Postal Service On Edge: What Would A World Without Mail Look Like?

You've Got No Mail: Postal Service Faces Bankruptcy

postal service

The post office in Syria, Va., is pretty easy to miss, but then so is the village of Syria itself. Lying in the eastern foothills of the Shenandoah mountains, about 90 miles from Washington, D.C., Syria has just a few hundred residents, mostly natives and recent retirees. The village has no stop lights and one general store, the Syria Mercantile Company, which serves as a grocer, a hunting-and-fishing outfitter and a meeting ground for town gossip.

Inside, near the cash register up front, a single employee of the U.S. Postal Service helms a tiny, wood-paneled office about the size of a generous walk-in closet.

Except for when it was briefly displaced after a pair of long-ago fires, the post office has occupied this same spot inside the general store since 1898, according to Jim Graves, the general store's owner. In a village where many residents still don't have internet access, the Syria post office -- like so many post offices around the country -- remains not only one of the few fixtures in town, but also a primary link to the outside world.

So it came as a great shock when the postal service told residents of Syria last year that the small outpost would soon be closing, the victim of budget cuts emanating from Washington.

“The rural area has no say-so,” says Graves, whose family has for generations run Syria Mercantile as well as Graves Mountain Lodge, a resort that’s the largest business in town. “When you get up there to D.C., those people up there have no concept of what’s in a rural area ... They have no idea.”

At all levels of government, budget cuts are hacking at core services that we’ve long taken for granted, from fire departments to public transportation, and the postal service is no different. The agency has been struggling to get its budget in order and climb out of the red. It is currently facing a crisis, having lost $3.2 billion in the last quarter and $3.3 billion in the quarter before that. At this pace, the agency could run out of money soon.

Americans may soon witness the fraying of an institution that, despite the rise of the internet, they still badly need. Even for those of us who pay our bills online, the postal service is intertwined in our daily lives, delivering the products we buy, the magazines we read and, in many cases, the medications we rely on. And for those on the less fortunate side of the digital divide, a society without decent mail service is hard to contemplate. Mail remains the bind between millions of Americans. For many of them, the letter carrier is the only civil servant they see all day. Even the founders recognized the role a postal service plays in a democracy, empowering Congress through the Constitution to create one.

But now, having exhausted its borrowing abilities, the postal service could face bankruptcy. That’s how Syria found itself on a list of 3,700 post offices around the country targeted for closure, many of them in rural areas where the next post office could be many miles away.

In Syria’s case, their new local post office would be about 10 miles south to Madison, the county seat -- not so far as the crow flies, but a long way on back-country roads and switchbacks, especially with gas over $3 a gallon.

“You get back in the hollows down here, some people would have to go 15 or 20 miles,” says Gene Pells, 75, a retiree in Syria. That means some residents might have to drive more than a half hour to mail a package, pick up some stamps, or buy or redeem a money order. According to Pells, some locals who can’t read also come to the post office to get help paying their bills.

“A lot of people here are pretty well in the dark,” says Pells. “We have no access to cell [service] where we are, and no access to high-speed internet until fairly recently.”

The controversy exposed a few nerves in town. Plenty of residents didn’t take kindly to Washington putting an axe to their century-old office, where for decades families have been making a daily pilgrimage to retrieve their mail at the window, chatting at the informal parlor often assembled at the front of the store. More than 170 people signed a petition, organized by Pells and a few allies, protesting the closure.

Under heavy opposition, the postal service ultimately scrapped its plan to shutter the Syria post office back late last year. But then earlier this year it announced it would be cutting the branch’s hours -- from normal business hours to just two per day, right around lunchtime -- as it would for thousands of others around the country. The lone full-time employee at the Syria office would probably be looking for new work after an unexpected early retirement.

To save the postal service, lawmakers and the agency’s own leadership want to dramatically scale back its workforce and operations. Postal workers and some public advocates warn that such moves will send the agency off a cliff, destroying a service as old as the republic itself, not to mention hundreds of thousands of jobs.

If that happens, the ramifications will be felt not just in small towns like Syria, but everywhere. And Americans who use the post office -- which is to say all Americans -- may have to adjust their expectations of government and what it does for them.

