Village Post Office

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.

It looks like the first post office on the Retail Access Optimization Initiative (RAOI) may have closed already — weeks ago, in fact — but somehow the news slipped by under radar.  Plus, five more “Village Post Offices” (VPOs) have opened over the past few weeks, and hardly a word from the Postal Service about that either.  Today we learn from an article in Reuters that the Postmaster General is backing off the VPO “concept” altogether and revising plans for closing thousands of rural post offices.  Turns out many of the small towns where they planned on locating a VPO in a small business, like a mom-and-pop convenience store, don’t even have a place to put the VPO. 

New Village Post Offices

It had been several months since the first VPO opened in Red’s Hop N’ Market in Malone, Washington, and it was starting to look like Red’s might be not only the first VPO but also the last.  Not so.  Several more VPOs have opened over the past month, but it looks like the Postal Service has decided a “soft opening” was the way to go. 

The first part of this VPO story was broken by Jay Bigalke in Linn’s Stamp Magazine, which recently reported that there were three new VPOs in Michigan — in Twining, Tower, and Brant.   Who knew?  There were a few short reports in the local Michigan media, but the openings occurred without any of the hoopla deployed by the Postal Service when the first VPO opened in in Malone.  That one was accompanied by photos, press releases, news reports featuring quotes from USPS VP Dean Granholm, and even a CNN TV spot.   

The Stamps article on the new VPOs came up during testimony before the Postal Regulatory Commission last Friday, when James Boldt, the man running the RAOI, was asked about it by PRC Chairman Ruth Goldway.  (The webcast is here.) There was some confusion about how many VPOs actually existed at that moment.  Boldt indicated that later the same day (October 28), a fourth VPO would be opening in Star Tannery, Virginia, but with one in Malone and three in Michigan, that would have been the fifth.  (And according to the Reuters article, there are actually six.) 

Boldt seemed almost giddy that another VPO “grand opening” would be happening in “just an hour,” and he was sorry he couldn’t be there and had instead to be present for a grilling by the PRC’s commissioners, the Public Representative, and representatives of the postmasters associations.  No doubt he would have preferred to be anywhere but the PRC hearing room.  But didn't Boldt get the memo?  Hadn't the Postmaster General told him that the Village Post Office concept was being revised and there was no reason to get too excited about another "grand opening"?

The VPO concept, come and gone? 

In July when the RAOI was announced, it was accompanied by the unveiling of a great "new concept" — the "Village Post Office" — basically a watered-down version of the "contract postal unit," which puts a postal counter in a private business.  There had been talk of opening a couple of thousand VPOs, and the Village Post Office concept was used to pacify citizens at many community meetings on post office closings.  "Don’t worry so much about losing your post office," USPS management told patrons at these meetings.  "We’ll replace it with a Village Post Office.”

But now Postmaster General Patrick Donahoe says, in the Reuters story that its plan to replace post offices with “Village Post Offices” will not work in many rural communities because there’s no business in which to locate the VPO.  "When you get west of the Mississippi,” Donahoe said, “it's more prevalent that you don't have stores in these communities, you have nothing in these communities. It's pretty much just the post office."  And they didn’t know this before they rolled out the VPO concept? 

The Postal Service says that at this point, in addition to the six VPOs already up and running, one more opens next week, four more are finalizing the deal, 30 others are in various stages of contract developing, and about 400 inquiries have come in. 

But it’s hard to imagine a significant number of VPOs ever opening.  The future is in putting postal services not in mom-and-pop convenience stores but in large chains like Walmart, Staples, and CVS.  These do not require the kind of one-on-one contract negotiation, training, and oversight required when a VPO opens in an owner-operated store.  The VPO was never going to happen on a large scale.  It was mainly a dodge so that it wouldn’t look like the Postal Service was abandoning its universal service obligation.  

In any case, the Postal Service is going to have to look elsewhere.  As the PRC’s Ruth Goldway put it in the Reuters article, “It's not going to be their great solution to the problem."  So now the Postal Service is talking about keeping some of those small rural post offices open, but for fewer hours — and for less pay and benefits for postmasters.

The first RAOI post office closes . . . maybe

In written response to a question from the PRC about the status of post offices on the RAOI, the Postal Service replied that "as of November 1, 2011, no Final Determinations have been posted as part of the RAO Initiative."  However, the post office in Tower, Michigan (49792) appears on the USPS website's RAOI "Expanded Study List" for Michigan.  And this news account sure makes it look like Tower closed.  Plus, the Tower post office no longer appears on the USPS Locator page.  

So it would appear that Tower, MI, is the first of the RAOI post offices to close.  But how could that have happened already?  The closing process implemented in July as part of the RAOI is supposed to take five months, so it seemed as if no post office would close under the Initiative until the end of the year.  What happened?

