Through Rain, Sleet, Snow -- But Perhaps Not Lean Times

By Joe Davidson
Tuesday, October 28, 2008

Things are looking bleak for the U.S. Postal Service.

It projects that it will deliver 9 billion -- that's with a "b" -- fewer pieces of mail in fiscal year 2008 than it did the year before. That drop is about 10 times greater than the 902 million decline in deliveries between 2006 and 2007.

This drastic plunge can be traced to the surge in e-mail, the nation's general economic malaise and the Wall Street meltdown.

"A lot of advertising mail volume is from financial institutions and the housing industry," said Gerald McKiernan, a USPS spokesman. "That accounts for a lot of that loss."

Postal officials expect the service to lose $2.3 billion in fiscal year 2008. The loss was even steeper -- $5.14 billion -- in 2007, which was the first year USPS was required to make a payment into the Postal Service Retiree Health Benefits Fund.

The dire financial situation prompted William Burrus, president of the American Postal Workers Union, to warn that the Postal Service itself is in danger of dying.

In an open letter to Postmaster General John Potter, Burrus wrote that a "half-century of service qualifies me as a knowledgeable observer of our revered institution. Throughout these many years, I have never seen the level of uncertainty now confronting us. Without significant adjustment to its business strategies, the Postal Service will not survive as a government institution and a public service."

In an interview, he insisted that is not hyperbole.

Referring to Potter, Burrus said, "On his watch, unless something dramatic happens, he's going to see the demise of an historic institution . . . I'm serious. It's not scare tactics."

Of course, it's hard to imagine Congress allowing the Postal Service -- the one tangible sign of government service people see everyday -- to die.

It's a point William H. Young, president of the National Association of Letter Carriers, is quick to make: "I think the Postal Service is a valued treasure to the American public, and I think Congress will do whatever they need to do to make sure that the Postal Service survives."

Potter was not available for comment.

The Postal Service is surviving, but it's getting thin.

Because of the budget problems, officials are seeking a 15 percent reduction in officially authorized staff out of a workforce of about 11,500 at Postal Service headquarters and headquarters-related units, spokesman Greg Frey said.

But he emphasized that the Postal Service is not expecting layoffs. Most of the reduction will come through retirements and by not filling vacant positions, he said.

"We are very hopeful and optimistic at this point that at the end of this not many employees will be adversely impacted," he said.

Potter, however, seemed to dangle the possibility of layoffs when he met with union presidents recently. In a message to his members last month, the union's Burrus wrote that "the Postmaster General pointed out that 16,000 USPS employees lack the six years of continuous service required to achieve protection against layoffs.

"The PMG's [postmaster general's] message was clear: For the first time in our history, postal employees may experience layoffs."

Even without layoffs, the Postal Service cut the number of work hours by 36 million in 2007, according to a list of key accomplishments in a year-end review by H. Glen Walker, the Postal Service's chief financial officer and executive vice president.

"So it should be obvious that work-hour reduction does not lead to solvency," Burrus wrote in the letter. "And those who cite labor costs as the driving force behind the deficit should be reminded that postal rates are increasing at the rate of inflation, while wages lag behind."

Unlike private industry, the Postal Service cannot simply raise prices to recoup losses. Under the law, postage may rise with inflation, except in extraordinary or exceptional circumstances.

Burrus said significant changes in mail volume or productivity are not permitted reasons for postage rate increases, as the Federal Diary reported earlier this month.

Burrus began his letter by saying he generally "would refrain from telling you [Potter] how to operate the Postal Service," then acknowledging he is proceeding to do just that.

Among his suggestions is shifting Potter's focus "from the Postal Service's negatives to USPS strengths -- and there are many."

"You have name recognition and a national presence," Burrus wrote. "You have an army of letter carriers visiting every American home every day, wearing the USPS uniform."

Let's hope it stays that way.

Contact Joe Davidson at federaldiary@washpost.com.

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