Update on USPS Closures and Cuts
by Apex Capital | November 26, 2012
The U.S. Postal Service faces a difficult financial situation. CNN Money reported in October that the USPS hit a debt limit of $15 billion imposed by Congress. The Postal Service continues to take measures to cut costs and increase revenue. This strategy has provoked significant opposition and may not provide an adequate solution.
Loss of Postal Service Jobs
The USPS has put approximately 13,000 post offices under review. It may reduce their hours or close them, according to Save the Post Office. The American Postal Workers Union reports that the USPS plans to offer some employees $15,000 to retire early. These postal workers will not be replaced; it intends to eliminate their positions.
A major component of the Postal Service’s campaign to cut costs is the Mail Processing and Network Rationalization (MPNR) initiative. It seeks to close nearly half of the mail processing facilities throughout the nation. This would result in slower mail delivery and a significant loss of employment.
The Postal Service estimates that the MPNR initiative will save $1.6 billion, according to Government Executive. However, the Postal Regulatory Commission projects savings of less than $50 million. In late September, the PRC urged the Postal Service to postpone the initiative and generate more realistic estimates.
The USPS continues to decrease hours at many post offices, especially in rural areas. It predicts that this will reduce costs by $500 million per year, according to USA Today. Additionally, the USPS announced in October that it will increase rates in 2013. The cost of mailing letters and postcards will go up.
What Happened to the USPS?
Many factors contribute to the Postal Service’s current financial difficulties. Federal restrictions, high fuel costs, online communication and the recession have created problems for the USPS. Service reductions often provoke strong opposition from local workers, customers, legislators and media outlets.
The Postal Service is also involved in a major legal battle with Northrop Grumman. It accuses the contractor of taking too long to supply and install sorting equipment, according to the Federal Times. Northrop claims that the USPS violated a contract by requesting changes to the project and withholding payments.
As the USPS continues to close post offices and other facilities, it will hold community meetings and request public feedback. The upcoming court decision on the Northrop Grumman dispute will also affect the Postal Service’s financial situation. However, economic trends and energy prices may have the greatest impact in the long run.