For whatever reason(s), some folks and most certainly the media, seem to forget even recent history. The USPS downsizing has been underway for several decades tracking with the sharp decline in First-Class mail. This downsizing has spanned several administrations and Postmaster Generals. Current First-Class mail volume is totaling to levels last seen in 1955.
U.S. Postal Service's "First-Class Mail Volume Since 1926," April 2019 report said that
"The USPS's financial challenges stem from its high-cost structure and the falling of first-class mail volume by 45 percent from 104 billion pieces in 2001 to 57 billion pieces in 2018."
Along with restructuring, removing mailboxes, closing distribution centers, cutting back post office hours, the downsizing included changing First-Class delivery expectations from one day to two days in 2011. Now they are suggesting merging it with the rest of the mail stream increasing it to 3-5 days. It should be noted that delays in delivery times of all mail services has been increasing over the last 15 years.
In 1974 a new postal guideline directed the USPS to remove pubic mailboxes that were averaging fewer than 25 pieces of mail a day to save on fuel and labor. Since then, an average of 3,258 mailboxes per year have been removed.
By 2007, the USPS had lost $69 billion and projections were grim; they were carrying $110 billion in unfunded liabilities for retiree pension and health care, and its workforce is accruing more retirement benefits every year. The Government Accountability Office (GAO) has put the USPS on its "high-risk" list. Without restructuring the USPS was headed for financial disaster. Downsizing was in order and that was exactly what they did.
In December 2011, the USPS announced it would close more than half of its mail processing centers, eliminate 28,000 jobs and reduce overnight delivery of First-Class Mail. This move closed 250 of the existing 461 processing centers. USPS also was seeking to close down smaller and highly unprofitable post offices many of which were rural POs (the USPS found that the bottom 4,500 locations averaged just 4.4 customer visits a day). But a few months later and after the Postal Union applied pressure to Congress, the USPS modified the plan to instead reduce retail hours (some as little as two hours per day).
By 2014, the USPS further announced that they were shuttering additional mail processing facilities. This time they consolidated 82 facilities starting in January 2014 and completing the downsizing by the 2015 holiday season; USPS estimated the saving to $865 million for this downsizing step.
Accompanying the downsizing over the decades has been a decline in productivity. According to the U.S. Postal Service Processing Network Optimization (Report Number NO-AR-19-006) the PO is less been less efficient at processing mail each year since fiscal year (FY) 2014 as mail processing workhours have not decreased at a rate consistent with decreased mail volume.
- First-Class letter processing productivity decreased by 6 percent – letter mail volume declined by about 12 percent, while processing workhours only decreased by about 6 percent and overtime workhours increased by 42 percent.
- Flats processing productivity decreased by about 18 percent – flat mail volume declined by about 22 percent, while workhours only decreased by about 5 percent and overtime workhours increased by 46 percent.
- Manual processing, or pieces processed manually, productivity decreased by 21 percent – mail processed manually declined by about 24 percent while workhours only decreased by about 3 percent and overtime workhours increased by 49 percent
In my opinion some of the decline in productivity is due to the transition to larger parcel handling vs. previously more efficient handling of letter mail. But it should also be noted the USPS pays its employees more than other US delivery services. A U.S. Treasury analysis for 2017 found that employee costs at the USPS was averaging $85,800 and was higher than the averages of $76,200 at UPS and $53,900 at Fed Ex.
And lastly Congress has artificially been holding down First-Class mail rates throughout the downsizing, knowing that the USPS was losing money. They are fully aware that US postal patrons pay far less than other countries AND that the cost of a First-Class letter was lower than the USPS cost to handle it. Here is a comparison of
As is shown, USPS losses 3 cents on every First-Class letter sent. The average cost for a first-class letter for most of the world is double than that of the current US rate.
So the take-away for me is;
- the downsizing is not a current issue
- the delays in First-Class mail have been growing for years
- the downsizing over the last few decades put the USPS infrastructure on very thin ice, the additional weight of COVID broke that ice and the USPS floundered in the ice cold water
- First-Class mail rates need to be doubled
- as long as the USPS has an anchor around its neck (named 'Congress') and is burdened with accounting for future employee benefits the odds that it will be profitable is zero.