Postal Service Will Delay Mass Closures

The outlook is grim for the U.S. Postal Service, with plans to close thousands of post offices and cutting processing centers, but the inevitable is being postponed for now.

The Washington Post reports that USPS is delaying the bloodletting until at least May 15. Lawmakers, looking to save face by preventing job losses and poor service in the areas they represent, spurred the delay by requesting more time to overhaul the organization.

The USPS is hemorrhaging money and looking to slash $20 billion in costs within the next three years and change.

Postal Service to delay closures [The Washington Post]

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  1. SkokieGuy says:

    I am baffled as to why the post office is talking about layoffs and service cuts.

    Why aren’t they publicizing the insane 75 year retirement benefit prepayment requirement and their inability to adjust rates without a (literal) act of Congress.

    UPS / FedEx and every other carrier can deploy rapid “fuel surcharges” and also announce permanent rate increases when needed.

    • SexCpotatoes says:

      The 75 year retirement benefit prepayment requirement SkokieGuy is talking about is CRAZY! The Republicans passed a law back in 2006 or so that said they have a mere 10 years to fully fund their employee retirement fund for the next 75 years!

      • Nigerian prince looking for business partner says:

        What is an appropriate pension pre-payment and what are you basing the figure on?

        • SkokieGuy says:

          Separate from your question,

          1). Do you agree the requiring advance funding for 75 years of pension obligations is crazy? This means fully paying for future retirees who have not been born yet.

          2). Do you agree that requiring 75 years of pension obligations to be funding in 10 years is crazy?

          Now, to answer your question, the IRS guidelines for small business states:

          “Minimum Funding Requirement: In general, if your plan is a money purchase pension plan or a defined benefit plan, you must actually pay enough into the plan to satisfy the minimum funding standard for each year”

          So it sounds like Congress has burdened the post office with 74 MORE years of prefunding that many other businesses are obligated to maintain.

          • Nigerian prince looking for business partner says:

            What is the standard for other federal agencies?

            Funding for one year at a time is a good way to bankrupt an organization (whether a car company or a city government) and relies on continual growth. My city is on the verge of receivership because for the past 60 years, the pensions were underfunded and payments came out of the general fund. Long term projections were also based on the assumption of continuous population growth, unrealistic investment returns, and shorter life expectancies. Virtually every state and city government in the northeast and mid-west is in a similar situation.

            Why didn’t the Democrats over turn the policy when they retook Congress?

            • SkokieGuy says:

              You are doing an excellent job as a GOP troll.

              You ignored my questions, because no sane person could acknowledge that 75 years of prefunding in a 10 year window is reasonable.

              You also take GOP’s legislation and try to blame the Dems for not overturning it. How about blaming the GOP for enacting it in the first place?

              Yes, the Dems had a brief window of control of congress. But as anyone even remotely politically aware recognizes, the GOP minority used the filibusterer constantly to insure that a simple majority was meaningless in terms of passing legislation.

              I’d done responding to you.

              • Bsamm09 says:

                I agree with the funding of the pensions but are they required to offer pensions? Could they just say after “X” date, no more pension and we will go to a defined contribution plan. Pension funding is a joke and the minimum required is not enough with the highly optimistic growth rate assumed.

                With people living longer and longer, pensions will crush a lot of companies. When these companies fail, the pensions get pushed on the taxpayers via the PBGC.

              • Nigerian prince looking for business partner says:

                GOP troll, seriously? Don’t you read any of my posts here?

                If 75 years is too long and one year is too short, what is a reasonable amount of time and what is the figure based on? What was the name of the legislation that implemented the 75 year rule and was it a straight party vote?

                Defined benefit pensions are a whole can of worms to begin with. There’s a reason why, for the most part, they only still exist in government. Few businesses could survive with largely unknown, massive long term liabilities.

                • Firethorn says:

                  Hmm… Let’s say that it takes working at the Post Office 30 years to get the ‘standard’ retirement. 20 years gets you 2/3rds the benefits(such as military retirees who already put 20-30 into the military before going to work at the PO), 40 years gets you 133%, but the average is 30.

