US Politics

Post Office Used Bad Data To Determine Closures

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The Washington Post reports that the Post Office used bad data, including inaccurate information about profitability and distance when it decided which offices to shutter:
The U.S. Postal Service relied on questionable data to identify more than 3,600 post offices and other retail operations to study for closure, an oversight panel has concluded.

In many cases the selection process ignored whether an alternate post office was nearby and which closures would reduce costs the most and lacked sufficient data and analysis to make the best decisions, the Postal Regulatory Commission said.

While Congressional meddling is responsible for a large share of the current troubles the Post Office faces (thanks, Representative Rehberg!) Congress should pay attention to this report and put more pressure on the Post Office to make good choices about the branches to close and convert into “village” post offices.

The Post Office simply needs to do better than this:

But the oversight commission consulted economists and other experts who concluded that other factors should come into play: How many miles away is the nearest post office? Would closing deny service to large groups of customers, such as seniors, who would have trouble finding alternatives?

The Postal Service also has a poor idea of how much money the closures will save, the commission said. Postal officials combine revenue from retail sales with day-to-day costs of operation. Balance sheets for several stations and branches are lumped together, making it hard to know which facility loses the most money.

“So when you’re deciding, I want to close this station as opposed to that one, it’s not clear which should go, except for the gut feeling of the postmaster,” Goldway said.

About the author

Don Pogreba

Don Pogreba is a seventeen-year teacher of English, former debate coach, and loyal, if often sad, fan of the San Diego Padres and Portland Timbers. He spends far too many hours of his life working at school and on his small business, Big Sky Debate.

His work has appeared in Politico and Rewire.

In the past few years, travel has become a priority, whether it's a road trip to some little town in Montana or a museum of culture in Ísafjörður, Iceland.

55 Comments

  • While Congressional meddling is responsible for a large share of the current troubles …

    Only partly true and certainly misleading to fail to mention the other causes: http://www.theatlantic.com/business/archive/2011/12/who-killed-the-postal-service/249508/

    We have discussed this before. Failure to mention the other “drivers” of the PO’s troubles, when you know what they are from those discussions, is rather underwhelming. From the Atlantic:

    THE INTERNET KILLED IT

    In the days of yore, sending letters by mail was pretty much the most efficient way to communicate in writing. Then the Internet happened. Although total mail volume stayed relatively steady until 2006, it has dropped an astonishing 20 percent in the past five years. More important, first-class mail, the Postal Service’s biggest moneymaker, has fallen 25 percent during the past decade. That’s a huge problem for its bottom line. The agency now delivers far more “standard mail” — what most of us call junk mail — than first-class mail. According to Businessweek, it takes three pieces of junk to equal the earnings from a single stamped first-class envelope. J. Crew catalogs and pizza menus alone won’t pay the bills.

    The two graphs below, courtesy of a report from the American Enterprise Institute, show the overall collapse in volume.

    615_360_Mail_Volume.jpg

    615_380_First_Class_Mail.jpg

    As the charts show, during the first half of the decade, the slow decline of first-class mail was balanced by rising stacks of corporate junk. When the economy tanked, both went into a free fall. The Postal Service delivers less mail at a smaller profit margin than it did just five years ago. And it gets worse. By 2020, first-class mail volume is expected to drop by half.

    LABOR COSTS KILLED IT

    Yet even as its profits have dwindled along with the mail it handles, the agency’s labor costs have remained stubbornly high. Salaries and benefits make up 80 percent of the Post Office’s budget. By comparison, FedEx spends 43 percent of its budget on labor, while UPS spends 63 percent, according to Businessweek. Why the disparity? As the magazine put it, “USPS has historically placed the interests of its unions first.” For years, it has happily negotiated contracts with generous salary increases and no-layoff clauses.

