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.Topics: Personal Finance