Staplizing the Post Office: A dozen reasons to just say no


January 9, 2014

Back in November, the Postal Service quietly announced that it was setting up postal counters in a couple of Staples stores in San Jose and South San Francisco.  The website Going Postal broke the Staples story a few days later with its report about a pilot program that included 82 Staples stores in areas around San Francisco, San Diego, Atlanta, Pittsburgh, and west of Boston.  (A list and larger map are here.)

The APWU was quick to challenge the program as an attack on postal workers, and earlier this week, the APWU announced what it planned to do about it.  On January 18, the union will send delegations to Staples stores in their communities to meet with store managers and protest the postal counters.  After the visits, the APWU plans to organize a day of action at Staples stores around the country, followed by sustained actions at a number of stores where postal retail units have opened.

The Postal Service hasn’t had much to say about the pilot program.  The only press releases on the USPS.com website are the two from back in November about San Jose and South San Francisco.  But putting postal counters in Staples represents a big step.  As the San Jose press release says, “The first of its kind, the USPS/Staples program offers access to postal products and services inside select local Staples stores.  Once inside, customers will find a familiar looking counter resembling a mini post office containing the most popular postal products and services.” 

One wonders why the Postal Service hasn’t made a bigger deal out of the new pilot.  In the past, the Postal Service has not been shy about its vast network of alternate retail access channels.  In 2011, it ran an ad campaign called “USPS Everywhere” boasting about the 100,000 places you could do some postal business, and it constantly mentions all the alternatives to post offices.

Among these alternatives are over 65,000 places where one can buy stamps, and they include several big box retail chains like Walgreens and Wal-Marts.  But the Staples arrangement is new and different. 

As a Postal Service spokesperson explained yesterday, the postal counters are basically Contract Postal Units, which offer a much wider range of products and services than simply stamps.  CPUs have long been a source of contention with the APWU, but there are only about 3,300 of them right now, the number goes down each year, and they are usually independent operations, not part of a big chain.  The prospect of thousands of new CPUs being put in big box stores takes the CPU model to a whole new level.  

That seems to be where this is headed.  As a recent USPS OIG report on CPUs revealed, "According to management, initiatives to expand CPUs and increase retail alternatives at contractor operated locations are an ongoing effort.  In January 2012, the Postal Service issued a request for information to 80 large national retailers regarding interest in establishing partnerships."    

The Postal Service says the new Staples program will give customers an additional option and more access to postal services.  But is putting postal counters inside of big box stores really a good idea?  Here are a dozen reasons why it’s not.

 

1. It could lead to the closure of thousands of post offices.

There's a little-noted passage in Darrell’s Issa’s Postal Reform Act of 2013 that paves the way for replacing thousands of post offices with contract postal units like the mini post offices in Staples.  

Section 103 of the bill is entitled “Efficient and Flexible Universal Postal Service.”  It says that the right to appeal a post office closing to the Postal Regulatory Commission “shall not apply to a determination of the Postal Service to close a post office if there is located, within 2 miles of such post office, a qualified contract postal unit.”  By "qualified," the bill means a CPU that opened less than a year before the post office closed, so it would apply basically to new CPUs and not those that have been around for a long time.

There are over 1,200 post offices within two miles of a Staples store.  If the Staples pilot program were expanded to all 1,600 Staples and Issa’s postal reform legislation were to pass with the Section 103 provision in place, all 1,200 of these post offices could be closed without so much as an appeal to the PRC.  About 165 of them are historic post offices, on or eligible for the National Register.  They too could be closed without appeal.

If post offices are replaced by postal counters in Staples, another potential problem is that one day Staples could decide to eliminate the counter.  It's also possible that Staples might close some stores with postal counters.  That would leave the community without a post office at all.

This map shows all the Staples stores (red) and all the post offices (blue) located within the same zip code area.  If you click on the marker for a Staples store, it will show the distance to the nearest post office.

The list of the Staples stores and nearby post offices on which this map is based can be found here, and a larger version of the map, which can be filtered by state, distance, etc., is here.  The distances are "as the crow flies," which is apparently also how Issa’s bill is considering the distances.  Actual driving distances are generally about 10 or 20 percent further.  

