The financially struggling U.S. Postal Service says it plans to stop delivering mail on Saturdays, but continue delivering packages six days a week.
In an announcement scheduled for later Wednesday, the service is expected to say the cut, beginning in August, would mean a cost saving of about $2 billion annually.
The move accentuates one of the agency's strong points — package delivery has increased by 14 percent since 2010. The delivery of letters and other mail has declined with the increasing use of email and other Internet use.
Let's recall why the USPS is struggling: because Republicans in Congress forced the agency to pay their retiree helth care costs decades down the road up front in 2006, then refused to give them the money to do that. As a result, the USPS made massive workforce cuts and forced thousands into early retirement, which of course means the USPS has to pay those health care benefits up front, putting them into a death spiral.
The financial woes of the U.S. Postal System have become a point of contention on Capitol Hill. The Postal Service is supposed to make a $5.5 billion payment to its retiree health care fund by November 18th... but doesn't have the money.
US Postal Service workers have a retiree health care benefit in addition to their pension. Before Congress passed the Postal Accountability and Enhancement Act of 2006, the USPS operated under a pay-as-you-go model for retiree health care funding. The new law requires the Postal Service to pre-fund its benefit obligations.
"The idea is that enough money is saved over the course of a career that the benefit is fully paid for by the time the worker retires.
Thanks to these prefunding payments, the Postal Service has greatly reduced its unfunded obligations for retiree health benefits. At the end of fiscal year 2010, these obligations were under $49 billion – a substantial sum, but much more manageable. If the Postal Service continues making its prefunding payments, its unfunded obligations for retiree health benefits will be around $33 billion by the end of the decade. And the postal service will be on course to pay these benefits over time," a Congressional insider explained.
Sure, unless you force early retirement so that the benefit is paid for well ahead of time, thus leaving the USPS unable to pay for anything else. Like, you know, operating costs. It's like the government came to you and said "OK, you're 25 years old, but you have to pay for every dime of your Medicare that we project you will use for the next ten years, rather than over the next 40 years. We'll be docking half of your paycheck until you get to that number. Good luck paying your rent or feeding your kids."
Also, let's remember who lost the roughly 160,000 jobs since the PAEA was passed: middle-class civil service workers, a disproportionate amount of them African-American.
African-Americans make up about 20 percent of U.S. Postal Service workers - and are the majority in some urban centers, representing 75 percent to 80 percent of the 5,000 letter carriers in the Chicago area, according to Mack Julion, president of the Chicago branch of the National Association of Letter Carriers.
But the public sector has cut nearly 600,000 jobs since 2009, due to shrinking government budgets and a range of other issues, according to the Bureau of Labor Relations. The slower recovery for African-Americans in the labor market has, in part, been the result of government layoffs after the end of the recession was declared, according to the DOL report. In December, the black unemployment rate was 14 percent, roughly double that of whites.
While some other sectors of the economy are seeing recovery, the biggest problems may be just beginning for the Post Office, the nation's second-largest civilian employer after Wal-Mart with about 536,000 career workers.
Death spiral accomplished, right? There's a reason why the Postal Service was targeted folks, it was a source of tens of thousands of middle-class jobs, especially for minorities. Since We Can't Have Nice Things, the PAEA was passed and BLAMMO, a recession coupled with structural failure in the Postal Service all but guaranteed a massive loss of jobs. And the USPS still has another 4 years to go to pay off the $22 billion or so it has left to pay off, thanks to Dubya. On top of all this, there are plenty of folks who keep saying the only way to save the USPS is to privatize the mail system completely.
In the case of the Postal Service, though, privatization has become the best path forward, mainly because it would take Congress out of the picture. As New York Times columnist Joe Nocera recently argued, “the problem is that neither the management nor the workers really control the Postal Service. Even though the post office has been self-financed since the 1980s, it remains shackled by Congress, which simply can’t bring itself to allow the service to make its own decisions.” And Congress won’t do so, as long as the post office remains part of the government.
The Postal Service has many assets that could be managed more efficiently, if Congress got out of the way. In addition to its 32,000 post offices, it has 461 processing facilities, monopoly access to residential mailboxes and an overfunded pension plan. These assets would attract bidders. Consider, for example, that many processing facilities and post offices sit on valuable real estate, and it may be smarter to sell many of them than to keep them.
Which awful glibertarian scold said that? You get points for coming up with none other than former Obama OMB head and current Citigroup exec Peter Orszag before clicking on the above link. Saving the USPS is not something that's apparently very high priority for the current administration either, and this is one of the times I disagree with them on economic policy. These are jobs that aren't going to be coming back, either, especially here in Cincy.
So yeah, part of me feels like going postal on just about everybody in DC. This was one of those "self-inflicted wounds" to the economy that President Obama was talking about yesterday, and not a hell of a lot happened to try to fix it. Ironically, it's postal service in rural areas that will be cut back the most because of these changes, but this was a needless anchor thrown around the neck of the USPS, and nobody in DC threw them a lifeline when the opportunity was there. Postal jobs aren't sexy.
See ya, Saturday mail. It was cool while it lasted.