Imagine running a business that is losing money year after year, at an alarming pace. You propose cuts and the shareholders refuse. What do you do next?
That's one way of looking at what's happening at the Postal Service. The USPS announced on Wednesday it would be postponing its end to Saturday mail delivery, which it proposed in February. The change, originally scheduled to take effect on August 5, would have reduced costs by $2 billion annually. As things stand now, the USPS is losing around $25 million a day, and last year lost nearly $16 billion.
However, Congress' recent continuing resolution to continue funding the government contains language that prohibits the USPS from making this change. In a statement, the Postal Service grudgingly said it would go along with lawmakers' decision.
"Although disappointed with this Congressional action, the Board will follow the law and has directed the Postal Service to delay implementation of its new delivery schedule until legislation is passed that provides the Postal Service with the authority to implement a financially appropriate and responsible delivery schedule," the USPS said in a statement.
Comparing the Postal Service to a business is an imperfect analogy, of course, not least because the USPS is not quite a business. Rather, it is a government agency, somewhere in between a business and government department. While it is intended to be self-sustaining, it also is governed by Congress, meaning lawmakers must approve major changes like postage rate increases — decisions that could help a faltering USPS try to right its financial situation.
That means that while Congress' decision to block the delivery cuts may look like meddling in business affairs, there's another perspective: that the Postal Service never had the authority to cut Saturday delivery to begin with. At a February hearing, some senators questioned whether Postmaster General Patrick Donahoe could legally make the service cuts.
Postal unions were also opposed to the plan, saying it would lead to reduced service and work hours. But that doesn't mean they're placing the blame at Donahoe's feet. The American Postal Workers Union, one of the major unions representing postal workers, puts the blame for the Postal Service's decline on lawmakers.
"Congress is killing the Postal Service. Congressional inaction is forcing the Postal Service to the brink of bankruptcy," says Sally Davidow, an APWU spokeswoman. She points to cost-cutting measures the USPS has already undertaken. Since 2006, the USPS has cut 193,000 workers and 21,000 delivery routes, and consolidated more than 200 mail-processing facilities. Davidow believes these measures are worsening service, driving customers away.
The USPS has also long fought Congress' requirement that the service prefund its workers' retirement benefits. Lawmakers enacted that requirement in 2006, increasing the USPS's operating expenses considerably. That fight is far from over, however. The GAO has recommended the USPS prefund benefits to "the maximum extent that its finances permit."
What happens now? Cutting employee costs and raising postage rates appear to be in the cards. The USPS statement said that the Board of Governors had told management to "seek a reopening of negotiations with the postal unions and consultations with management associations to lower total workforce costs, and to take administrative actions necessary to reduce costs."
And it's also too soon to declare Saturday letter delivery will continue indefinitely, says one expert.
"I think it's a concession on the part of the Postal Service to at least allow some more time for Congress and whomever else to make the proper legal decisions around it," says John Callan, managing director at Ursa Major Associates, a consulting group that specializes in delivery firms. "I don't think it's any reflection about the Postal Service changing their mind about what they want to do."