“I have a 93-year-old father in rural, south Alabama,” says Ben Cooper, president of a business association called the Coalition for a 21st Century Postal Service. “He knows what time the letter carrier comes. If he doesn’t come at the right time, my father blames the government. Most people out there have a hard time getting their hands around trillions of dollars of debt and the [European Union] and all of this. But they see the government in simple things like the postal service. If it fails and it doesn’t do what’s expected of it, people see the fabric crumbling.”


Patrick Donahoe, the U.S. postmaster general since 2010, has put himself in an unusual position for a civil servant. He’s essentially pleading with Congress to allow him to put his own agency through significant cuts.

To right the agency, he says it’s necessary to pare back the workforce by another 150,000, eliminate Saturday delivery and close postal facilities that are a drag on the agency’s bottom line.

“Americans are smart people. They know we can’t have the same levels of service and the same size of an organization as we did in the past,” Donahoe says. “We don’t want to be a burden. We take no tax money. We want to run this like any other business.”

Though overseen by the federal government, the postal service is an independent agency whose budget comes from postage fees, not taxpayer dollars. It’s a business that isn’t really a business -- a corporation that must answer to Congress whenever its managers want to make structural changes.

Because of this quasi-corporate, quasi-governmental standing, the postal service suffers from an inherent conflict, says Ron Bloom, the turnaround expert who helped lead the bailout of the auto industry.

“You must make money, and you must carry out all these social functions at the same time,” Bloom says.

Unlike other businesses, the postal service has a “universal service” obligation, meaning it must serve every American home and business -- including the most far-flung. It must also charge the same price for a letter whether it’s going from New York City to Greenwich, Conn., or from New York City to Anchorage, Alaska.

Those letters generate the bulk of the postal service’s budget. High-density areas subsidize low-density areas, and the short deliveries subsidize the long ones. The letter you mail across the city for 45 cents helps underwrite the letter you mail across the country for 45 cents.

The Internet has disrupted this system, however. Though the volume of package deliveries has shot up with the rise of e-commerce, it’s not enough to replace the huge losses from the decline in first-class mail. Online billpay, in particular, has sucked business away from the agency, as has the worst recession in decades.

“It’s been unrelenting,” Donahoe says of the fall in first-class mail. “We’re off almost 30 percent over the last five years, from where it was at the end of 2006.”

The postal service has another unique -- and some would say more pressing -- problem. In 2006, before the housing crash and the Great Recession, Congress passed a law requiring the agency to pay for the health care benefits of its retirees decades in advance, putting the agency on the hook for $5.5 billion a year in payments -- a requirement hard to find elsewhere in either the private or public sector.

The mandate may have seemed like prudent long-term planning during rosier economic times, but most observers agree that it’s handicapped the agency. Of the $3.2 billion in losses last quarter, for instance, about $3.05 billion came from the pre-funding burden, not from operational failings.

Ohio Democrat Rep. Dennis Kucinich, a staunch supporter of postal workers, has gone so far as to argue that small-government advocates in Congress created the mandate in order to deliberately cripple the agency and create an excuse to push for cuts. “That was a move that was designed to deal a death blow to the U.S. Postal Service,” Kucinich said at a press conference last month.

Regardless of the mandate, the decline in mail volume is undeniable and will only get worse. Some supporters worry that the attempts to save the agency will end up killing it instead.

“We need to do some major, thoughtful restructuring of the postal service so it can survive in the long run,” says Bloom, who, along with the investment bank Lazard, has been hired by the National Association of Letter Carriers union to devise a turnaround strategy for the agency. “But we don’t need to rush to judgment and slash and burn the very asset the post office has, which is its network. Then it will never recover.”

Donahoe’s critics say his proposed reforms will start the agency on a “death spiral”: If you cut the post office’s core services, customers begin looking at other options, leading inevitably to more financial hardship and further cuts down the line. A majority of Americans may be willing to forgo Saturday delivery and drive farther to buy stamps, but as the value and convenience diminish, so does the agency’s long-term viability, the thinking goes.

“The post office is being pushed to the cliff, into the abyss,” Ralph Nader, the longtime consumer advocate and an acolyte of the death-spiral theory, told The Huffington Post last year. “The ultimate goal is shrinkage -- continual shrinkage and private businesses pick up the cream.”