                  As such, they should have to contribute, each year, 1/30th of the total anticipated cost for the retirement of the current workers.

                  Let’s also say that ‘average retirement cost’ is $24k/year, and that you should expect 4% interest on the fund holdings, and that, on average, you’ll need to pay for 30 years. *breaks out spreadsheet*

                  By my *rough* calculations, that’s $7,500 into the pension fund, per year, per employee. Of course, that only gives you ~$24k per retiree per year. If that’s not enough, $10k per employee gets you $32k per year. A worker that stays on for 40 would be able to get $55k, and a 45/25 work/retirement split would get $77k off of a $10k annual deposit.

                  At which point the pension fund, spread across a huge number of retirees, over a huge number of years, should be financially very stable(and large), plus contributions would naturally grow/shrink as the business grows and contracts. The fund would also be stable – in low interest years, retiree costs would essentially be paid by the business contributions, while in boom years the fund would grow like a weed. I’ll note that 4% is still a fairly conservative interest rate assumption.

            • ARP says:

              “Why didn’t the Democrats over turn the policy when they retook Congress?”

              Filibusters. Also asking why they other party didn’t fix it still shows that one side is wrong and disingenuous about the “manufactured” crises. Democrats have tried to partially reverse it in April. http://thomas.loc.gov/cgi-bin/query/z?c112:H.R.1351.

              Do people honestly believe that using FedEx and UPS is going to be cheaper if the USPS went away?

              • Nigerian prince looking for business partner says:

                Thank you for the clarification!

                What was the name of the bill that Democrats brought before the Senate to remove the 75 year rule and was filibustered by the Republicans? I’d really like to see the arguments for and against it.

                I like the USPS and would hate to see it go away. I’ve just lived most of my life in the northeast and have seen first hand what happens to declining areas and industries with underfunded pensions. Because of poor planning, close to half of my city’s budget goes to pension payments for retirees. It’s simply not sustainable and the problem is being exasperated by the bear market.

    • consumeristjohnny says:

      I agree with you on this. The other thing I question is, if a business funded their pension plan this way, and then went out of business. What would happen to the pension fund? Unless of course somebody thinks there will be EVERY retiree living 75 years beyond their age of retirement. If the person started working at the age of 18 and worked for 30 years, that would put them living to 123. I can with certainty say, it wont be happening.

      • SkokieGuy says:

        Johnny, you are misunderstanding. It’s not that a retiree will live for 75 more years after retirement.

        The requirement is that the PO have enough money set aside for this year’s retirees, next year’s retirees and so on all the way to people who will retire in 2086.

      • Nigerian prince looking for business partner says:

        Private pensions are insured by the PBGC. Being a quasi-government organization, I don’t think the USPS pension is insured.

        One of the biggest advantages of defined contribution plans (eg 401k) is that they are always fully funded and don’t create long term liabilities. Defined benefit plans create massive liabilities and are virtually always based on fuzzy math to minimize current funding levels.

    • jeb says:

      It wouldn’t be enough, though. It may get close to what we need in the short term (they pay $5.5bn/yr, some of which they should pay already since they do have retirees, and the current amount they need to cut is $20bn over three years, according to this article), but as the deficit grows wider, they’ll still need to find solutions to the problem.

      http://www.coloradoan.com/article/20111213/OPINION03/111213001/USPS-pension-plan-dragging-down?odyssey=mod|newswell|text|FRONTPAGE|s

      • ARP says:

        But they can’t raise prices or close offices without congress giving the OK. Since the political party in power wants to get rid of them, do you think that party is going to agree with allowing them to raise prices? No, the manufactured pension crises along with the refusal to use the “levers” that other businesses have, is designed to kill USPS, not to save it, make it solvent, etc.

    • tinyninja says:

      UPS increases it’s rates 5% every January. Just FYI.

      And thank you for understanding fuel surcharges. I don’t see what’s wrong with having a large package going to BFE cost substantially more than a smaller package going to a more metro area. But a lot of people think charging for costs actually incurred is somehow evil.

      I blame the post office for this skewed thought process.