The full list shows that about 1,360 of the 1,600 Staples stores are located in the same zip code area as a post office.  In some cases, there’s more than one post office in the same zip code.  For a couple of hundred Staples stores, there’s not a post office in the same zip, but there's probably one nearby.  You can look for Staples locations here and post office locations here.  The map, by the way, may have a few errors due to geocoding problems, and a few stores may be missing.  

 

2. It’s all about closing post offices.

The Postal Service may say that putting postal counters in Staples is just about “expanding access” to its services, but initiatives like this are not intended simply to enhance customer convenience or bring in more revenue.  They are always about closing post offices. 

Nearly every study on cutting costs at the Postal Service or moving toward privatization recommends closing post offices and replacing them with counters in private businesses.  This was one of the principle recommendations of the Bush Commission on the Postal Service in 2003 (it claimed the reason was that people complained about having to go to the post office), and that’s why expanding access was mandated in the 2006 Postal Accountability and Enhancement Act. 

Every time the GAO comes out with a report on how to deal with the Postal Service’s financial situation, it suggests replacing post offices with private retail units, as it did in this 2012 report on “Challenges Related to Restructuring the Postal Service’s Retail Network.”

More recently, a study on postal hybridization commissioned by the National Academy of Public Administration and Pitney Bowes recommended privatizing the retail network by closing post offices and authorizing “retail stores, gas stations, schools, coffee shops, movie theaters, or any other location that is interested and meets USPS requirements . . . to set up shop to provide postal services.”

Every time a post office is studied for closure, the Postal Service identifies the numerous alternative access points in the area and uses them as a justification for closing the post office.  The list of alternatives is included in the proposal to discontinue and the final determination, and it’s mentioned at the public meeting and the press release. 

The Postal Service is very clear about its intentions.  In the USPS press release on the discontinuance of the Dubuque Station post office in South San Francisco (which is located just a couple of miles from the Staples where a postal counter has opened), the Postal Service offers the following explanation for the proposed closure:

"A generation ago customers had no choice but to visit a Post Office to buy stamps or ship a package, but today it’s not just about brick-and-mortar Post Offices as USPS moves online and into retail outlets, grocery stores, office supply chains and pharmacies. There are now over 100,000 locations outside of Post Offices to buy stamps and ship packages. In fact, over 40 percent of Postal Service retail revenue now comes in through expanded access channels."

The big mailers are also advocates of shifting postal retail to private businesses.  They see it as a way for the Postal Service to cut costs and thereby avoid rate increases.  Valpak spoke for many of the mailers when it made the case for contract units in its brief on the Retail Access Optimization Initiative (RAOI), the 2011 plan to close 3,700 post offices. 

Valpak observed that many countries, such as Australia, Canada, Germany, and Sweden, have been able to reduce their brick-and-mortar retail facilities by successfully outsourcing to private sector establishments.  The U.S. Postal Service, argued Valpak, should do the same because it’s a “reasonable, perhaps the best available, solution for fulfilling the universal service obligation to provide citizens with ready access to the postal network.”  As Valpak explained, the costs of operating contract units are far less than operating regular post offices.

 

3. It's not necessary — there’s always a post office nearby

Since one of the justifications for closing a post office is the availability of nearby alternatives, one has to ask: If there’s no need for a post office when there are alternatives around it, why do we need a postal counter in a Staples when there’s a post office nearby?  

This map shows the 82 Staples stores with a new postal counter (red markers) and all the post offices around it (blue markers).  You can drag the map to navigate to other areas of the country.

There is already plenty of access to post offices in the communities where there’s a Staples store.  The average distance from the 1,360 Staples stores to the 1,730 post offices that share the same zip code is 1.6 miles, and 1,530 of these post offices are less than three miles from a Staples.  Those are just the kind of distances the Postal Service cites when it points to alternative retail outlets around a post office that's closing.

Some people may say they would prefer to go to Staples for postal business because the hours are more convenient or because the lines are too long at the post office.  But opening a postal counter at Staples is not the way to solve those problems.  Rather than cutting hours at 13,000 post offices under POStPlan, the Postal Service should be expanding hours where there’s demand for it.  And if the lines are too long, why not open another window at a post office instead of opening a counter at Staples?

 

4. It threatens the sanctity and security of the mail.

One of the most important responsibilities of the Postal Service is to preserve and protect the security and sanctity of the mail.  As the Postmasters Training Guide puts it, “Maintaining sanctity of the mail is a public trust vested in each postal employee. Failure to uphold this trust may result in the postal employee’s removal from the Postal Service as well as possible criminal prosecution resulting in fines and/or imprisonment.”

