Effect of closing post offices?

[JimPlans]

Just read this story at CSM:

Postmaster General: focus on customers, not struggling downtowns

In it the Postmaster General discusses shutting down 26,000 out of 32,000 post offices that he calls "money-losing" and moving post office products to malls and shopping centers, where they will be sold by non-PO employees.

While I can see the positive economic impacts to the postal service of closing 26,000 locations, laying off reasonably-paid employees with benefits and pensions, and shifting sales duties to minimum-wage workers at pharmacies and grocery stores, I wonder what the impact will be on areas that currently host post offices.

And while it's true that the postal service is not in business to help out downtown areas, I'm still disturbed by the Postmaster General's sttement that “[w]e don’t want to be the anchor for the revitalization of some downtown area that is pretty much vacant because some big strip malls have been built up outside of the downtown area. We need to be where the people are.”

The flip side, according to the article, is that "[t]he average post office foot traffic of 600 people per week compares to 10,000 per week at the average pharmacy, and 20,000 at the average grocery store." So I'm not sure what positive effect a relatively small amount of postal customers really has on a downtown.

Thoughts?

[stroskey]

We would all like to see needed businesses in our downtowns but the fact is that the Post Office competitors (on the package side) deliver packages on time, in good conditions, and are profitable. If UPS and FedEx can do it why can't the Post Office? He is on to something - look where the UPS stores are - malls, airports, college campuses, etc. They go there because that's where their customers are. The Postal Service does not need to be daily and if you have so many letters that you truly need it to be daily service than maybe you should pay a bit more than the household that only sends out Christmas cards.

I consider us to be a normal family so I've tallied what pieces of mail I've gotten for the past two weeks. Out of 26 items, 5 were magazines, 2 were bank statements (that I get online anyway but they still send them), 1 was a letter from my insurance company, and 1 was a letter from the 2010 Census. 17 were items I did not ask for nor do I really want. This means 65% of the items I received served no purpose to my household and if we multiply that by 110,000,000 households imagine the wasted time, sorting and delivering unnecessary mail!

[Chet]

The USPS has no business model to work from. I think it should go the way of the Pony Express. I think in the last 5 months I have bought 10 stamps and still have 3 left.

[Cloverhill]

We had a post office in a grocery store. It was like a bank kiosk, really, but it was more or less full service. That's a business model that can probably work and honestly it was the only reason we ever went into that store.

It works, sort of, unless of course the grocery store closes down (as ours did). Or if Starbucks muscles them out, or the grocery wants a bank instead, or...never mind. Post Offices are the retail equivalent of Charlie Brown lying on his back with Lucy (the UPS store) holding that damn football.

[TerraSapient]

What kind of impact would it have if we just opted to do away with post offices in general?
Is a federal mail delivery system still needed?

Here is what happens when I go to the post office (about once or twice a year)...
I wait in line, I finally get to the counter to pay X dollars to have something shipped, then the PO employee tries to talk me into an upgrade, then they ask if I want to buy insurance... at which point I usually pause and think to myself "doesn't my tax dollars going toward your salary and the fact that I'm paying for this item to get from point A to point B ensure that it will arrive in decent condition?"

The answer, or course, is no.

The PO cannot compete. Maybe its time to simply let mail and package delivery be fully privatized (and this is being said by a very left wing socialist).

If I am missing the mark here, and someone can think of a valid reason to continue having a federal mail service, then please let me in on the secret.

[Mud Princess]

If I am missing the mark here, and someone can think of a valid reason to continue having a federal mail service, then please let me in on the secret.

Wow. Really? There may be millions of Americans with computer access, but we still have an awful lot of people in this country that rely on regular mail service. I can't imagine what my mother-in-law or my aunt or my friends who live in rural areas would do without the mail. Or people who (believe it or not, in this day and age!) do not have reliable Internet access. There are some items that cannot be paid for or processed electronically. Without mail service, I would no longer be able to subscribe to any magazines... it would have a huge impact on publications of all kinds. I would not be able to send and receive postcards with people from other countries around the world. And who the heck can afford FedEx and UPS on a regular basis?

[TerraSapient]

Maybe I wasn't clear enough. It is Friday after all.

I'm not suggesting that we completely do away with mail service. What I am suggesting is that we examine what types of impacts would result from privatizing our current federally-subsidized and government-owned mail service.

Obviously UPS, FedEx, etc., have found ways to compete with USPS for speedy deliveries and package handling on a global level. They cost a bit more most of the time; however they are viable businesses, earn a profit every year, and compete on a global and national level with USPS - and they do this without tax dollars footing the bill.

The bulk of what I receive in the mail is junk mail. Overwhelmingly junk mail. Currently, we are all subsidizing the cost of large and small businesses advertising via mail flyers.

I thought it would be interesting to examine what kind of impacts would result should USPS no longer provide a subsidized delivery service.

Find a suitable competitor to take over the services of mail delivery - which would then put the burden of paying for such services on those who actually use them.

Mail delivery isn't, in my opinion, a public good that we cannot do without - such as education and health care. Do we really need USPS anymore?

[wburg]

Simple.

USPS is mandated by law to deliver to any address, anywhere. The private mail services are not. That alone justifies their existence--private industry doesn't have to serve everyone, but USPS is. If private mail delivery services were legally mandated to deliver everywhere USPS does at the same rates, could they?

USPS pretty much breaks even: every 3 years or so they tack on a couple cents to postage and they're in the black, prices go up with inflation, in another 3 years they're in the red again so they tack on another couple of cents.