Consider one likely service cut: the dropping of Saturday delivery. Seven in 10 Americans support the idea if the savings will help the agency survive, according to a recent New York Times/CBS News poll. But it will certainly make the postal service less convenient.

The postal service has already proposed changing its standards for first class. Whereas a first-class letter is expected to arrive within one to three days, that benchmark would be changed to two to three days, eliminating overnight service. Cutting Saturday delivery would make it even slower.

That could be inconvenient for many and even problematic for others, including those who receive prescription medications by mail.

Tonda Rush, president of the National Newspaper Association, says her members worry that a diminished postal service won’t get community papers to subscribers before they’re yesterday’s news.

Diminished service aside, a slimmed-down postal service could have a dramatic effect on the wider economy. As an American employer, the U.S. Postal Service ranks behind only the federal government and Walmart, with roughly 550,000 career employees on its payroll. (Postal service employees often aren’t counted among the federal workforce since they aren’t paid by tax dollars.)

That’s to say nothing of the wider mailing industry, which would include catalog printers, envelope manufacturers and direct-mail advertisers to name just a few -- an estimated 8 million workers and more than $1 trillion in business annually.
If the mail slowed, so could a good chunk of the economy.

“We’re seeing an unraveling of the basis of the system,” says Rush. “Mail is like oxygen. It’s there and you count on it, and you don’t get worried about it until it disappears. There is going to be concern by a lot of people if this goes away. The national concern is going to be enormous.”


Congress is expected to soon pass legislation that will overhaul the postal service, likely leaving a much leaner agency in its place.

While Donahoe has requested permission to cut 150,000 jobs, the Democratic-controlled Senate passed a bill in April that would free up money to phase out around 100,000 positions. It would also lighten the pre-funding burden, limit overnight delivery in some areas and allow the agency to start shipping wine and beer like private shipping companies already do.

The plan that Rep. Darrell Issa (R-Calif.) is pushing in the House is more severe. It would allow for the phasing out of more than 150,000 jobs, facilitate a quicker move to five-day delivery and bar no-layoff clauses in labor contracts. It would also establish a commission tasked with cutting costs if the agency wasn’t hitting its benchmarks.

“What we have in the Senate is not perfect, but it’s a very good start,” says Sen. Tom Carper (D-Del.), one of the most vocal lawmakers on the issue. Carper, who logged three tours with the Navy in Vietnam during the war, says he partly sees the postal service through the lens of someone serving abroad. “The folks in Afghanistan, when I go visit them, they get mail and they look for packages, but they don’t need the mail like we did. It’s just a reality. Some people might say it’s a death spiral. What I think it is is a wake-up call.”

Whatever the final deal, the postal service will probably be much smaller than it used to be.

In justifying the workforce cuts, Donahoe draws parallels with the auto and steel industries. “I was born and raised in Pittsburgh, and my parents worked for General Motors. I’ve seen two examples of not planning ahead and having companies and people suffering,” he says.

“My view is this: A healthy postal service that employs 350,000 to 400,000 and that pays middle-class wages is a heck of a lot better than an unhealthy one that employs 500,000 or 600,000 and runs up debt and scares people out of business.”

Even if the shrinkage is necessary, however, some question the timing. Public-sector job losses due to budget cuts have been a huge drag on the economic recovery, wiping out many of the gains made in the private sector. As the economist Dean Baker has pointed out, 150,000 jobs cut from the postal service would equal several weeks’ worth of recent job growth in this economy.

“Even if we say that’s a good thing to do, it would be much better if we could put that off,” Baker says. “I understand from an accounting standpoint they want [the workers] off the books as soon as possible, but from an economic standpoint, it’s less money going into the economy.”

Another issue is the level of pay earned by postal workers. The job has traditionally been seen as a gateway to the middle class, with wages that reflect that -- a situation that causes resentment among some, in today’s low-pay economy.

As with a lot of public-sector jobs, workers in the private sector tend to view postal employees as overpaid. Paradoxically, the postal service generally receives high marks from the public, with about three quarters of first-class mail customers offering a favorable review of the agency, comparable to FedEx and UPS, according to surveys by the American Consumer Satisfaction Index.

In other words, a lot of people who approve of postal workers’ performance resent the wages and benefits that underwrite and help ensure that performance. Tonya Detrick, a letter carrier from Hagerstown, Md., hears the gripes often, even from relatives.

