Challenged by changes in the way we communicate and hobbled by Congressional mandates, the U.S. Postal Service is fighting to survive. In the wake of post office closings and reductions in staff and services, we examine some possible solutions.
On a recent weekday morning in the Northfield Bridge Square post office, a young mother with a toddler in tow chats with the older woman who waits behind her in line. The employee staffing the service window greets most of the customers by name, and a visitor can’t help but smile at the vase of fresh-picked daisies that sits on one of the lobby tables.
Such is the mood in this small-town post office, where the business of mailing letters and buying postage stamps is enhanced by the opportunity to socialize with your neighbors.
In a time when most of us take care of business online or at a drive-through window, the effort of people to visit a specific building and interact with each other face-to-face seems quaint—and very precious, indeed.
Historically, post offices across America have played multiple roles in the lives of communities—as civic icon, gathering space, architectural landmark, and place of business. So it’s no surprise that, when their local branches are threatened, community members often mobilize around “save the post office” grassroots campaigns (see sidebar below).
Citing the need to cut costs, the U.S. Postal Service (USPS) last year identified nearly 4,400 post offices that it will consider closing. Some are housed in nondescript structures, but more than 400 are located in historic buildings, which are either currently listed or eligible for inclusion on the National Register of Historic Places. About a dozen historic post office buildings have been sold already, and some 30 more are still listed for sale, including the one in Northfield’s Bridge Square. For this reason, the National Trust for Historic Preservation included “Historic Post Office Buildings” on its annual list of the 11 most endangered places in 2012.
The USPS plans to consolidate two Northfield facilities by closing the Bridge Square post office and moving all services to the current carrier annex located two miles southwest of town off Highway 3. The downtown facility draws an estimated 500 visitors a day and, by virtue of its central location in Bridge Square, is both an architectural treasure and a social anchor for the town, says Carleton history professor Clifford Clark, who is a member of the Northfield Historic Preservation Commission. “Northfield is a walking community,” says Clark. “The post office provides a magnet that draws people into the center of town on a daily basis. Closing it would force people to travel out of town to visit the post office, and likely accelerate a decrease in its use.”
Northfield’s Bridge Square post office is one of many facilities that were reviewed to determine if a consolidation of operations was feasible, says USPS spokesman Pete Nowacki. “We can no longer afford to operate two facilities in communities where one will do. [Consolidating] the two Northfield facilities will result in approximately $780,000 in savings over 10 years.”
According to Nowacki, the USPS has chosen to sell the Bridge Square building because it “does not have enough space to house all operations, and it is easier and safer to transport mail in and out of [the annex location].”
Well, How Did We Get Here?
- $9.5 billion in profits 2002–2005
- $10 billion in losses 2012 (projected)
In 2006 Congress required the USPS to prefund the costs of future retirees’ health care 75 years into the future, and to do so over a period of 10 years. The health care prepayments amount to $5.6 billion a year and are a big factor in the huge deficits the Postal Service has accrued.
It’s true that the USPS has fallen on hard times, but the reasons why are complicated. For example, the Postal Service announced in July that it would not be able to make mandated payments—totaling $11 billion and due August 1 and September 30—to prefund retiree health benefits. Reaction fell roughly along these lines: The Postal Service is a bankrupt relic of the 20th century that needs to be privatized or a stalled Congress needs to act to clean up a mess it created.
Most people can agree that the modern-day Postal Service is facing serious problems, some of which began long before the first citizen elected to have her utility bills and bank statements delivered via e-mail. Debates over how the USPS arrived at its current state and what can be done to rectify the situation are occurring in the midst of a sea change in how we communicate. The situation is at the heart of long-standing, contentious debates in American society over the proper relationship between government and the private sector.
Perhaps the first indication that things had gone badly awry came in spring 2011. In the face of declining volume and mounting financial losses, the Postal Service announced it would close about 3,700 low-volume rural post offices, which, in addition to providing needed mail service, also function as community hubs. The politically unpopular plan was scrapped in May. Instead, most of the system’s 13,000 rural post offices will operate under significantly reduced hours (two to four hours a day in most cases) and with part-time, contract postmasters. Hundreds of mail-handling facilities nationwide are also being closed over the next two years.