The RAOI list released on July 26, 2011, includes 265 post offices that had been initiated for closure study but had not progressed to the community meeting stage.  It’s possible that Tower was well along in the 60-day comment period by July 26, and perhaps a community meeting took place soon after.  Maybe the post office received its Final Determination notice in early August.  But the soonest it should have closed would have been 60 days later — early October.

The Postal Service is rolling out its inaugural “Village Post Office” this week, and it's the cutest little place you ever saw.  It’s called “Red’s Hop N’ Market,” and it’s located in the small town of Malone, Washington, pop. 473.

The Postal Service closed Malone’s post office on August 9, and it opened the Village Post Office (VPO) in Red’s the next day, right across the road.  Talk about a smooth transition.  And the Postal Service did an outstanding job staging the debut.  All that was missing was the ribbon-cutting ceremony. 

Red’s looks like the quintessential mom-and-pop convenience store.  Red himself isn’t around, but it’s definitely a family-run business — Cheryl Lee and family have been running the store for the past five years.  The Postal Service wasn’t taking the event lightly, and it brought out the heavy hitters for the news media — Dean Granholm, VP of USPS operations, and Lee Fritschler, a scholar at George Mason University. 

“Malone was costing us about $85,000 to $90,000 a year and was bringing in less than $20,000 a year,” Granholm told American Public Media’s Marketplace, which did a spot on the “debut.”  Putting a scaled-down version of the post office inside a store will be much cheaper to operate.

How much cheaper isn’t clear.  The old post office, which had been there since 1982, was paying $450 a month, just $5,400 a year — pretty typical for a small rural post office.  The salary for the postmaster and two part-time postmaster reliefs (PMRs) may be a cost-saving, but postal workers at other locations will have to pick up some of the slack, and there’s also a fee to be paid to Red’s.  

Plus, folks in Malone are going to have put some extra gas in the tank to drive five miles to Elma when they need to do things you can’t do at Red’s — like anything requiring weighing, rating, scanning or tracking (there's no Contract Access Retail System at Red's), plus money orders, passports, bulk mailings, change of address forms, etc.  Given how limited the Village Post Office is in the services it provides, maybe VPO should stand for "virtual post office."  But there will be nothing virtual about the extra gas folks will have to pay for — not that this cost will show up on the Postal Service’s books.  

Marketplace doesn’t provide any details about the contract with Red’s.  It’s probably similar to the way they set up a “contract postal unit” (CPU). For a small operation, the Postal Service and business arrange a firm-fixed contract, in which the business is paid a fixed annual rate in twelve monthly installments.  Marketplace says the Postal Service paid Red’s $2,000 to become the new Village Post.  That's the annual fee, and it includes retail space.  It's not much (it ought to be the monthly fee), it's locked in for two years, and it's almost impossible to get an increase out of the Postal Service.  That's one of the main reasons businesses drop their CPU contracts.

The Markpetplace report also doesn’t say anything about how Red’s was selected to be a Village Post Office.  In its responses to interrogatories for the PRC Advisory Opinion, the Postal Service said that to get a VPO started, “management in the field will solicit vendor bids, and they will award firm fixed price (flat fee) contracts establishing the terms and conditions under which each VPO will operate.” 

There’s no mention of the solicitation of vendor bids in the Marketplace piece.  Maybe the Postal Service skipped that stage of the process.  CPU contracts are supposed to be competitive, but the Postal Service can use a “noncompetitive purchase method” when it’s done business with the retailer before in other locations or when “the proposed CPU is the only supplier capable of providing or willing to provide the service needed” (Postal Employees Guide to Contract Postal Units). That may have been the case with Malone — it’s not as if there are a lot of other convenience stores in town.  But does that mean the Postal Service is going to skip competitive bidding on a couple of thousand Village Post Offices since most of them are going to be in places like Malone? 

On July 26, 1775, the U.S. postal system was established by the Second Continental Congress, with Benjamin Franklin as its first postmaster general.  In its profound wisdom, the Postal Service chose July 26 to release a list of 3,653 post offices that will it be studying for closure over the coming months.  The list even includes the B Free Franklin post office, a museum dedicated to Ben Franklin and the creation of the post office. 

The next day the Postal Service released a second list, this one with 727 post offices, stations and branches already heading for discontinuance.  (A list of 727 post offices released on 7/27.  They know how to pick their dates.)  That’s 4,380 post offices, and it doesn’t include at least 150 that have been closed over the past several months, and probably a few hundred that have fallen in the cracks.

If you want to get a sense of what all those closures look like, check out the interactive map of the closing list presented on Tuesday.  You’ll see the whole country blue with markers indicating the post offices slated for closing.  The map says it all.