In order to ensure the security of the mail and prevent unauthorized opening, tampering, delay, and theft, the Postal Service has implemented rigorous guidelines, like restricting access to workrooms to authorized on-duty Postal Service employees and authorized contractors.  Postal workers can get in serious trouble for infractions of the Code of Ethical Conduct. The OIG and Postal Inspection Service are constantly investigating fraud, theft, and other threats to the security of the mail.

Because of the emphasis it places on the sanctity of the mail, the Postal Service ranked as the fourth most trusted company in the country in a 2013 survey, and it was named the "Most Trusted Government Agency” for the seventh year in a row.  People have confidence in the Postal Service’s ability to handle and protect their information.

Will people feel this same level of trust and confidence when they do business at the mini post office in a Staples store?  Will the guidelines restricting access to the mail be as rigorous at Staples as they are at the post office?  Will Staples employees be obligated to follow the same Code of Ethics that postal employees must obey?

 

5. It's not good for customers.

Another problem with putting postal counters in Staples is that its employees do not have the experience or expertise that career postal clerks possess.  That’s one reason why the postal counters won’t offer the full range of Postal Service products and services.

According to the USPS press release about the pilot in San Jose, the postal products available in the San Jose Staples stores include stamps, First-Class Domestic and International Mail and package services, Priority Mail, Priority Mail Express, Domestic and International, Global Express Guaranteed and Standard Post.  That may sound like a lot, but it’s missing many things you get at the post office, like PO boxes, passports, certified mail, insured mail, signature confirmation, and so on.

Then there’s the matter of the experience and knowledge of the person behind the counter.  “Staples associates,” says the press release, “are fully trained to assist in all these services.”  Perhaps, but most of the postal workers who serve you at the post office have been doing the job for many years, while the Staples associate has been at it for a couple of months.  The turnover at Staples is probably higher than at the post office, so it’s not likely that the associate at the postal counter is going to acquire the experience or expertise of a postal worker.

It’s easy to denigrate the expertise of postal workers and think anyone can do the job, but there are thousands of small towns out there right now where residents will tell you that things aren’t the same at their post office since their career postmaster left and got replaced by an inexperienced part-time worker as a result of POStPlan.

 

6. It gives up revenue.

The Postal Service has not released any information about the financial details of its partnership with Staples, and it’s not likely to do so.  But with contract postal units like this, there are several possibilities — a fixed-fee contract or a performance-based system or some mix of the two.  The various types of arrangement are described in the Postal Service's Employees' Guide to Contract Postal Units.

Traditionally, CPUs were paid a set annual amount, regardless of how much business they did, under a firm-fixed price contract.  It’s possible the Postal Service is simply paying Staples a flat amount for each counter.  In fact, one news report about the pilot is headlined, “USPS Will Pay Rent to Local Staples Store.”

Over the past few years, the Postal Service has been switching from the fixed fee to performance-based contracts in which the host business gets a percent of the sales.  In negotiating with each business, the Postal Service tries to keep the percentage as low as possible, but it ranges from 6% to 10% of gross "walk-in" revenues.  Sometimes the arrangement is a little more complicated, with a straight or split percentage of all sales or a flat fee plus percentage of identified sales.

Whatever the specifics of the deal, the Postal Service is going to have to pay something to put postal counters in Staples stores.  It will pay a fee or give up some percentage of the revenues.  Postal management will probably say that expanding access to Staples will bring in new revenue, but more likely it will mean less.  The customers who use the postal counter in Staples would in all likelihood have gone to the post office anyway, and the Postal Service would have gotten 100 percent of the revenue.  

That raises an interesting question, of course.  Why would the Postal Service be willing to give up revenue rather than just having people go to a regular post office?  Perhaps because putting postal counters in big box stores may eventually allow the Postal Service to close post offices, and in the long run that could lead to significant savings.  In the short term, though, it means losing revenue.

Advocates of CPUs, like Valpak, also argue that the operating cost per revenue dollar is much less with contract units.  At post offices, the Postal Service spends an average of 23 cents for every dollar it brings in; at CPUs, the cost per dollar is just 13 cents.  But lower operating costs at a Staples store are only a benefit if the Staples CPU replaces the post office.  Otherwise, the Postal Service still has to pay the rent and employees at the post office, and it doesn't matter that there's a less costly CPU a mile or two away.