“The public perception is that we’re overpaid and the taxpayers are paying us,” says Detrick. “People in my family, who I’ve known my whole adult life, still think taxpayers [pay our salaries]. No, you don’t pay my check. The stamp you put on this letter pays my check. But the taxes you pay the federal government do not.”

“I think that our wages are commensurate with where middle-class wages should be,” Detrick adds. “We need a middle class in this country.”

The postal service was certainly the gateway to the middle class for Detrick, a 24-year veteran. She came to the agency looking for a job as soon as she got out of high school. She and her two siblings were being raised by her mother, who worked long hours for low pay as a retail clerk. They were poor, living together in public housing.

Detrick started out at a salary more than double the minimum wage at the time, she recalled. She had good health insurance and a retirement fund she could count on. She also loved the job.

“I liked meeting people, being outside, feeling like I do a service for the public,” Detrick says. “I’m a people person and it’s a lovable job when you’re a people person ... I’m very satisfied with the life that it’s given me.”

Detrick now earns a salary in the mid-five figures after two decades with the postal service. She’s managed to raise three kids mostly on her own, with one son in college and another headed in the fall. Her well-paying job at the postal service, she says, has made it all possible.

To further complicate the labor issue, postal jobs aren’t just middle-class jobs -- they’re middle-class jobs that have gone disproportionately to veterans and African-Americans. The agency remains one of the largest employers of veterans in the nation, with about one in four carriers having served in the armed forces, according to the National Association of Letter Carriers. About one in five of the agency’s employees are African-American.

Those two communities will bear the brunt of looming job cuts, says Phil Rubio, a former letter carrier who wrote a book, “There’s Always Work at the Post Office,” about African-Americans and the postal service.

“It’s shrinking,” says Rubio. “The post office was one place where African-Americans could find jobs in the 60s and 70s and after that. I’m not African-American, but like them the post office was an avenue to the middle class for me. We purchased our own home, we put our kids through college. Removing that I think is bad for the country in general. Historically, it has been such a rich institution.”


Postal unions have been pushing back against the most austere proposals. Unfortunately for them, today’s political atmosphere lends itself to the kind of job cuts and concessions that could fundamentally alter the agency.

GOP governors across the country have blamed public-sector unions for their budget woes. In Wisconsin, Gov. Scott Walker (R) survived a recall election after championing legislation that stripped most of the state’s public-sector workers of their collective bargaining rights. Gov. John Kasich (R) shepherded similar legislation into law in Ohio, although it was eventually overturned by voters. Many House Republicans in Washington have shown sympathy for rolling back the bargaining rights of public-sector workers.

“To destroy public unions, they would just as soon destroy the government agencies as well,” says Cliff Guffey, president of the American Postal Workers Union, which represents many of the workers who aren’t carriers. “There’s a sanctity of the mail that’s important to a lot of people in this country. But there are people who want to dismantle it.”

When it comes to postal reform, Tad DeHaven, a budget analyst at the libertarian Cato Institute, argues that lawmakers cater too much to the postal unions, as well as to their own constituents. Even self-avowed small-government types have a way of losing their convictions when it’s their own post offices on the chopping block.

“It’s supposed to run like a business, but ultimately it answers to 535 people in Congress,” DeHaven says. “They make decisions on the basis of parochial concerns.”

The unions seem to fear Rep. Darrell Issa the most. As chairman of the House Oversight and Government Reform Committee, Issa holds the key to postal reform on the House side. Unions say his attempt to bar no-layoff clauses in labor contracts as part of the postal reform bill would effectively gut their bargaining power. Issa has warned against a government bailout for the agency, arguing that taxpayers would be on the hook for billions due to labor contracts.

“If USPS is prevented from cutting costs, 400,000 USPS jobs will be put in jeopardy and Americans could face an across the board postal rate hike of 25% -- this could affect rates charged by companies like FedEx and UPS as well,” Issa said in a statement to The Huffington Post. “Eighty percent of USPS operating expenses are labor related. Continuing no-layoff protections that do not exist for the rest of the federal workforce will prevent USPS from returning to solvency and meeting its obligations to employees, retirees, and the American people.”

