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14 Aug, 2009 08:48

US Postal Service – shot by slowdown and email?

US Postal Service – shot by slowdown and email?

Americans tend to take mail for granted. Most never consider whether the US Postal Service is a profitable business. But it’s not. The agency is literally facing billions of problems.

The Government Accountability Office (GAO) warns that the US Postal Service (USPS) is not on a sustainable path. It needs to cut costs and make money – quickly.

The GAO has added the Postal Service to a list of federal high-risk areas in hopes of attracting the attention of Congress and the executive branch. Federal operations can be deemed high-risk for a number of reasons. The USPS is on the list because it is a financial eyesore.

Changing its course will not be simple because the USPS is being bombarded from several directions.

Losing customers

To begin with, “new technology is profoundly affecting services in both public and private sectors, including mail delivery,” reports Gene L. Dodaro of the GAO.

The internet is the “new technology” that is crushing the USPS. Deliveries that once required postal staff now require only one person – the sender. People receive their statements, pay their bills and keep in touch online. This new alternative is fast and it’s free.

Over the years, additional pennies charged here and there have pushed the cost of a stamp steadily higher. But unfortunately for the USPS, the increase cannot be justified because the service hasn’t improved. So, for many people, the combination of economics and convenience deem the mailbox outdated.

Less money, more bills

Dodaro, in his capacity as Acting Comptroller General, says this is “compounded by the current recession” and the fact that the USPS has “significant infrastructure and personnel costs.”

Advertising materials were another staple of the postal services. Now, many companies have sliced their advertising budgets, wielding another blow to the USPS.

Mail rates have dropped by the billions. It is predicted that this fiscal year (FY), 28 billion fewer pieces of mail will be sent than last year, when there was also a drastic decline. This will leave the federal operation with a multi-billion dollar deficit and another grim outlook for next year.

Meanwhile, the USPS maintains its title as the largest US civilian employer with over 700,000 employees and excessive numbers of facilities. Some are only operating at half their capacity.

Passing the burden

If the USPS has its way, it will trim costs by reducing mail delivery to five days per week. Furthermore, staff wages and benefits will be subject to the agency’s financial circumstances.

The American Postal Workers Union (APWU) was originally optimistic about a bill designed to offer short-term financial relief to the USPS. But, they have now become the opposition.

According to William Burrus, President of the APWU, unions have always taken the financial condition of the USPS into consideration. Now, there is an amendment seeking to make this negotiating factor a matter of law.

Burrus says that’s because “the amendment is intended to elevate this factor above all others…Clearly, the authors of the amendment hope it will constrain wages and benefits.”

In his congressional testimony, Burrus argued that one of the biggest problems stems from obligations made by the Postal Accountability and Enhancement Act (PAEA) of 2006.

PAEA supporters wanted to force the USPS to downsize. Part of their plan mandated a pre-funded retiree healthcare program that has cost $14 billion over the last two years and has left billions still due. Burrus claims that allowing this to weigh heavily during workforce negotiations shifts the burden of an ill-devised plan.

“No single change will be sufficient to address the challenges facing the postal service,” according to the GAO. “Mail volume has bounced back after past recessions, but USPS's forecast suggests that may not be the case this time…”

Michelle Smith for RT