 

7. It's another step toward privatization. 

While putting postal counters in a few dozen Staples stores may not sound very significant, it needs to be seen in the broader context of the piecemeal privatization of the Postal Service. 

The advocates of privatization know that the country is not ready for a full-scale conversion — even the recent survey by the right-leaning Rasmussen Reports acknowledged that — but we have been moving toward a privatized postal system for a long time. 

Mail processing operations have been privatized by replacing postal workers and processing plants with private-sector consolidators like Pitney Bowes.  Air transportation has been handed over to FedEx, and numerous trucking companies move the mail on the ground.  Even delivery has been handed over to private individuals working as contract labor. 

Putting postal counters in big box stores represents another step in the same direction.  The country never voted for a privatized postal system, but we’re getting one anyway, and if you patronize a postal counter in a big box store, you’re saying yes to privatization.

 

8. It’s an attack on postal workers and union workers. 

It’s pretty obvious that replacing post offices with postal counters in Staples is a direct attack on postal workers, and the APWU is fighting back.  When the new APWU President Mark Dimondstein first learned of the new pilot back in November, he said the following:

“This is a direct assault on our jobs and on public postal services.  The APWU supports the expansion of postal services.  But we are adamantly opposed to USPS plans to replace good-paying union jobs with non-union low-wage jobs held by worker who have no accountability for the safety and security of the mail. Postal workers deserve better, and our customers deserve better.”

“Postal management will undoubtedly try to convince our members that this arrangement is beneficial because it creates revenue for the USPS,” Dimondstein went on to say. “But revenue without good union jobs is not in the interest of our members. Postal services that are performed by anyone other than well-trained postal workers will not serve the American people well.”

The Staples plan is also a not-so-veiled attack on unions and union workers in general, and that should be of concern to every worker, whether they're in a union or not.  Unions aren't perfect, but they bring up everyone’s wages and benefits by raising the bar on what employers must pay.  That's obviously why so many businesses and institutions do everything they can to prevent their employees from unionizing.

Union workers know all about worker solidarity, and it’s very likely that when a union worker meets a postal worker picketing in front of a Staples store, they’ll have plenty to talk about.

 

9. It's not a partnership with just any retailer.

Staples got its start in 1986, thanks largely to the backing of the private equity firm Bain Capital, one of the four original outside investors in the new venture.  Bain's co-founder, of course, was Mitt Romney, and Romney served on the Staples board of directors for fifteen years.

One of the co-founders of Staples was Thomas G. Stemberg.  After Romney helped him get Staples started, he became a big political supporter.  Mr. Stemberg helped Romney when he ran for the Senate in 1994, he was a big part of the Romney-for-president campaign, and he spoke on Romney's behalf at the 2012 Republican National Convention.

Bain Capital became a source of controversy during the presidential election because of news stories about how it had invested in companies that outsourced jobs abroad.  As Rolling Stone put it in a 2012 expose, Romney and his private equity firm "staged an epic wealth grab, destroyed jobs — and stuck others with the bill."  

In speeches and interviews, Romney liked to cite Staples as an example of a successful private sector company.  Mr. Stemberg was equally fond of Bain.  As he said in one interview, “I've been involved with Bain Capital companies for a long time….  I'm very comfortable seeing how Bain operates.” 

A 2012 report by the National Employment Law Project put Staples on a list of the 50 largest low-wage employers in the U.S.  Most of its nearly 33,000 employees make less than $10 per hour.  

A few weeks ago, Staples told its part-time employees that they would be limited to 25 hours a week for reasons of “scheduling flexibility.”  But a petition on change.org says that the real reason for the new policy is the Affordable Healthcare Act.  The act says that any business that has at least 50 full-time employees must provide health coverage for employees who work 30 or more hours each week.  By limiting workers to 25 hours, Staples is avoiding the costs of paying for their health care.  (More on that here.)

 

10. It’s bad PR.

The last thing the Postal Service needs is bad PR, and this story has all the makings of another headache — and not just for the Postal Service.  The controversy over the sale of historic post offices and other postal properties hasn’t been good for the Postal Service’s real estate broker, CBRE.  It’s led to a lot of bad press for both the Postal Service and the chairman of CBRE, Richard Blum, and it hasn’t been exactly great for his wife, Senator Dianne Feinstein.  Now we’re going to see postal workers picketing in front of Staples stores?

