Week in Review: What a mess


December 11, 2011

A total mess: The big news this week, of course, was the Postal Service’s request for an Advisory Opinion on its plan to “rationalize” the processing network by closing 252 processing plants.  The Postal Service says the plan will save $2.1 billion a year.  Most of that savings would be in labor costs. The materials submitted for the Advisory Opinion, as detailed as they are, say only that the reductions will be "significant," but they do not venture a specific number.  News reports are saying that 28,000 jobs will be cut (in September it was 35,000).  As this excellent article (by Ryan Foley for the AP) explains, shedding that many employees is not going to be easy: “Most workers in the facilities are represented by the American Postal Workers Union, which reached a four-year contract in May guaranteeing that its 220,000 clerks and maintenance employees cannot be laid off or transferred more than 50 miles away.”  (This table of the plants slated to close shows that most of the “receiving plants” are more than 50 miles away, some of them way more.) 

Some workers may leave via attrition — early retirement or simply quitting in disgust and despair— but in the long run, any significant reduction in the workforce will require layoffs.  At some point, Congress will need to decide what to do about the no-layoff clause in the union contracts, but before legislators can get their act together — one way or the other — we’re going to watch a real disaster unfold.  “The downsizing or the demise of the postal service,” said John Zodrow, an authority on postal employment and labor relations, “it's going to be a mess and it's going to be a mess for a long time.”

Stakeholder vs. stakeholder:  The network rationalization plan would change “service standards” so that First-Class mail and periodicals will slow down by a day or more.  The periodicals industry is very concerned about news arriving late, and Time, Inc. —“the largest magazine publisher and the largest user of Periodicals Class mail in the United States” — has given “notice of intervention” to the PRC indicating that it will participate in the Advisory Opinion.  It looks like the rationalization plan will pit stakeholder against stakeholder — publishers worried about time-sensitive mailings will oppose the plan, while direct marketers concerned about low rates will support it.  The marketers give the Postal Service more business and may have more clout, but the publishers, well, they control the media message, and they’re going to be a lot more interested in this case than they’ve been in saving small rural post offices.  (By the way, this week's Time — that's the cover — features an updated version of an excellent article by Josh Sanburn about the Postal Service that appeared online a few weeks ago.)

More movement toward a moratorium on closings: Twenty Senate Democrats have written a letter to Congressional leadership asking them to “include language in the next appropriations to prevent the USPS from closing or consolidating area mail processing facilities or rural post offices for the next six months. This six-month moratorium will give Congress the time needed to enact reforms necessary for the postal service to succeed in the 21st century.”  That’s in addition to the amendment in the Senate bill that would put a halt on post office closings while “service standards” for post offices are worked out (these standards involve distances to the nearest post office and other geographic and demographic factors).  Congressional action may just not be fast enough to stop the post office closings, however.  Nearly 600 have closed this year, and come January, the Postal Service will start issuing Final Determination notices on the post offices on the Retail Access Optimization Initiative (RAOI).  They could number in the thousands.

Already optimal: There’s a very interesting blog post on the Save Our Erie Mail website by the APWU Erie Local 269.  The post challenges the basic assumption of the Postal Service consolidation plan, which basically says that “economies of scale” — consolidating lots of small plants into fewer large ones (operating 24-hours-a-day) — will be more efficient and cost less.  But there’s evidence that the size of your average processing facility is actually optimal for a business.  The post references Malcolm Gladwell's book The Tipping Point, which discusses something called the Dunbar number.  The thesis is that businesses with about 150 employees fare much better than those that are larger due to the "cognitive limit to the number of people with whom one can maintain stable relationships.”  Not that the Postal Service is very interested in that.

Mailers perplexed: The Postal Service is sending out mixed messages on the “exigent rate increase” — that’s an increase in postal rates that goes beyond the rate of inflation, which must be approved by the PRC.  The Postal Service requested the increase in July 2010, and when the PRC turned down the request in September, the Postal Service appealed the decision in court.  The court remanded the decision back to the PRC in May 2011, but the Postal Service, under pressure from the mail industry, withdrew the request in August 2011.  Then in November, the Postal Service renewed the request (at the same time expressing hope that legislation would allow it to withdraw the request yet again).  This week a group of industry stakeholders wrote a letter to the Postmaster General expressing its displeasure: “We are perplexed. In your presentations to the mailing community in recent months, we have heard you say repeatedly that you do not want an exigent price increase; an exigent increase will not occur.”  There’s probably a tussle going on in L’Enfant Plaza, with some executives arguing that the Postal Service needs the money, while others worry that increased postal rates will drive away customers and offset any revenue increases the higher rates might yield.  Businesses hate uncertainty more than anything else, so the Postmaster General’s flip-flops may be worse than the increase itself.