Postal unions had hoped they’d find an ally in Issa. The California lawmaker had actually been one of the biggest beneficiaries of campaign money from postal unions, receiving $41,000 during the 2010 election cycle, according to the Center for Responsive Politics.

But Issa cast postal employees and their unions as a primary obstacle to financial stability in an op-ed he wrote for the Washington Times in 2010. “[T]housands have less than a full day’s work, and some are even paid to sit in empty rooms,” he wrote of workers.

That rhetoric has angered and baffled employees like Robert Williams, 62, of Washington, D.C. Williams is a 39-year postal veteran who serves as president of his union local, the National Association of Letter Carriers 142. The local has about 1,800 members and covers around 90 percent of D.C.-area carriers, Williams says. Like Williams himself, the majority of the local’s members are African-American.

On a recent morning, Williams gave a reporter a tour of the neighborhood he grew up in, Anacostia, a mostly African-American area of Washington with a high poverty rate. Perhaps aware of a lack of sympathy among the general public for postal employees, Williams instead spoke about how cuts to the postal service would impact poorer residents of neglected neighborhoods in cities like Washington.

But when it comes to the anti-labor sentiment, Williams can’t hide his frustration. He draws a line between the predicament facing postal unions and the rollback of collective bargaining in Wisconsin. He seems genuinely hurt by it.

“We negotiated a contract with the postal service,” he says. “That’s what our bargain is. And now someone wants to come and take away our bargain.

“I take it as a personal affront,” he added. “I’m not going after people in the private sector. Make as much money as you want to make ... I don’t think they understand what unions have done. I really don’t think they do. All the things they have now -- five-day weeks, eight-hour workdays, overtime, child labor laws. That’s something organized labor fought for.”

Yet even Williams recognizes the problem posed by the decline in first-class mail, which isn’t an abstraction when you handle letters for a living. “You can see it,” he says of the falling volume.


If the postal service cuts back or disappears altogether, there are two big competitors seemingly waiting in the wings. As Rep. John Mica (R-Fla.), who pushed a plan to privatize Amtrak service, said at a hearing last year: “The postal service is becoming a dinosaur and will soon be extinct ... I usually use FedEx or UPS.”

Those shipping giants may have a combined U.S. workforce comparable to that of the U.S. Postal Service, but they probably wouldn’t fill the void left by the agency. It’s doubtful that UPS and FedEx would be interested in delivering letters, postcards and bills. With web-centric people winnowing down their mail piles, the profits to be made on first-class mail are dwindling.

Besides, they don’t have the universal network that the postal service has in place, and it wouldn’t make sense for them to try to start going door to door making nickel-and-dime deliveries. Unlike the postal service, the private shipping companies have built networks designed for more specialized, high-dollar shipping, not first-class mail.

In fact, FedEx and UPS are actually dependent on the postal service, just like the rest of us. The agency does what’s called “last-mile delivery,” often carrying FedEx and UPS packages on the last leg of their trip. It simply isn’t profitable for the private companies to deliver all the way to remote homes, so they take advantage of the government’s universal service guarantee for many of their home deliveries.

Package delivery is one promising area for the postal service, thanks to the rise of e-commerce, and private industry would probably be happy to pick up the business should the postal service disappear. But the private carriers would also suffer, at least initially, if the postal service starts to contract.

Asked where UPS stands on postal reform, Kara Ross, a company spokeswoman, says, “We think it’s important to have a strong postal service. They contract to us, and we contract to them.” Maury Donahue, a spokeswoman for FedEx, echoes that sentiment, saying in an email that the company “support[s] efforts to ensure that the Postal Service is able to successfully manage its business. We believe that a healthy Postal Service, the largest postal operator in the world, is important to America.”

Private corporations, of course, have no social obligations to the public the way the postal service does. Lose the postal service and you lose a considerable public asset, and maybe something more, says Ellen Dannin, a professor at Penn State’s Dickinson School of Law who follows privatization trends.

“If you are going to have one country, then you have to take actions that help keep you knitted together as a country,” says Dannin. “I think that we are really in danger of losing what I would call important citizenship values ... We have a responsibility to one another to make [the postal service] function effectively.”

This story originally appeared in Issue 6 of our new weekly iPad magazine, Huffington, in the iTunes App store.

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