    • Matthew PK says:

      USPS is a government agency masquerading as a private enterprise. Its pension requirements are designed to prevent *government employees* from having a defaulted pension.

  2. mikedt says:

    I like the post office. I find it amazing that I can mail something from the east coast to the west coast for 44 cents. That said, there are far too many post offices out there. Off the top of my head I can think of 3 within a 4 mile radius of my house.

    And as Skokie mentions, they’re expected to operate as a real business without the powers of a real business. Not fair.

    • sponica says:

      I think in some areas, there aren’t enough post offices (or aren’t enough postal employees). Anyone who’s had to do something that required interacting with a postal employee in certain post offices in Brooklyn, NY will agree. I swear those lines moved so slow, it felt like time was moving backward….I used to actually bring all of my packages with me to Manhattan and mail them from a post office closer to my office as it usually had an APC or shorter lines.

    • Matthew PK says:

      They’re not expected to operate as a real business. They have a federally enforced monopoly and they pay no taxes.

    • yurei avalon says:

      Depends where you live. I live in the second largest city in my state (~85k population) and we have 2 post offices to meet the needs of the city. One of which is in a horrid location downtown with no parking. It’s terrible, the lines are long no matter what time of day I try going. I usually drive further away to a post office in a smaller neighboring town because it’s still faster than the hassle of going to one of the city locations and finding a parking place.

      When I lived in a much smaller town (~15k population) 1 post office and an annex for package pickup and PO boxes was fine, the post office was only really busy at peak hours.

  3. Captain Walker says:

    So the branches with 3 customers/day are going to stay open another 5 months or more?

    Brilliant.

    It doesn’t HAVE to be all or nothing. Shut down the least used branches now, transfer the few people who work there to nearby (or relatively nearby) locations, and get cracking on saving money.

    Sheesh

    • SynMonger says:

      Yeah, also brilliant when you consider that most of the closures they’re looking at are for rural areas that need a post office or station nearby.

  4. Mr_D says:

    Close every post office branch, and replace them with the automated post machines.

    Mail horror story (or at least story of baffling incompetence): I recently went on vacation, and had my mail held. I specifically told them to hold it at the sort and not to deliver it (my mailbox is small, and won’t fit much). Well, two days before the hold scheduled to end, I get email notification that the hold is ending and they are resuming normal mail delivery. I return to find my mailbox bursting with mail. It turns out they not only stopped the hold a day early, they delivered the held mail even after I specifically requested pickup at the local sort. However, I noticed some items that I expected to be delivered (loan paperwork and debit card for the CREDIT UNION I changed to) were missing. I went to the post office, where they had 2 service windows open for a line out the door, and when it was finally my turn, they said they had no record of the hold and there was no mail being held for my address. I left with a phone number to call the next morning. The person I talked to had no idea either, and then the remaining mail was delivered later that day.

    • Mr_D says:

      Wow, that was a wall of text. Sorry.

    • Bunnies Attack! says:

      Mail awesome story (or at least a story of going beyond the call of duty):

      For about a year I ran a small business importing and selling small electronics. One day I get an order in from Indonesia but paid for with a US paypal account. Everything checks out ok so I drop the package off in the morning at the post office.

      Later that day, I get a notice saying that the payment was from a stolen account so I call the post office to retrieve the package. I found out that they had already delivered it to the central processing facility to sort so they try and stop the package there.

      They tried for an hour to find information on the package, turns out its too late, its already been sorted and was on a truck going to Ohare to be sent overseas. The employee at my local branch jumps into his car and says he’s going to try and intercept the package for me there.

      A couple hours later, I get a call saying he caught it before it was loaded onto the plane and would have it waiting for me at my local branch.

      • Applekid ‚îÄ‚îÄ‚î¨ Ôªø„Éé( „Çú-„Çú„Éé) says:

        WOW that’s crazy! That fire of motivation sounds lit by having been a victim of a scammed account, too.

    • stranger than fiction says:

      I started to post my own mail hold horror story here, but it quickly became a candidate for TL;DR. Without spoiling the punch line, let’s just say I had the opposite problem — we couldn’t get delivery restarted!