    That seems to finally be changing. As part of his budget-cutting campaign, Donahoe is looking to slash roughly 220,000 of the Postal Service’s 653,000 employees. About 100,000 of those cuts would happen through attrition. Meanwhile, Donahoe has asked Congress for permission to break the no-layoff provision of the service’s current contracts so it can let go the additional 120,000.

    The key words there, of course, are permission from Congress.

    • This is the second time you’ve posted a large chunk from that Atlantic article, cutting out the portion about Congress’s role.

      At least pretend to be intellectually honest. The next header (you must have some bizarre character limit on copy and pasting) is

      CONGRESS KILLED IT.

      • Don, yes you should at least attempt to be honest. I stated that Congress’ involvement is partly true. You left out the other legs of the stool’s collapse of which you are fully aware. From your own WP link: “As it fights plummeting mail volume, the Postal Service announced plans in July to close about 3,600 of its 32,000 post offices. ” Funny how you left that out of your post, and even funnier as to how it relates to the point from the Atlantic regarding how the internet has taken away the PO’s profitable first class business. And you completely avoid to mention the PO’s uncompetitive cost structure as, again, explained by the Atlantic. Your attempt to score political points without explaining the problem is, indeed, intellectually dishonest.

  • There is nothing in the constitution about the PO being profitable. It doesn’t have to be. It’s a useful service and a good career for people of ordinary talent. God forbid that ordinary people should have nice lives. So what if we “subsidize” it – I can’t think of anything less important. The Pentagon loses that much money before breakfast just buying toilet seats and swinging missile dicks.

    Other thing to factor in, beyond Internet competiton and non-union competition (FedEx) is the Postal Accountability Act of 2006, which mandated that they fund their pensions 75 years outg to the tune if $5 billion per year. They knew what they were doing – crushing another union. No other enterprise n the country is saddled with such a pension burden. Remove that, and the PO is damn near breaking even.

        • That’s why the PO should contract with the brown shirts for those rural routes.

          You know, some union competition.

          • You demonstrate a fundamental misunderstanding of the nature of the post office. It is a service entity, like buses, that is part of the commons and operates in the background to enhance commerce. So its costs are known, but the economic value it produces is not quantified, but like buses that bring people to businesses to shop, part of the value of the enterprise is captured in the the income statement of the business, and not for tshe bus line. So it may look like the bus line loses money, but taken as part of the whole of the city economy, it is not. To reduce PO down to a normal for-profit business is to undermine its mission. It’s not a business. It’s a service.

            I know how right wingers think, and you’re likely thinking that any enterprise that cannot produce a profit should not exist, and that unions are undemocratic. Both of those thought are wrong and the seeds of the reasons why are contained in this comment. Will they grow in your fertile mind? Or do they fall on barren soil?

            • You don’t understand the advancement of technology.

              Say, you’ve been around a while. Did you bitch when they closed down your Pony Express Office? Even though those riders were replaced by rail did you keep funding their pensions?

              Kramer was ahead of his time.

              • I don’t know the future of technology, but with each advace has also come great setbacks. Email brought Spam, telephone got us telemarketers, and Internet xommunication of all kinds can easily be intercepted and read by our overseers. So I son’t know where we stand in the “advance” department. I do know I still send out a lot of first class mail, but that the amount of junk I get (subsidized by law by first class mail) constitutes the major bulk of the postman’s duties.

                I do wish private banks would drop their $10-$15 charges for wire transfers, which are virtually cost free. That is a real barrier to commerce. That’s an aside.

  • Some would say that a non-commercial post office is in fact essential to securing national unity. A cheap way to send letters from anywhere in the country to anywhere else in the country is important, especially in a country this size. I think it stands to reason. Sometimes the interests of a for-profit entity are not identical to the interests of the country as a whole. This should surprise no one.

    Now, whether the post office can really be supplanted by technology, if the existence of email makes the postal system obsolete, is another one entirely. Judging from the complaints the post office closures have engendered, we aren’t really there yet. As a member of my generation, I can definitely foresee the day that post offices are replaced with centers full of scanners, printers, copiers, hi-speed internet, and attendants to show the technologically inhibited how it works. I’m not sure we are there yet, however.

  • From Denny’s site 11/14.

    ILLINGS, MT – Montana’s Congressman, Denny Rehberg, today delivered hundreds of comments from around Montana to the United States Postal Service relating to proposals to close more than 90 rural post offices. The comments were sent to Rehberg by Montanans as a part of his innovative “Mail Call Montana” initiative.

    “The best policy solutions usually come from places like Montana,” said Rehberg. “Mail Call Montana is a way for us to get some of those Made-in-Montana ideas into the decision making bureaucracy in Washington, DC. The response to this effort has been overwhelming. I think it will be very helpful for the Postal Service to see for themselves that while their proposals may look good on paper, they simply won’t work in Montana.”

    Earlier this year, the Postal Service proposed closing more than 90 post offices in Montana. Rehberg, who regularly travels throughout Montana’s 56 counties, immediately expressed concern about how the closure of so many local offices would affect Montanans who depend on their services every day for personal and business purposes.

    The “Mail Call Montana” initiative harnessed grass roots support for local post offices by asking Montanans to submit written comment about the important role their post office is to their community and their way of life. Participants were encouraged to utilize their own local post office to send comments by mail.

    “The Postal Service needs to listen to Montanans before making any sudden decisions to close the offices that people depend on every day,” said Rehberg. “The Postal Service should not expect to balance their books on the backs of rural America.”

  • I’ve read the postal commission’s report. What struck me is how poorly the USPS tracks and separates the costs of its operations. At this point, it doesn’t have good enough information to determine whether, let alone how, it can consolidate services and still fulfill its legal mandates, or even whether is can save very much money.

    One legal mandate that should and could be lifted is the pension funding requirement, which makes no sense from a policy standpoint. I think it’s an attempt to break the USPS’s financial back, an attempt to create conditions arguing for privatizing the post office. Repeal that requirement and solving the postal system’s problems becomes much easier.

    I agree with Tokarski. There are sound social and political reasons for a government run postal system.

    *******

    In the Flathead, the USPS was considering moving the 599 Zip-3 sorting operations to Spokane. Local newspapers reported the move would save money (by cutting jobs), but not all that much because of the cost of hauling the mail to Spokane for sorting there, then hauling it back to Kalispell. No mention was made of the additional greenhouse gases that the extra hauling would put in the atmosphere.

    • Congress is absolutely trying to break the Post Office, certainly an interesting position for those who loudly bray their support for the Founders at every turn.

      While I am thankful that options like UPS and FedEx exist, it’s madness to believe they can provide the services that the USPS does. It remains a vital, affordable link between distant parts of the country and world.

    • Happy New Year to everyone! May our country endure and prosper.

      James, I think the recommendations that the report criticizes were a “down and dirty” amputation to staunch the financial bleeding and stop the disease. The twin evils the PO faces at this time is the continued hemorrhaging and time. The study approach has no sensitivity for those evils. As to the pensions, that’s debatable because it does not address the underlying problem drivers. Short term fix at best with the long term problem of not having funded future pension liabilities. Any approach other than the one proposed by the PO should address the following questions, and many others:

      == What is the sized of the current financial debt?
      == How fast is it growing?
      == How much longer can the PO operate with these losses?
      == What is the time line for any proposed study and alternate approaches?
      == How much would be saved with the alternate approaches vs what the PO proposed?

  • If you are like a lot of people you can simply overlook this. The best thing you can do is become relevant with yourself and faithful with your own morals. This will lead to a sad and unfulfilling life.

  • Whats up this is kind of of off topic but I was wondering if blogs use WYSIWYG editors or if you have to manually code with HTML. I’m starting a blog soon but have no coding expertise so I wanted to get guidance from someone with experience. Any help would be greatly appreciated!

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