U.S. Postal Service awash in red ink
Published 10:44 pm Wednesday, March 5, 2008
WASHINGTON — The souring economy and changing lifestyles are dramatically affecting one of the most dependable institutions in American life: the U.S. Postal Service. Troubled banks are mailing fewer credit card offers. Declining new-home sales mean vacant houses sitting with empty mailboxes. And as consumers switch to paying bills online, first-class mailings are drying up.
Now, a new trend in consumer activism — do-not-mail lists pending in 18 states — threatens to reduce deliveries of catalogs and other “junk mail” that make up the largest volume of postal deliveries.
Because of these factors, postal officials are expecting an operating deficit of $1 billion this year, the largest since 1995, and are looking for creative solutions.
“We cannot afford, literally or figuratively, to begin (the year) … more than $1 billion in the red,” Postmaster General John Potter testified before a Senate subcommittee Wednesday. “We would never be able to dig out of that hole.”
Potter said he wants to explore the possibility of renting space in the 37,000 post offices across the country to banks and other commercial interests. He said, however, that legal restrictions governing federal property could get in the way of, say, installing a Starbucks in the local post office.
The looming deficit is a sharp reversal from the past several years. As recently as 2004, the Postal Service had a $3.1 billion surplus, but has since been struggling against growing competition from FedEx, DHL, UPS and other delivery services. The Internet also has posed a threat, with the explosion of e-mail and an increase in the number of consumers who pay bills online rather than send a check in the mail.
To solve its immediate headaches, the Postal Service will reduce labor costs by cutting overtime and using more seasonal workers, Potter said. The service also plans to raise the cost of stamps and premium services in May, taking advantage of major reforms passed by Congress last year that clear the way for annual rate increases. The cost of a first-class stamp will rise a penny, to 42 cents, and will increase every May thereafter, officials said.
