Audio clip
Judy Mahaffey
For 21-year-old Chad Wheeler, a scheduled 2-cent increase in the price of a first-class stamp — bringing the cost to 44 cents on May 11 — is no big deal.
“I do everything online. I hate buying stamps,” said the University of Tennessee at Chattanooga student. “Every (bill) I have comes out of electronic bill pay.”
The rising tide of Americans choosing electronic bill payments over traditional “snail mail” has contributed to a steady worsening of the U.S. Postal Service’s revenue stream, officials said.
Dwindling mail volume, combined with skyrocketing costs, has pushed the U.S. Postal Service deep into the red, and the recession is compounding losses that are becoming unmanageable, officials said.
“We can’t really work our way out of this,” said Beth Barnett, spokeswoman for the U.S. Postal Service’s Tennessee district, which includes North Georgia. “We can’t reduce costs enough to balance the books.”
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Mail carrier Tom Caldwell loads his truck at the East Ridge Post Office in this 2009 file photo.Photo by Angela Lewis
Now the agency is seeking relief from federal laws that officials say are making it impossible for the organization to get back on budget.
Last year, the Postal Service lost $2.8 billion, and the agency is predicting losses of $6 billion in fiscal year 2009, which ends in September. Between October and December of 2008 alone, the agency lost $384 million, Ms. Barnett said.
Since 2002, the Postal Service has eliminated 120,000 positions through attrition and tried to improve efficiency to cope with losses from declining mail volumes as more people pay bills online.
“I think once in middle school I had to write a letter to a politician for a class project,” said Brett Powell, 19, of Fort Oglethorpe, Ga. “But I don’t think I’ve ever bought a stamp personally. You can do all that by e-mail now.”
In addition, many of the Postal Service’s loyal business customers also have cut back on advertising and mailings to deal with the deepening recession, officials said.
Rising expenditures because of gasoline prices and the cost of health benefits for employees have made tough times even worse for the Postal Service.
For every 1 cent increase in gas prices, the Postal Service faces $8 million in added expenses annually, said Judy Mahaffey, the service’s spokeswoman for the Chattanooga area.
Ms. Barnett said that nationally, mail volume declined by 9.5 billion pieces in 2008, which is the largest mail volume decline in U.S. Postal Service history.
“It even exceeded the four-year decline in the Great Depression. It’s monumental,” she said.
Projections for the coming year foresee 12 billion to 15 billion fewer pieces of mail delivered, she said.
Last week, the U.S. Postal Service announced that the price of a first-class stamp will go up 2 cents to 44 cents on May 11. That increase is unrelated to the service’s financial hardship, Ms. Barnett said. Legislation passed in 2006 made the stamp price dependent upon the rate of inflation, she said.
SEEKING FEDERAL HELP
Postmaster General John Potter asked a Senate panel in January temporarily to change federal laws to allow mail delivery only five days a week instead of six. Though that limit in mail service is not the agency’s first choice to cut costs, it may become a necessary option to stave off employee layoffs, officials said.
In another plea to Congress, Mr. Potter also has asked for two years of relief from legislation that requires the agency put up money in advance to pay for future employees’ health benefits, amounting to about $5.6 billion per year.
“No other agency is required to do that other than the Postal Service,” Ms. Barnett said.
That temporary concession could avert a move from six to five days of delivery, she said.
For mail carriers, the Postal Service’s efforts to avoid layoffs are welcome.
“As long as we can hold our jobs, that would just make us happy,” said Rossville-based mail carrier Sheena Hoodenpyl in between making deliveries last week. “I’m just happy to have a job, and I’d appreciate anything the Postal Service could do to help the situation.”
For consumers who actually use the mail service, the rate hike seems like just another pile-on.
“It’s just one more thing,” said Julie Middleton, 26, of Fort Oglethorpe, who said she writes her grandmother in Vermont once a week and has done so since she was a teenager. “I know they have bills, gas and everything, but it’s like everything is going up.”
In Chattanooga alone, the Postal Service’s revenues are down 9 percent compared to this time last year, equaling a decline of more than $500,000, Mrs. Mahaffey said.
“The economy pretty much is reflected in the Postal Service,” she said. “In boom times, we have high mailing volumes. Now the rest of the nation is hurting, and we see it in how much (less) business are mailing.”
Local post office customers were sympathetic to the organization’s economic woes.
Gail Spaulding, who works at a law firm in downtown Chattanooga, popped into the North Market Street post office last week to mail a last-minute Valentine’s Day package to her son in Johnson City, Tenn. She said she wouldn’t mind if the organization switched to five-day-a-week delivery.
“Every business has to make some cutbacks and economize in some way,” she said. “That would probably be OK. I understand.”
Betsy Silberman, of Lookout Mountain, Tenn., said she appreciates the friendly service at her local post office.
“I definitely like having mail delivered six days a week. I don’t like (the proposed change), but I’d rather have that than they lay off people,” she said.
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Postage rate increaseThe U.S. Postal Service’s planned two-cent rate increase to 44 cents will do little to help the service’s declining revenues, according to Judy Mahaffey, customer service supervisor for the USPS at the Shallowford Road office. Watch as Mrs. Mahaffey describes the USPS financial situation, and the scheduled rate increase to reflect the 2008 rate of inflation.
Health care reporter Emily Bregel has worked at the Chattanooga Times Free Press since July 2006. She previously covered banking and wrote for the Life section. Emily, a native of Baltimore, Md., earned a bachelor’s degree in American Studies from Columbia University. She received a first-place award for feature writing from the East Tennessee Society of Professional Journalists’ Golden Press Card Contest for a 2009 article about a boy with a congenital heart defect. She ...
The Post Office's dilemma is really no different than what other providers of services and products have had to face as technology has advanced over time. It's merely change.
Who still uses a polaroid camera to take photographs? Who uses floppy disks to save data on a computer any longer? Who buys or rents movies on videotape these days? Computer technology has changed the way we do many things, and most people would agree that most of the changes have been positive in direction.
Raising prices for services that the Post Office offers will only drive people to seek less costly alternatives in communicating between one another, shipping packages and parcels, and how they transfer funds to pay their monthly expenses.
The Post Office is going to have to seriously streamline their operations. Wages and benefits will have to be trimmed, cuts in staff will be inevitable, and consolidating locations in close proximity of each other will be a must.
They can keep raising the cost of a stamp and decide to trim the number of days they deliver mail, but the result will be no different than applying a one inch bandage to a six inch wound.
Raising prices and trimming services is a rather arrogant strategy when you think about it, because the simple fact is that the Post Office is slowly becoming obsolete in many people's lives these days.
They would be far better off if they would decide to come up with ways to reverse this trend.
heres a novel idea, try getting the mail delivered in a timely fashion. Responsibility would be nice too. If you want to compliment the PO they all want to suck up the praise, but try complaining and no one wants to hear it or they point the finger somewhere else or back at the client.
The Post Office was never meant to make money...it was a branch of the government, after all, and got its money through taxes. It was always subsidized...until it was privatized [or whatever] a couple-three decades back. Then all of a sudden it had to make money, even show a profit; so services dropped and costs skyrocketed.
Cheap mailing costs increased advertising [appropriately called "junk mail"]via the mails and greatly increased the overhead costs, employee count, the bureaucracy [of course], and driving expenses.
Today, one piece of real mail is delivered to me for every five or six pieces of unwanted junk...which I promptly throw away unread.
One very important piece of information for consumers...first class mail requires the equivalent of a court order to open [or at least it used to]. E-Mail is open for anyone to read with a little effort.
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