternatives, like giving the Postal Service the ability to develop new products and services to make up for the lost revenue.
The theme of the chart is that mail volumes are declining dramatically, so there really is a “crisis” and my point in the article that it’s “manufactured” is simply wrong. But the lines show that the steep declines in volume occurred in conjunction with the recession. That’s the real crisis, and the Postal Service and others are using it to justify changes to the postal system that people have wanted to make for a long time — long before the recession.
The following chart shows quarterly changes in total mail volume (by percent) since 1989. As you can see, there are always ups and downs, but the three the periods with steep declines were all associated with recessions (the gray bars). The "Great Recession" of 2008-2009 caused the steepest decline of all, by far:
November 25, 2011
The New York Times welcomes the holiday season with a 300-word editorial entitled “Overhauling the Post Office for the 21ST Century.” The piece gets so many things wrong that it would be laughable if it weren’t so maddening. It’s really the Times’ editorial staff that ought to overhauled.
On five-day delivery
First, the Times calls the request from management to end Saturday delivery “reasonable,” and says it would save $3 billion a year. But the Postal Regulatory Commission — the agency responsible for regulating the Postal Service — took up the issue of five-day delivery in an Advisory Opinion issued in March 2011. Based on data provided by the Postal Service, the PRC found that the cost savings would be far less than the Postal Service claimed — more on the order of $1.7 billion. (The Postal Service never challenged the PRC's analysis.)
More important — and the Times says nothing about this — the PRC found that eliminating Saturday delivery would have many adverse effects. It’s not just about the inconvenience of not getting your mail on Saturday. Cutting Saturday delivery would also cause 25% of First Class and Priority mail to be delayed two days.
Add that delay to yet further delays caused by consolidation of 500 mail processing plants down to 135 facilities (120 P&DC's and 15 hubs) — a plan now being implemented — and delivery times will slow down even more. If you’re used to seeing your mail delivered in one or two days, think three or four, or more. Eliminating Saturday delivery would also hurt some people more than others, like people in rural areas and small businesses, or people waiting for medicine or perishable matter.
Given all the problems with cutting Saturday delivery, you have to ask, who's behind it? In the PRC Advisory Opinion, one of the main advocates was Valpak, the direct mail company that sends you the blue envelope filled with coupons. And why would they back five-day delivery? Simple. Anything that keeps the Postal Service's costs down also keeps postage rates down. Valpak and many others in the bulk mail industry don't care if you get their mailings on Saturday or Tuesday or whenever, so long as the rates they pay are as low as possible. Apparently the New York Times doesn't care when you get its newspapers delivered either.
On Village Post Offices
The Times goes on to say, “Congress needs to produce a bill that allows the Saturday shutdown as well as the closure of up to 3,700 local post offices where service would be continued through automated outlets at neighborhood businesses.”
It’s hard to imagine where the Times got the idea that the Postal Service wants to replace 3,700 post offices with “automated outlets at neighborhood businesses.” The Times must be referring to the “Village Post Office” concept — the Postal Service’s plan to contract with a local business so it can provide basic postal services. But this concept has nothing to do with automation. It’s not about putting an “automated postal center” or postal kiosk in a business.
Rather, the Village Post Office is about allowing a local business to sell stamps and flat-rate boxes. And that is all a Village Post Office can do. The folks working in the local business cannot weigh packages, do registered or express mail, sell money orders, or any of the other things a post office does. In other words, a Village Post Office is not a post office at all. It’s just a place to buy stamps.
The idea for the Village Post Office was released last August amidst much ballyhoo about what a great new “concept” it was. It would save the Postal Service money and help a local business bring in new revenue. (The business is paid a couple of thousand dollars per year but makes no money on the stamps or flat-rate boxes.) Supposedly people coming in for stamps would buy something else. Forget about the fact that in a small town, people are going into that local business anyway.
Grand as it all sounded, the Village Post Office idea ran into a little trouble, and so far, some four months later, the Postal Service has established just five VPOs. Turns out a large number of the 3,700 communities where the Postal Service planned to locate a VPO didn’t even have a business where you could put one. The Postmaster General has recently backed off the concept and said he needed to find an alternative to this alternative.
(It’s possible the Postal Service has leaked to the Times that its newest concept is to put 3,700 automated kiosks in local businesses, but if that’s the case, the Times has buried a terrific scoop inside a silly editorial.)
On post office closings
The Times also makes it seem like the Postmaster General is interested in closing only 3,700 post offices. That is the number of offices on the Retail Access Optimization Initiative (RAOI), the plan released in July that is now being reviewed by the PRC, as it's being implemented by the Postal Service. (Actually, the original number was 3,650, and about 200 have already been removed from the list.)
However, far more than 3,700 post offices are going to close. In a recent article in Time.com, the Postmaster General is quoted as saying, “We'll probably look at 15,000 post offices rather than just 3,700.” That’s half the country’s post offices.
And it’s not as if the Postal Service is waiting on the PRC’s Advisory Opinion or new legislation to get the process started. A few days ago, the Postmaster General told the National Press Club that the Postal Service had closed 500 post offices this year. At least a hundred more have received a “Final Determination” notice saying they would close in 60 days. There’s a temporary suspension on closures until January 3rd, but those post offices will close soon after the New Year.
While many of the closures have been reported in the local news, there’s been little attention in the national media to these closings. The Postal Service has not even produced a list of the closings. In Great Britain, where they have closed over 7,000 post offices over the past few years, there’s a phenomenon called “the secret closure programme” — closings that happen “quietly,” under the radar of the media. The same thing is happening here.
The cost savings from closing post offices is surprisingly small. The Postal Service says closing the 3,650 offices on the RAOI list would save $200 million a year — about 0.3% of its annual budget — and even that estimate may be inflated. As we’ve seen in the appeals on closings that communities have brought to the PRC, the amount of savings for closing an individual office is consistently inflated by the Postal Service, and several closing decisions have been questioned by the Commissioners for precisely that reason.
Now, closing 15,000 post offices might realize more significant savings, perhaps over a billion dollars a year. But at what cost, and at whose expense?
Think about all the extra driving closing half our post offices would cause, all the fuel consumption, pollution, and gas money and extra time each person would need to spend on postal matters. Think about the harm to small businesses that go to the post office once or twice a day. Think about all the people who walk to the post office, like seniors or people who don’t have a car, who won’t be able to get to a post office at all. Think about the communities — small rural towns, inner-city neighborhoods, and suburbs too — that will lose an important social and economic hub. For many towns, the post office is a nexus of its identity — close the post office, take away the zip code, and the place isn’t a place anymore.
On the legislation
The Times editorial also refers to the House bill, legislation crafted by Tea Party congressmen Darrell Issa and Dennis Ross on behalf of the right-wing, anti-government, anti-union 1% in this country — people like the billionaire Koch brothers, who are large campaign contributors to Issa and Ross and whose Cato Institute has been cranking out studies advocating the privatization of the post office for years.