Postal Service to Cut More Jobs and Facilities

There are many industries that have been suffering from the unstable and uncertain economy, and the continuing rise in the cost of oil has also negatively impacted many businesses as well. This has led many businesses to struggle and many have even gone under. Even linchpins of business such as the United States Postal Service (USPS) are not immune from these problems. The Post Office has been weathering the financial storm for years as alternatives to traditional mail services began to proliferate, but now it is facing a far bigger problem, and it is a bottom line too small to cover the costs of their operations.

There have been rumors of more job cuts and facilities closing and this was confirmed last Thursday as the United States Postal Service made a statement about their intention to reduce costs by $20 billion dollars through the closing of facilities, as well as the cutting of as many as 35,000 jobs around the nation. The past five years alone have seen the loss of 140,000 jobs and these new cuts are expected to result in the closure of 200 facilities. This means even more centers will close, many in rural and small communities that rely on these jobs for economic stability.

There is a temporary moratorium in place that keeps any of these plans from going into effect until May. However, it appears that these changes are inevitable and even the President of the United States thinks the job cuts and closures are for the best. Basically, the moratorium is delaying the inevitable loss of jobs and closures.

In addition to facilities closures and job cuts, the USPS has to do more to reduce their overhead and get their finances back in the black. There are talks that next day delivery will be discontinued to save on manpower and gasoline. The rumors of no more Saturday deliveries is also likely to be a result of these proposed changes, cutting one day from the work week payroll. They are also planning on closing thousands of post offices around the country, consolidating services and reducing overhead.

There have already been a number of increases in the cost of first-class postage as the Post Office has tried to weather the economic storm, but the new plan asks for a 10% increase in the cost of first-class postage, making it $0.50 for a basic stamp. Increasing the costs of postage by 10% has the ability to generate over $1 billion in much needed revenue for the postal service.

There will also be an increase in the cost of international shipping as well as the shipping of things like postcards. These efforts are not meant to be a drain on the consumer, but rather to help keep the USPS in business, providing high quality mail delivery services for our nation.

The number of job cuts might seem massive, but the USPS hopes to achieve these cuts through the opening of early retirement programs for those who are close to, but not at retirement age. These programs make retirement an attractive option for the employee and cuts down on the cost of labor for the company. Savings are also to be gleaned through changes in the medical benefits offered by the USPS.

Currently, USPS employees are covered under a federally funded insurance program, which costs taxpayer dollars. When the new measures are enacted, the USPS will take over its own insurance benefits programs, moving away from federal funding. These savings, combined with those created through the “early-out” retirement program is where the USPS is likely to see most of their savings.

An interesting fact about the USPS is that it is one of the only federal agencies that is not funded through the use of tax dollars, it is funded through the Treasury and the revenue it generates from its own operations. Currently, the USPS owes the U.S. Treasury $12.9 billion dollars. That may seem like a huge amount of money, but the USPS claims that if the proposed changes are not enacted, this debt will skyrocket to $90 billion by 2016. That is a huge increase in the debt load carried by the USPS and is a burden to our economy. The proposed changes are designed to help the USPS remain a viable partner for business and personal mail delivery. Job cuts are never news that people want to hear, but if the USPS does not work to reduce their overhead and increase their revenue stream, there might not be a USPS in the future, and that would be a shame.

Sources Cited: 

  1. http://www.investorplace.com/investorpolitics/us-postal-service-usps-slashing-35000-jobs/
  2. http://online.wsj.com/article/BT-CO-20120216-720150.html
  3. http://www.wtol.com/story/17006368/usps-releases-list-of-distribution-centers-to-close
  4. http://www.statenews.com/index.php/article/2012/02/usps_continues_to_sustain_losses_according_to_report

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