A tie favors the Postal Service: This week the PRC issued an order affirming the final determination to close the post offices in Francitas, TX, and Ida, AR.  Both decisions were unusual because in each case, the vote was two to two.  The two Republican commissioners, Mark Acton and Robert Taub, voted to affirm the Postal Service’s decision to close, while the two Democratic commissioners, Ruth Goldway and Nanci Langley, voted in favor of remanding the final determination back to the Postal Service.  According to PRC rules, the tie favors the Postal Service’s decision to close the post offices. 

In the case of Francitas, the dissenting commissioners objected to the closing decision because the post office near Francitas — the office designated to receive its boxes and retail services — is in La Ward, and the La Ward post office may close in a few months under the Retail Access Optimization Initiative (RAOI).  Chairman Goldway’s dissenting opinion also faults the Postal Service for other reasons, like inaccuracies in the cost-savings analysis.  As in many other discontinuance cases, the Postal Service did its calculations using the salary of a postmaster, even though Francitas has been managed by a postmaster relief or officer-in-charge for more than three years.

In the Ida dissent, Langley and Goldway simply wrote, “The financial analysis contained in the Postal Service’s final determination is seriously flawed. It misstates the record in several places, particularly, with regard to savings related to the existing lease.”

Absolutely insane: This week the APWU honored Derrick Watson with a 2011 Community Service Award for his efforts to keep the post office in Valley Falls, RI, from closing.  He lost the fight and the post office closed in August, but he stuck with it through the PRC appeals process, and he’s not a bit sorry.  He is unhappy with the PRC’s reasons for rejecting his appeal, though.  The Postal Service had claimed the post office was losing money, but that was largely because an office gets no revenue credit for parcels it accepts when a customer buys the postage online using services like the USPS e-bay program.  Watson was one of those e-Bay sellers, so he should know.  “That's hypocritical,” says Watson. “You ask people like me to buy postage on-line, but it's not credited to that particular post office, to that zip code being used. . . . They used that as a basis to close Valley Falls, which I find absolutely insane.”

Reprieve for the Venice post office: The sale of the New Deal post office in Venice, CA, has been suspended pending the outcome of the appeal filed with the PRC.  David Williams, VP of Network Operations, had previously stated that “there is no right to further administrative or judicial review” of the decision to sell the Venice post office, but the Postal Service has decided to take the post office off the market, at least for now.  There’s an excellent story about the latest news on the Venice post office by Greta Cobar in the Free Venice Beachhead, and there’s also a video of a recent protest.

Off the list: Photo-journalist Evan Kalish of Going Postal fame filed a FOIA request a few weeks ago, and this week he got some very helpful information about the status of post office closings.  Check out the list of 307 post offices removed from the Retail Access Optimization Initiative — these post offices will remain open (at least for the foreseeable future).  (We’ll update the Save the Post Office list and map using this new info asap.)

A not-so-small price to pay for the truth: The Pimmit branch of the Falls Church, VA, post office closed a few weeks ago, but attorney Elaine Mittleman has filed an appeal with the PRC.  In September, she submitted a FOIA request for Postal Service records concerning the decision to close the post office.  This week, she got a reply.  The Postal Service says that she does not fit the category of those exempt from paying fees for research time and copying (that would include journalists, academics doing research for their institution, and a few others), so she’ll have to pay the full fees.  Here’s the good part: The Postal Service has estimated the computer processing and personnel costs at a minimum of  $21,191.70, and they want her to pay half up-front: “Please submit your check or money order,” says the USPS letter, “in the amount of $10,595.85 made payable to the ‘U.S. Postal Service.’”  Right.  (By the way, for a related story on FOIA and appealing a closing, check out "They're Coming for Your Post Office.")

Corrections re: Hammond: In a post last week about President Obama’s nomination of Tony Hammond to the PRC, we wrote that he would serve a regular four-year term on the PRC, but that’s incorrect.   The regular term of a commissioner is six years, but more important, as we learned in a meeting of the PRC this week (podcast here), if approved by Congress, Hammond would finish out the term of Dan Blair, just until November 2012.  He could serve an additional year if no one has been confirmed to replace him, and there's a good chance that a commissioner confirmed to fill out a term like this would be on the short list for nomination to a full term, so Hammond could end up on the PRC for many years to come.  Sorry for the errors, but the main point of the post stands:  Appointing a Democrat would have been better for postal workers and communities facing the loss of their post office and processing plant.

Photo credits: Mail handler in Sioux City, IA (closed in October); this week's Time magazineErie, PA mail processing facility protest (being studied for closure); Seattle postal workersDirect Marketing Association websitegirl & po boxes in the Francitas post office (closed); Derrick WatsonVenice CA post office lobbyFOIA cartoon.

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