Good Question: What If The Postal Service Stops?
MINNEAPOLIS (WCCO) — It’s not a good time to be the United States Postal Service. For USPS, revenue is down, expenses are high, and Congress requires the Postal Service to pre-pay future retirees’ health benefits.
With a $5.5 billion payment for those benefits due at the end of this month, the Postmaster says the USPS is in jeopardy of default. So, what happens if the Postal Service has to shut down?
“We would have to completely transform our business,” said Greg Herman, marketing director for MagnetStreet, a Blaine company that sells promotional magnets and other materials.
If the Postal Service shut down, it would be an incredible shock to the millions of Americans, and businesses –like Herman’s — who rely on the service of picking up mail and delivering it to every home in the United States.
Email can be to blame for part of the Postal Service’s troubles. This fiscal year, they’ll handle 167 billion pieces of mail, which is down 22 percent from five years ago.
Priority Mail, a huge moneymaker for USPS, is down 36 percent over the past five years.
The postal service “is very important. We’re actually in the middle of mailing almost 200,000 catalogs,” said Herman. “There’s a segment that doesn’t need it, but a segment like our customers that does still use it a lot. They get so saturated with email and social media or phone calls or whatever — that that just becomes noise.”
In the event of a shutdown, it’s hard to picture UPS picking up a letter in Minnesota and delivering it to Alaska for 44 cents. In the past, UPS and FedEx have expressed little interest in doing door-to-door First Class mail service. It’s a big business, but it’s labor-intensive.
Labor represents 80 percent of the Postal Service’s expenses. At UPS, its 53 percent, and at FedEx, it’s 32 percent.
A Postal Service shutdown would mean nearly 600,000 people out of work.
Postmaster General Patrick Donahoe has suggested eliminating Saturday mail delivery, closing up to 3,700 postal locations and laying off 120,000 workers. The suggestions are all things that would require Congressional approval, and some would require reopening union contracts.
Although the Postal Service may not make that $5.5 billion payment this month and may default, they expect to have enough money to continue operating until next fall or winter.
“We think by August, September timeframe next year — given no action — we will be out of cash to pay employees and pay contracts,” said Donahoe, testifying in front of Congress.