The Postal Service and Staples should remember what happened back in 1989, when “mini post offices” were put in eleven Sears Roebuck stores, staffed by Sears employees.  The plan was to expand the program to one hundred stores.  It didn’t turn out so well.

The APWU was outraged and urged its members to slice up their Sears credit cards and mail them back to the store.  Boycotts and protests followed, and postal workers sent thousands of letters to Sears.  

The mess spread further when postal watchdog Ralph Nader demanded the resignation of Norma Pace from her position on the USPS Board of Governors because she was also a director of Sears.  As Sarah Ryan observes in her thesis on postal privatization, “Pace denied a conflict of interest, offering the explanation that postage was a small factor in Sears' costs.  She said that corporate directors were the kind of people interested and qualified to run the Postal Service and that many compete for contracts and use the mail. ‘I don't know who you would have [as a governor],’ she said.  ‘Everybody works for a company.’

Sears eventually decided to cancel the arrangement with the Postal Service.  "We prefer to remove ourselves from an issue that should be resolved by the postal workers and the Postal Service," said Mary Jean Houde, a spokeswoman for Sears.

As James Bovard tells the story in a Cato Institute white paper (which advocates steps toward privatization like the Sears deal), Postal Service management “did nothing to come to Sear's support when the APWU began attacking Sears.  At least one Sears official felt that the company had been ‘set up’ by postal management to get clobbered in a public relations fiasco.  Van Seagraves, editor of Business Mailers Review, observed, ‘In hindsight, it is obvious that postal management goofed by setting up Sears up as the 'lightning rod.’”

For its part, postal management continued to maintain that the plan was a great idea.  Assistant Postmaster General Gordon C. Morison said the Postal Service considered the Sears operation a success. "It was a win-win-win situation. It was win for the consumer with a one-stop shop and ship service, a win for Sears, which increased traffic in most of its stores, and a win for the Postal Service, which was able to offer increased convenience to our customers.”

All of the Sears post office outlets were closed by October 1, 1989, a year after the pilot had begun. 

 

11. It's unfair to Staples’ competitors.

Another problem with the Staples plan is that it means the Postal Service is helping out one business at the expense of its competitors.  That’s especially unfair to small independent businesses that offer products and services similar to those at Staples. 

FedEx and UPS already complain when the Postal Service expands services at post offices in ways that compete with their retail outlets.  Those complaints handcuff the Postal Service and prevent it from finding new ways to bring in revenues.  Putting postal counters in Staples is a more blatant problem because it gives Staples something other retailers don’t offer.  That's one of the reasons retailers take on CPUs.  As the USPS Guide on CPUs points out, the benefits for the retailer include "customer traffic to generate additional sales" and "competitive advantage." 

Costco actually discounts the price of postage stamps and takes a loss just to help bring in customers.  A postal counter in Staples may not do much for the Postal Service’s bottom line, but it might give a boost to Staples — at the expense of its competitors.  

 

12.  It’s only the beginning. 

The Postal Service will probably reply to the criticism that it’s unfair to other retailers by saying that if they would like a postal counter, the Postal Service would be happy to talk about it.  But that’s another problem.  A few counters in Staples is only the beginning. 

The press release about the pilot in San Jose says as much.  Staples, it says, “is the first retailer to take part in a USPS pilot program dubbed the Retail Partner Expansion Program.”

Not only will the program expand to more Staples, there are other big box stores that would probably be ready and willing to host a postal counter.  There are already thousands of them selling stamps as part of the stamp consignment partnership program.  

According to Postal Bulletin, you can buy stamps at 7,450 Walgreens; 3,830 Wal-Marts; 1,632 Staples; 1,200 Office Depots; 847 Safeways; 609 Sam’s Clubs; and 426 Costcos.

That adds up to over 14,000 locations.  If all of those arrangements were converted from selling stamps on consignment to setting up postal counters, the Postal Service would have an instant infrastructure of “mini post offices” to replace real post offices, just as other countries have done.  The dream of closing more than half of America's post offices could finally be realized.

And don’t think there isn’t someone in L’Enfant Plaza right now thinking exactly that.

(Photo credits: Protest in front of Staples in Berkeley, CA, 12/21/13; postal counter in a Staples store in Westborough, MA [Evan Kalish, Going Postal])

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