The proposed closure of rural postal facilities was part of a five-year plan the USPS developed with a private consulting firm to lower operating costs by $22.5 billion in an effort to remain profitable. (Curiously, while a 1971 act of Congress made the Postal Service a semi-autonomous agency of the executive branch, responsible for raising its own operating revenue—it receives no tax dollars—Congress still holds the reins.) Other elements of the profitability plan included eliminating Saturday delivery and reducing the postal workforce from 540,000 to 350,000 by 2014. Currently, the USPS is the country’s second-largest employer, after Wal-Mart.
But the most crucial element of the five-year plan was calling on Congress to end an obligation it imposed on the USPS in 2006. Currently, Congress requires the USPS to prefund the costs of future retirees’ health care 75 years into the future, and to do so over a period of 10 years—something required of no other governmental agency or private company. The health care prepayments amount to $5.6 billion a year and are a big factor in the huge deficits the Postal Service has accrued. In the four years before the prefunding requirement kicked in, the USPS made a $9.5 billion profit. Yet in the first quarter of 2012, it posted a loss of $3.2 billion and is expected to incur a $10 billion loss by the end of the year.
Granted, mail volume has dropped 20 percent overall since 2006, and first-class mail levels are down 50 percent from 10 years ago. Yet, according to New York University professor Steve Hutkins, who edits and administers a website devoted to information about post office closings and consolidations: “If you ignore the health care prepayments, the [USPS] is basically breaking even—in spite of the weak economy and diversion to the Internet.”
A Congressional Conundrum
Congress has worked on postal reform legislation this year, but the House and Senate bills reflect different visions for the future, and critics say neither bill offers a comprehensive solution.
Both chambers’ bills would transfer about $11 billion in surplus retiree cost contributions back into Postal Service coffers and would restructure, but not eliminate, the prefunding payments USPS is required to make annually. The Senate bill, passed in May, would allow the USPS to proceed with some of its cost-cutting proposals. The House Oversight and Government Reform Committee passed a more aggressive bill earlier this year that focuses on lowering labor costs through layoffs, retirement incentives, and a reduction to benefits. Although House leaders promised to bring the bill before the full House prior to the August prefunding payment deadline, a hearing was moved to fall, following the election.
Meanwhile, the USPS says the health benefits prefunding default will not affect day-to-day operations, including employee pay and benefits. But mounting deficits and uncertainty have large-scale mailing customers, such as magazine publishers, catalog merchandisers, and credit card companies, nervous and on the lookout for delivery alternatives, which could exacerbate USPS woes.
The tight leash Congress holds on the Postal Service prevents it from making necessary changes, says Lee Fritschler, professor of public policy at George Mason University and a past chair of the U.S. Postal Regulatory Commission. “When the post office tries to act businesslike, Congress moves in to say, ‘Uh uh, that is unpopular,’ ” Frischler said in a radio interview that aired in July.
Back to the Future
The Postal Service must evolve to survive in a digital era—yet still fulfill its legal obligation to “provide uniform first-class mail service even to sparsely populated, far-flung areas of the United States, all for the same price of a 45-cent postage stamp,” says Peter Nesvold, a financial analyst with Jeffries and Co.
The fact is, “we have to think beyond mail,” Kent Smith, manager of strategic business planning for USPS, said at an MIT Communications Forum in July. The same Internet that changed the rules of the game for the Postal Service 20 years ago now offers it the best opportunity to survive. Smith and others believe the USPS should seek a larger share of the burgeoning package delivery business that has been generated by online sales.
U.S. Postmaster General Patrick Donahoe has spoken of expanding USPS package delivery to seven days a week to compete with private carriers like UPS and FedEx. A similar scenario occurred a century ago, when Congress prohibited the post office from delivering parcels that weighed more than four pounds (a ban that lasted until 1913). As a result, the USPS didn’t benefit from the rise of mail-order catalog houses such as Sears Roebuck and Montgomery Ward. Then, as now, says University of Washington communication professor Richard Kielbowicz, “few disagreed that the Postal Service should facilitate communications and commerce, but at what point did facilitation become unwanted intrusion of a largely free-market economy?”
