On Tuesday, the Senate Homeland Security and Governmental Affairs Committee held a hearing that hinted at the financial problems the United States Postal Service faces.
At the hearing, titled “U.S. Postal Service in Crisis: Proposals to Prevent a Postal Shutdown,” Postmaster General Patrick Donahoe testified that the Postal Service is projected to lose up to $10 billion by the end of the fiscal year.
Why is the post office hemorrhaging money?
“The growth in electronic communications continues to drive the diversion of first-class mail. Instead of buying stamps, many consumers pay bills online, send ‘e-vites’ to friends and family, and simply press “Send” when they want to communicate. These shifting customer habits will continue to add to the migration away from traditional first-class mail,” Donahoe said in prepared remarks.
So what is the post office doing to rein in its spending? Here’s a look at four ways, according to Donahoe, in which the postal service can save money.
Cuts in processing (by 2015)
- Close mail-processing centers, going from nearly 500 centers to about 200
- Eliminate 35,000 positions (overall, the postal service employs about 574,000 workers)
Cuts in mail delivery (by 2015)
- Cutting the number of routes from 144,000 to 124,000
- Eliminate 22,000 positions
Changes in service
- Change first-class mail delivery window from one to three days to two to three days
Changes in labor agreements
- Salaries of new career employees would be about 10 percent lower after a newly negotiated contract with a postal-workers union.
- Donahoe, in his remarks, proposed addressing collective-bargaining prohibitions against layoffs to “make these difficult, but absolutely necessary, personnel moves, in order to remain viable.” In other words, the Postal Service needs to shed jobs more quickly than its union agreements allow, and the director is proposing revisiting those rules in order to do that.