      This same nearly-new post office was the home of the stamp bandit (I’m pretty sure Consumerist covered that story, but I can’t find a link), and is/was rife with other examples of incompetence. Its newness is probably the only thing that kept it off the closure list.

  5. Costner says:

    I always feel that when you have underperforming stores that are bleeding red ink the best course of action is to keep these stores open for another six months just to be sure, and to all but guarantee a few more billion down the drain.

    Are you kidding me??? Close them yesterday. They listed something like 80 post offices to be closed in my home state, and all but a half dozen were in towns where the average population is sub-1000 and where another post office location can be found via a 15 minute drive down the highway. The remainder were redundant locations in larger cities which only exist because they were useful at one point probably back in the 1970s.

    This is just Congress being Congress. They aren’t willing to make tough decisions so they use stall tactics. In another six months they will extend the deadline again pushing it beyond the 2012 elections just to safe face and hopefully protect their jobs.

    • ARP says:

      Yes, but one side actually wants to keep the USPS open by easing the Retirement funding over-zealousness. Many pensions are underfunded, so there should be some pre-funding, but not 75 years. If you actually eased that up, USPS would be dong OK.

      The other side wants to stall job losses by using government spending that they complain about.

      • Costner says:

        I’m ok with easing the pension funding, but they should close these post offices and processing centers either way. No private company would allow a location to remain open when it sees less than 10 customers and has losses of tens of thousands of dollars each and every year. It is incredibly ignorant and they have stayed open far too many years.

        • SkokieGuy says:

          Bingo! It doesn’t have to be an either or choice.

          There are too many physical post offices, and some can be closed.

          The 75 year pension pre-funding requirement is insane and can be reduced

          Free the post office to adjust rates based on market conditions and costs without an act of congress.

          Possibly long-term, the employees could be moved to Social Security or a replacement for a defined-benefit be found.

          So rather then either / or, maybe an intelligent congress (ain’t that an oxymoron) can initiate multiple solutions?

    • Firethorn says:

      The local post office that they proposed closing is indeed a small one, but they noted that the figures they used to say that it needed closing are from like 10 years ago – the branch is always busy, it’s in a ‘free’ location(on base), and the one 15 minutes down the road would have to extend it’s hours to let people from on base get to it after work, as 15 minutes is enough time that ‘over lunch’ isn’t a practical option.

      IE closing it wouldn’t save them a plumb nickel.

  6. Costner says:

    Let me tell you about my postal service experience this week so far. On Monday I was home and the postman pulled up in front of my house where he began searching his car for a package for me. I had just stepped out to the garage on my way to do some shopping, so I figured I would wait for the package. Five or six minutes later after searching the entire truck at least three times he walked up with five pieces of mail and proclaimed that he thought he had a package for me, but he couldn’t find it.

    Fine – so I take my mail and as he is standing there blaming some other employee for mislabeling his little tag that said I had a package, I notice the very first piece of mail he handed to me was for someone else at another address. I had it back. The second piece of mail was for my neighbor, so I hand it back. The next two were for me, and the fifth was for an address I didn’t even recognize.

    So out of five pieces of mail, three were for someone else. Is that a sign of good quality control?

    He didn’t say a word and just took the mail back. About three hours later my doorbell rings and I go to answer it as I see the post office truck pulling away. There was my package – I guess he was just blind the first time.

    So then yesterday (Tuesday) I go to check my mail and out of three items, one of them was for another address that is several streets away. It isn’t like it was the wrong house number or something… this was a totally different street and the street name isn’t anything like my street name.

    So if you are keeping score out of a total of eight pieces of mail over two days, four of them have been for the wrong addresses. I’d like to say this is a rare situation, but I get mail for either one of my neighbors, for a man who hasn’t lived at this address for several years (and the post office has been notified of this numerous times) or for a totally different address at least once or twice a week. I even went so far as to print up a huge sticker that is stuck to the inside of my mail door that lists my full name so they would know who should be getting mail there. It hasn’t helped.