The question is still relevant. The same 2006 legislation that required prefunding retiree health care benefits also prohibited the USPS from introducing any new, non-postal services. For example, post offices offered banking services from 1911 to 1960, of particular value then, as it would be now, for low-income, inner city, and rural residents, and recent immigrants. Reinstating banking services is part of the very solution offered in a report the USPS Office of Inspector General issued at the end of July: Create a positive view of the post office brand by offering other types of services—passport processing, income tax assistance, and social services—in effect creating a one-stop shop for federal, state, and local government services. These services are available in post offices in other countries, as is providing a private, secure e-mail box for every citizen.
Extending the USPS’s Congressionally mandated “universal service obligation” to include e-mail service was an idea considered in the early 1980s when the Internet was new. Today, people trade their privacy for free e-mail services such as Google’s Gmail. “We have laws that prevent corporations and unauthorized individuals from reading paper mail, but laws do not cover electronic communications,” says V. A. Shiva Ayyadurai, who consults with the USPS Office of Inspector General.
Advocates of government delivery of public services see the specter of privatization as an effort to dismantle the Postal Service and rob it of its profitable aspects. Others, such as Peter Orszag, former director of the Office of Management and Budget in the Obama administration, say a privately held Postal Service can escape the clutches of Congressional oversight and expand into the digital realm. One blogger even suggested making the post office a worker-owned cooperative.
As Americans and their politicians debate the role of the Postal Service over the coming months and years, the ultimate outcome is uncertain. If Congress is so inclined, however, the USPS, consumers, and the private sector could join to collaboratively look beyond the current financial crisis and envision new ways to utilize the vast postal infrastructure that has been built over the past 235 years.
A Piece of History
Like its Northfield counterpart, the post office in Venice, California, is listed on the National Register of Historic Places and was put up for sale by the USPS. Carleton alumni have worked to save both, though the Venice building has been sold.
It’s hard to miss the Gothic Revival building that sits just south of Northfield’s Bridge Square, facing the Cannon River. Built in 1936 with funds provided by the Works Progress Administration (WPA), the building houses the town’s post office. It is part of the Northfield Historic District and is listed on the National Register of Historic Places. When the United States Postal Service (USPS) announced two years ago that it was closing the facility, residents launched a drive to save it.
“I got involved on the Save the Post Office committee when their objective was solely to prevent the Postal Service from closing the downtown post office,” says Carleton vice president and treasurer Fred Rogers ’72. (The USPS plans to move all services to the carrier annex two miles southwest of town off Highway 3.)
While some members of the Northfield committee—led by Keith Covey, retired head of Carleton facilities and former Northfield mayor—want to continue the fight to preserve the post office function in the Bridge Square building, others say that battle is lost and the focus should move to recommending the best use for the building. Rogers, who also is vice chair of the Northfield Economic Development Authority, is in the latter camp.
“It’s a signature downtown building with the potential to be something very exciting,” he says. “Done right, the post office building could be a huge asset for Northfield.”
Rogers mentions retail and restaurants as potential uses for the building, though, he says, the city council would ultimately have to approve any use based on existing zoning restrictions for the historic district.
Jed Pauker ’76 can relate to Northfield residents’ frustration because he has been active in a similar fight over the post office building in Venice, California. The USPS has already moved retail services from the 1939 WPA post office building to a carrier annex. The sale of the building to Hollywood film producer Joel Silver (Lethal Weapon, Die Hard, The Matrix) was completed in July, despite various appeals and a pending lawsuit on the grounds the sale flouted procedures required by USPS guidelines and federal historic preservation law. A member of the Venice Neighborhood Council Post Office Task Force and a technologist, Pauker is currently working with the City of Los Angeles and the new owner on issues related to preservation and future public access to the building’s lobby and WPA mural.
Beyond his wishes to preserve the historic building, Pauker says he is motivated by the “fundamental issue of free speech and, even more important, free access to information. Everyone in the country must be on a level playing field.”
He pauses for a moment when asked if he would have fought to save the Venice post office if it weren’t housed in an architecturally and historically significant building. “I find myself unable to separate ‘historic building’ from ‘post office,’ ” he says. “All post offices do the same thing: They uniquely honor our government’s obligation to assist all Americans in sharing information.”
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