We’re witnessing the largest effort to close post offices in the country’s history.   For the past 40 years—since the Postal Service was created out of the old Department of the Post Office—they’ve closed post offices at the rate of about a hundred a year.  Over the coming year, they want to close 30 or 40 times that many, and over the next six years, 16,000—half the country’s post offices. 

There have been over three thousand news reports about the release of the closing list this week, and nearly every one says the same thing — basically the USPS press release about how much money the Postal Service is losing and how everyone is using email, and nothing about what's really behind the mass closures, nothing about the huge corporations that have been making billions off the Postal Service for years, nothing about how "rightsizing" the postal system is part of a plan to privatize it. 

Most of the articles also repeat the Postal Service’s line that just because a post office is on the list doesn’t mean it will ultimately close.  Some articles make it sound like the Postal Service isn't really serious about closing all those post offices—it's just "mulling" it over.  This is just wishful thinking designed to put everyone back to sleep.  

(By the way, speaking of how the news media are covering the story, don’t miss the Washington Post editorial endorsing the Ross-Issa Postal Reform Act.  Who wrote this thing, Fred Smith or the Cato Institute?)

Nowhere in the reporting on what’s going on will you read what should be obvious.  The Postal Service is not going to stop with the lists this week.  It is closing down our post offices, period.  It will continue to develop its “alternative retail network” of kiosks, contract postal units, and internet business so that in six years, there will be no need for post offices at all, and they can proceed to close the rest, perhaps leaving the cream, a couple of thousand of the big money-makers, probably to be sold off to a private corporation.

The best part is the way the Postal Service puts an Orwellian spin on the whole sorry business.  Downsizing postal workers out of their jobs is called "rightsizing," and now they call the push to close 3,653 post offices a “Retail Access Optimization Initiative."  On the website where the Postal Service lists the post offices being studied for closure, they call it the “Expanded Access Study List.”  Only the Postal Service could close thousands of post offices and call it “expanded access.”  And killing post offices—oh, that’s called “consolidating,” “discontinuing,” and “optimizing.”   

The major media outlets are finally reporting, as we’ve known for several days now, that over 3,600 post offices are being targeted for closure in the Postal Service's new plan, but here’s the real news.  The Postal Service is also unveiling its “replacement strategy” for communities that lose their post office, and it turns out to be a “plan to have third-party retailers provide services in places that lose a post office.”

Postal Service spokeswoman Sue Brennan explains: “If you're a community and there is a local convenience store, for example, we might be reaching out to these organizations to see if they would be interested in providing limited postal service for the community that might be affected."

Such arrangements will likely be put in place place in "communities that have existing businesses, mom and pop shops -- some type of local business that could also provide postal services," Brennan told CNNMoney.

Postmaster General Donahoe referred to the strategy as a new "village post office concept." "We're finding a lot of interest with small businesses who say, 'I'll gladly sell stamps and provide package services,' " he said. Of the 3,653 post offices on the list being released Tuesday, 2,500 potentially qualify for the "village" concept, he estimated. In other cases, the agency could move postal services to a neighboring town.

So this is the “new concept” that the PMG referred to last week?  A $70-billion-a-year operation, and this all they’ve come up with?  A few days ago I joked that the “new concept” was going to be contracting out postal services to Starbucks.  That was supposed to be funny.  The only thing I got wrong, it seems, was the name of the business.  It’s not Starbucks, it’s your local 7-11 and Charlies' gift shop.

While the Postal Service may want to make this idea sound homey with its talk about "mom-and-pop stores" and the "village post office," there’s nothing new about contracting out postal services.  It’s called a “contract postal unit” or CPU, and as of 2010, there were some 2,931 CPUs in the country, as well as 763 “community post offices" or CPOs.

According to the 2009 Postal Employees Guide to Contract Postal Units, a CPU is “a supplier-owned or supplier-leased site operated by the supplier under contract to the Postal Service to provide postal services to the public at postal prices.”  A CPO is closely related—that's a contract postal unit in which a small rural community, rather than a local business, assumes the responsibilities of providing postal services.

The USPS publication “Foundation for the Future” (2010-2011) states further that “most CPUs offer the same basic services available at Post Offices.  CPUs are staffed by the host retailer, typically in supermarkets, card and gift shops, colleges, and similar locations.”

The Postal Service has also made arrangements with private retailers, typically a packaging service, to sell stamps and some postal services.  These retailers charge customers a service fee in addition to the postage and shipping costs.  These are not CPUs because they receive no fee from the Postal Service.  

From what Ms. Brennan is quoted as saying, the "replacement strategy" sounds more like a CPU than this other sort of arrangement.  In any case, the PMG may come up with a new type of CPU, but for now there are two: