The U.S. Postal Service announced Thursday that it will reduce its workforce with layoffs and offers of buyouts and will close seven district offices from New England to New Mexico to help address record losses.
The reorganization, designed to eliminate 7,500 administrative, executive and postmaster jobs this year, came as a commission that is evaluating the Postal Service’s plan to eliminate Saturday delivery concluded that one in four letters would be delayed by not just one but by two days.
The independent Postal Regulatory Commission also said that postal officials underestimated the losses the agency would suffer from handling less mail— and overestimated the cost savings.
Five-day service and a smaller workforce are among the Postal Service’s strategies to become solvent after losses of $8.5 billion in fiscal 2010, the result of declining mail volumes. Projected losses for 2011 are $6.4 billion.
Once buyout decisions aimed at administrative staff are final in April, the agency plans to eliminate the jobs of thousands of postmasters and supervisors, many through layoffs, officials said.
“Nobody did anything wrong, but we’re a victim of the economy and past legislation,” said Anthony Vegliante, the Postal Service’s chief human resources officer and executive vice president. The cuts are expected to save $750 million a year.
District offices that handle managerial work will close in Columbus, Ohio; Albuquerque; Billings, Mont.; Macon, Ga.; Providence, R.I.; Troy, Mich.; and Carol Stream, Ill., the Postal Service said.
The closures will pave the way for the agency to close up to 2,000 local post offices throughout the next two years, a plan announced in January.
Vegliante said he expects about 3,000 administrators to take the buyouts, which will offer $20,000 to employees over age 50 with at least 20 years of service, or any age with at least 25 years of service. Layoffs will then be used to help reach the 7,500 goal, he said, though he would not commit to a number.
The Postal Service has eliminated 105,000 full-time positions in the last two years, among them clerks, plant workers and mail handlers. Those cuts were made mostly through attrition and early retirements.
The Postal Service announced plans for five-day service in 2009, although Congress, which must approve the change, has showed little interest in pursuing it.
Among the findings of the 211-page opinion from the Postal Regulatory Commission:
• Five-day service would delay by two days delivery of 25 percent of first class and priority mail.
• The Postal Service did not adequately evaluate the effect of five-day service on rural areas.
• While the Postal Service estimated net savings from the reduced service at $3.1 billion, the commission’s estimate is closer to $1.7 billion.
• Lost revenue from mail volume declines from the service cuts would be $600 million a year, not the $200 million the Postal Services estimates.
Margaret Cigno, the regulatory commission’s chief analyst, said many letters normally delivered on Saturday would not arrive until Tuesday because Saturday mail would no longer be transported and processed over the weekend. “Saturday would not just end delivery, but mail would not go out,” she said.
Postal officials said they would continue supporting the plan.
“I’m comfortable that people did their due diligence,” Vegliante said, calling five-day service “an inevitable question.”
“Whether it’s tomorrow or 10 years from now, sooner or later it’s got to be dealt with.”