    I’m trying to remember the last time UPS or FedEx delivered a package to my door that was supposed to go somewhere else…. but that has never happened. Is there any wonder why the post office is going broke?? They are simply incompetant. How hard is it to deliver the right mail to the right address? Isn’t that sort of the core service they are supposed to offer?

    • tinyninja says:

      I work for a UPS Store–we have 400 mailboxes so part of my job is sorting mail. *Daily* we get mail that is not for anybody at our store. The mix includes mail for other businesses in the plaza, mail for surrounding homes, mail destined for other cities, and mail destined for other states. Yes, the mail is sorted by bar code, but people also sort it every step of the way. Why would a piece of mail that is supposed to go to, say, Delaware, even be put in our bin? WTH?

      I’ve also seen our main carrier sit in the back of his truck merrily scanning all his delivery confirmation packages ahead of time, rather than scanning it as it gets to the proper location, thus rendering it completely useless. The reason he can do that is because neither the trucks nor the scanners have GPS, and the scanned info is updated at the end of the day.

      I propose two fixes–a reward program for any employee who intercepts a piece of mail headed towards the wrong destination. A dollar per piece could net a diligent employee a nice little bonus. And GPS for the scanners and trucks, with real time tracking. This would, of course, need to be funded by getting rid of the six $80,000 middle managers per facility who sit up on the catwalks watching the sorters, but with my proposed ideas in place they wouldn’t be needed at all.

  7. scoosdad says:

    It’s the inefficiency of the postal service that bothers me most. Fedex and now apparently UPS also are using them for the last mile of some package deliveries. By online tracking I see my package sprinting across the country at lightning speed aboard a UPS plane or truck, only to be dropped off at the local USPS depot where it sits undelivered for about three days on average, it seems.

    That doesn’t give me any confidence in using the postal service to deliver a package for me end to end, if they can’t even get off their butts to complete the delivery of packages that are a source of outside revenue for them.

    • jeb says:

      That could be because they’re low priority, but I had it where it looked like it sat in the UPS depot for three or four days waiting to be given to the post office. (No, the “Electronic Delivery Information Received” doesn’t count, as they don’t have the package then.)

      Magically, the tracking information changed for UPS to say they gave it to the USPS two days earlier. Yeah, right. Why didn’t you update it then?

      Personally, First Class and Priority Mail are amazing deals, especially for small-ish packages.

    • Not Given says:

      On a government holiday, I watched for my package as I saw where it left the nearest UPS. It then updated and said it was undeliverable because the business was closed. I questioned UPS about it and they told me the post office being closed was the reason I couldn’t get my package today. That’s the first I heard of the post office being involved at all.

  8. lovemypets00 - You'll need to forgive me, my social filter has cracked. says:

    My selfish reasons for wanting the post offices to stay open is because I don’t want to wait 5 or more days to get a Netflix DVD from the Netflix warehouse that’s only 1 1/2 hours from my house. I’m on rural delivery and don’t have a post office box. Even if I did, I’d have to drive into town to get mail, and without knowing what was actually there, who wants to make trips like that for junk mail?

    My non selfish side says to limit rural delivery to 2 days a week, like Tuesday and Friday. And even at that, set up neighborhood mailbox units so the carrier can make more centralized deliveries rather than driving all over the place.

    I just read an article about the post office cuts – it was by the AP and published in our local paper – that basically said even with cuts, there wouldn’t be much savings because the workers would still be employed, just doing other things. Plus it actually said they were worried about the postal workers finding employment doing other things because they just weren’t qualified. Yikes.

  9. brinks says:

    Most of us don’t need a post office branch. You can buy stamps at the grocery store, you can mail a package at a place like Mailboxes Etc. If you’re in a rural area and those places aren’t very close, chances are the Post Office isn’t that close to you, either.

    I only mail my rent, subscribe to one magazine, and send and receive Christmas cards, so losing a day of delivery wouldn’t hurt me, nor would another price increase.

    They need to do whatever needs to be done. Fast. We’ll survive and adapt, but THEY won’t if they don’t take some action.

  10. Matthew PK says:

    The post office is a tax-payer supported monopoly where a “natural monopoly” is not warranted.

