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In 2010, the United States Postal Service operated at an unprecedented $8.5 billion in losses. At the end of 2010, USPS announced that it would close 491 post offices across the United States. Beginning in March 2011, another 2,000 locations will be closed. On top of all that, USPS will review the 16,000 post offices that are operating in the red.

That’s fully half of all brick and mortar post offices in the entire United States! Why all the trouble keeping the postal service above water?

For one, postal mail has a lot more to compete with in the digital age. Before the internet age, people keeping in touch from distant parts of the country sent letters. Now, most everyone has a personal email address, and it’s very easy to keep in touch with phone and video chatting.

Mail traffic peaked in 2006 at 213 billion pieces. Now, it’s down a full 20%, and expected to continue dropping. In fact, one study suggests that mail volume might drop to 150 billion pieces over the next ten years. The recession contributed greatly to this drop, but a large portion of the decline is just the fact that society is becoming more and more digital.

How Post Offices Make Money, and Why They’re Losing It

Individual post offices make their money from sales of postage and rental fees for post office boxes. America has a long tradition of commitment to postal delivery. Thanks to that, our stamp prices are among the lowest in the industrial world, and even our remotest regions have post offices.

Many contend that labor costs are contributing to the deficits at the postal service. A study by the Office of the Inspector General found that, due to union contracts, postal service employees pay significantly less in health and life insurance premiums.

Also, Postmaster Patrick Donahoe has testified that setting aside $5 billion in annual funds for retiree healthcare benefits is a substantial burden on the USPS budget, and one that no other federal agency company or private sector company is faced with. Congress mandated that the postal service set aside these funds beginning in 2006.

What Does it Mean For You?

By law, USPS cannot close a post office solely for operating at a loss. Instead, they must close them because of an expiring lease, a retiring postmaster, or a safety concern. There are proposals to change that law, but until it’s changed, post offices cannot be closed only because of a failing bottom line.

In the meantime, there are other, less drastic reorganizations proposed in light of this huge postal problem. Many are suggesting more postal service counters at banks and supermarkets. This would maintain local services and reduce overhead to help keep the postal service afloat.

Most of the post offices slated for closing are in rural communities. This means that most of us can expect for our post offices to remain open. Those who live in rural towns are not so lucky, though.

Thankfully, though, communities will still receive deliveries, even if their post offices are closed. For some rural communities, it will simply take longer to get a delivery.

But many rural communities use their post offices as a place to congregate – a community meeting place, of sorts. Without them, community members will have few places to go. If you live in this sort of community, you may find yourself driving many miles to your new post office.

The bottom line is that even if post offices close near you, the mail will still be delivered each and every day.  However, specialized services like overnight mail and passport service may take longer because your local post office won’t be as local anymore.

A world without the United States Post Office is a crazy thought, so don’t expect the end just yet! But do expect increases in the cost of postal services, plus fewer brick-and-mortar post offices across the nation in the coming years.

Article comments

Devin says:

The reality is that it’s not just Post Offices that are closing in rural areas. The dwindling small towns are losing schools, stores, and all other reminders of a former time. 77 out of 93 NE counties lost population in the past 10 years.

Annie Mack says:

I like the idea of postal service counters in supermarkets or banks. The overhead alone for brick and morter post offices must be overwhelming. Whatever they decide to do, it shouldn’t be allowed to hamper the processing of the US Mail. That is one organization that desperately needs an overhaul, a management enema, and more work ethic among the postal carriers. I have to listen to mine whine and complain every day. I know lots of people that would love to have his job if it’s more than he can handle.

Ryan says:

We recently had a few post offices in nearby towns shut down, which hasn’t had a huge effect, but just means that patrons in have to run one town over in order to get any direct service. There’s still obviously pickup service, but in general I don’t think it’s made a huge impact on the towns that have lost the office locations.

jim says:

I won’t mind or probably even notice some cut backs. The key problem with the USPS in my mind is that they are a dying business. They have scale and economics for delivering mail to every house in the country. But when their business declines over years due to email and internet then they need to adjust their model accordingly. The main problem is that the postal service is heavily regulated by congress. Even the bit about them paying more % of the health and life insurance benefits than other government employees is actually due to how the laws are written. And closing branches has been forbidden by congress. And over contributing to their pension was caused by the government too.

patricia says:

I live over 45 miles from any big town ( a town over 10,000) and those of us that live in the country of Colorado are looking at the closures post office being 51 miles and that is from my house. I know people that are over 100 miles and we are losing all small town post offices. Why, because we are rural, and we’re not as important as a large city.

Kenny says:

The postal service needs to downsize big time. They are horribly overstaffed. Management and union officials work hand in hand to ensure that both sides survive. Unlike before, the postal service did a good job in managing their work productivity. Now, the postal service is no different than city or state workers. Less work for more pay.

pam says:

With no post office no morevoter registration cards, bills to pay at stores[ stores lose those employees] tax bills are paid on line or phone[some up to $20 charges]. How will you get valid medial cards, prescriptions. You will also be at the mercy of higher charges if you pay by phone. More of your personal info out there for hackers. how will you get your driver’s license. I have yet to receive a package that wasn’t damaged through other deliveries. We will be probable be charged higher delivery rates with others. They do want to close the post offices and we lose alot of convenieces at a low price. Good bye low price for overnight movies. Some older folks do not understand computers and why they are forced to direct deposit or auto pay when they don’t see a bill. Companies can make errors and on direct pay you can get hurt on your accounts. It won’t be just postal workers losing jobs, it will be customer service at stores for paying bills, loss of ads for shoppers and stores, taxes paid online or longer lines at tax office.