By Jason Hart | Watchdog.org
If you like your local post office, you can keep your local post office. Probably.
Amid efforts to cut retail hours, reduce staff and shutter distribution facilities, the United States Postal Service announced a third-quarter loss of $586 million on Monday.
Believe it or not, this was an improvement over the nearly $2 billion quarterly loss USPS reported a year ago.
Recent losses stem primarily from a requirement that USPS pre-fund decades of retiree health benefits. Without that liability on the books, USPS would have reported net profits five of the past eight quarters.
Still, in a five-year business plan adopted in 2013, USPS projected losses would continue and even worsen after accounting for 10 years of retiree health benefit prepayments from 2007-16.
How could USPS cut costs, and why has it failed to do so? Roughly 80 percent of USPS operating costs come from compensation, and over 90 percent of employees are unionized.
Attempted reforms in USPS’s 32,000 local post offices — and in distribution centers through the country — are constrained by Congress, the Postal Regulatory Commission and several postal worker unions.
In 2011, USPS began seriously exploring options for transitioning thousands of local post offices to counters and kiosks in groceries and other retail stores.
The American Postal Workers Union was not pleased with the USPS Retail Access Optimization Initiative, even though USPS emphasized the importance of maintaining access for all customers.
Presently, USPS lists 50 post offices within five miles of the center of New York City. There are 30 post offices in Los Angeles, 25 in Chicago, 20 in Houston and 42 in Philadelphia.
FedEx and UPS, USPS’s primary competitors for package delivery, have even more retail locations in the nation’s largest cities.
In 2013, APWU cried foul over a USPS Post Office Structure Plan to reduce service hours at 13,000 post offices. APWU has led a years-long “Stop Staples” campaign to keep USPS from putting service counters in Staples stores.
Before retiring this February, USPS postmaster general Patrick Donahoe tried to implement a plan to stop mail delivery on Saturdays. He was blocked by Congress.
USPS identified its large network of facilities and its growing labor costs — from members of APWU, the National Association of Letter Carriers and other unions — as ongoing problems in its five-year plan.
But USPS public relations representative Sarah Ninivaggi told Watchdog.org things are looking up.
Ninivaggi pointed to the Retail Access Optimization Initiative and the Network Rationalization Initiative as successful examples of USPS working with local stakeholders to improve efficiency.
Despite resistance from unions and politicians, USPS reduced its staff from 704,000 “career employees” in 2005 to 486,000 career employees as of February.
While technology has torpedoed first class mail volume by 30 percent since 2008, online shopping has increased demand for package deliveries.
“Growth in the shipping and package sector has contributed to increases (in) operating revenue,” Ninivaggi explained via email.
USPS seems to be taking steps to capitalize on the online shopping trend. In 2014, USPS penned an agreement with Amazon to deliver packages on Sundays in some cities for the Christmas season.
National Association of Letter Carriers, the largest postal union, sees USPS’s growing revenues as proof further cuts and consolidations are unnecessary.
“Monday’s results show the impressive Postal Service financial turnaround continuing in full force,” NALC president Fredric Rolando said in an emailed statement to Watchdog.org.
Adding that “2015 is turning into one of the USPS’s most impressive annual performances since the Great Recession,” Rolando said USPS has been recording annual operating profits since 2013.
Leslie Page, vice president of policy and communications for the nonprofit Citizens Against Government Waste, has a less sunny view of USPS’s performance.
The requirement to pre-fund retiree health benefits may be unique compared to taxpayer-funded federal agencies, but that doesn’t mean USPS should get a pass on those costs, Page told Watchdog.org.
“Just because they don’t pre-fund it doesn’t mean they aren’t going to have the liability,” she said.
USPS staffing cuts haven’t produced the savings they should, Page said, because of increasing wages and benefits for remaining employees.
“Any normal private-sector business would by now have become much more nimble,” Page added. “When you are a government entity you can do nothing of consequence without the interference of politicians.”
There’s one thing Page, NALC and USPS all agree on: Congress needs to give USPS more flexibility to meet its central mission. This doesn’t appear likely any time soon.