    • Firethorn says:

      Until extremely recently, the post office needed no federal funds. Heck, it’s not getting federal funds now. It’s the most cost effective way to ship letters, delivers to everyone(fedex and UPS don’t), and is even cheaper on most packages if you’re willing to wait a little bit longer.

      Trust me, if you’ve ever had to deal with other country’s equivalents, you’ll find that the USPS is a world leader in mail delivery.

      • Matthew PK says:

        The USPS does not pay sales tax, they do not pay income tax, they do not pay vehicle tax, they do not pay fuel tax, they do not pay property tax, they have the power of eminent domain, they have their own federal police force, they have a federally-enforced monopoly on bulk-letter carry and the use of addressable mailbox use.

        Each of these is a tax-payer subsidized process that is a burden to any private enterprise. That difference in the postage cost? Yes, you’re still paying it.

        • ARP says:

          So what about the taxes. How much does FedEx pay in taxes? How much of the fees are taxes? It sure as hell isn’t $5 (the cost different to sent a letter via USPS v. UPS). It’s probably a few percentage points, tops.

    • Axon2 says:

      For all of that, the USPS does a pretty fair job of delivery considering all roadblocks thrown at them; 2 all powerful unions, the inability to change pricing to reflect their operating costs and the inability raise prices without an act of Congress. The price of first class postage was kept artificially low for decades because Congress was too chicken to let it go up.

  11. Kuri says:

    And there are people who want it all shut down post-haste because the manager, how dareh e, wanted no distractions for his employees and customers.

  12. kingdom2000 says:

    Republicans broke USPS on purpose despite its existence being a constitutional requirement (but historically GOP loves to ignore the constitution while claiming to love). Now you are thinking the thousands of jobs losses would motivate the GOP to try to fix that which they broke (with their fund 75 years of pensions (aka through 2086 give or take a few years) by 2016 but you would be wrong. If anything they will double down on it and try to make it worse.

    Make no mistake, the GOP want USPS gone. Part of it is the hate for government. Part of it is the believe that free market will fill in the gap (and probably will for a dollar a letter and those out in rural areas that UPS and others usually pay USPS to deliver too? Yeah tough luck, no mail for you.) Also they want to push us to the edge of a depression, feeling that will get Obama and democrats out of office. Then, through no taxes for corporations and rich people, that will someone magically fix everything even though historically that accomplishes next to nothing in meaningful job growth.

    Long story short, between GOP’s ruthelessness and Democrat wimpiness, this extension will accomplish nothing.

  13. kingdom2000 says:

    Republicans broke USPS on purpose despite its existence being a constitutional requirement (but historically GOP loves to ignore the constitution while claiming to love). Now you are thinking the thousands of jobs losses would motivate the GOP to try to fix that which they broke (with their fund 75 years of pensions (aka through 2086 give or take a few years) by 2016 but you would be wrong. If anything they will double down on it and try to make it worse.

    Make no mistake, the GOP want USPS gone. Part of it is the hate for government. Part of it is the believe that free market will fill in the gap (and probably will for a dollar a letter and those out in rural areas that UPS and others usually pay USPS to deliver too? Yeah tough luck, no mail for you.) Also they want to push us to the edge of a depression, feeling that will get Obama and democrats out of office. Then, through no taxes for corporations and rich people, that will someone magically fix everything even though historically that accomplishes next to nothing in meaningful job growth.

    Long story short, between GOP’s ruthelessness and Democrat wimpiness, this extension will accomplish nothing.

  14. OMG_BECKY says:

    USPS is not hemorrhaging money, don’t believe the hype.

  15. Broke_Daddy says:

    I appreciate the Post Office and the employees. They’re good people. On the other hand, management and contract negotiators are a little short in the common sense department.
    Personally, I wouldn’t mind if they raised the postage rates, HOWEVER; it’s my gut feeling from past experience that it won’t matter how much you raise it, they will still manage to mismanage it and end up in the hole very quickly. If I thought they could raise rates and do well, then no problem, but there’s never been any evidence of it.

  16. Yorick says:

    That so nice of them! Considering they already closed a couple branches around here back in October.