The post office is an example of a government agency that actually does its job really well, efficiently and inexpensively. They get a bad rap only from people who got bad service from someone (although, in general, service is fast and efficient) and from people who assume everything should be privatized as an article of faith.

[Chet]

Simple.

USPS is mandated by law to deliver to any address, anywhere. The private mail services are not. That alone justifies their existence--private industry doesn't have to serve everyone, but USPS is. If private mail delivery services were legally mandated to deliver everywhere USPS does at the same rates, could they?

USPS pretty much breaks even: every 3 years or so they tack on a couple cents to postage and they're in the black, prices go up with inflation, in another 3 years they're in the red again so they tack on another couple of cents.

The post office is an example of a government agency that actually does its job really well, efficiently and inexpensively. They get a bad rap only from people who got bad service from someone (although, in general, service is fast and efficient) and from people who assume everything should be privatized as an article of faith.

Sounds like a postmaster found cyburbia after a G00gle lunch break.

EDIT: And they do NOT come close to break even.

[Woolley]

I am not sure of what post offices are like in the US. But here they have diversified their goods and services so they don't go out of business:

Passport Applications
Pay Bills
Money Transfers
Stationary
Gift Cards
Mobile Phones
Office Supplies
Computers

You get the idea...

Or are we talking more about mail centres?

[stroskey]

Simple.

USPS is mandated by law to deliver to any address, anywhere. The private mail services are not. That alone justifies their existence--private industry doesn't have to serve everyone, but USPS is. If private mail delivery services were legally mandated to deliver everywhere USPS does at the same rates, could they?

They get a bad rap only from people who got bad service from someone (although, in general, service is fast and efficient) and from people who assume everything should be privatized as an article of faith.

The laws that mandate they go to every home were written 75 million homes ago - society changes and what was good in the 1850s doesn't mean it is good now. As for service, UPSP has been great for our household and they are always fast and efficient (except when I bought my house from a person with a one letter difference than my last name - senders kept getting my mail bounced back to them saying "I" moved. - eeks!) But as I detailed before, we don't need to subsidize coupons, credit card offers, and "Tru Green" lawn care brochures.

[fringe]

Postal Service.

Key word: service.

Government services are not businesses, and might not earn profit.

Do planners earn profit?

How about the military. Does it earn a profit?

Space program?

Environmental Protection Agency?

What about meat inspection?

[JimPlans]

It's interesting to me that no-one has discussed any potential problems that may occur in downtowns (both in small rural towns and in larger urban areas) if their local post office closes. I assume by the silence that no-one feels that there will be any significant impact on the health of downtown areas when the post office that has been there for many years is closed.

Its interesting that in many cases where the USPS has made moves to close post offices, the local community has reacted negatively. One example. Another example. As planners, I would assume that some of us would be/have been asked to justify the existence of a post office that is under threat of closure. I would also think that the localities we work in wouldn't want to lose their ZIP code, especially if it was identified with the area's name (though I don't think all post office closings result in the retirement of a ZIP code).

The USPS has published a list of all the post offices that are under study for closure. Although the Postmaster General states in the article above that he wants to put post offices in malls, two of the post offices under study for closure in the Baltimore area (Towson Towne Center and Eastpoint Mall) are in shopping centers:

Station/Branches Identified For Full Study

Interestingly, the USPS has also removed 200,000 "underperforming" mailboxes in the last 20 years. Also interesting is that, under current law, the USPS cannot close a post office just because it loses money. Hard to run a business if you can't control your costs (though I would argue that the USPS isn't a business nor should it be).

BTW, the post office is not taxpayer funded and has not received taxpayer funds since 1982. It was spun out of the Federal government by Richard Nixon in the early 1970's. From 1982 until the current recession in 2008, its operating costs have generally broken even. As for postal employees and privatization, I'm sure that there could be a case made for any public employee to be privatized, even planners.

[stroskey]

I may be stirring up trouble but if the issue is access to mail and all that jazz then why don't we have a government-run/inspected/organized internet since (now/in the future?) a majority of correspondence goes through the web anyway.

[Cloverhill]

I see what you are saying. Places get part of their identity from their post office. They are durable tenants and landmarks. Or they were until recently.

As an "intentional place" (gag) Seaside, Florida made sure their tiny little post office was front-and-center. I lent a great deal of personality to the place. You may not know the food market, but you sure did see the cute post office. Does it make enough money to stay "in business" I do not know. I do know that folks like to have their postcards postmarked "Seaside".

I worked on a subdivision here in northern VA where the developer got his own zip code and 'town' designation. The physical mail goes to a tiny rural PO down the road, but you address mail to all the residents and businesses by the name of the subdivision. There is no real town to speak of, just a subdivision. It is probably keeping that little PO in the black. The developer saw that he could add value to the project by doing this, but is it more than just window-dressing?

So is it all just marketing at this point? Can a PO act as an anchor? I don't think so anymore. That business model has changed so drastically in the last 10 years that the physical act of moving a piece of mail from A to B might not be viable in the future and the USPS sees this coming. Hopefully, they see it coming.

[fringe]

If not at the PO where would you put the "wanted" posters?

Mark Twain, in "Tom Sawyer Abroad", has a great story of a local postmaster who discovers a letter he misplaced and failed to deliver, and who decides to travel to DC and turn himself in to the Postmaster General and make a clean breast of it and beg for absolution.

[mike gurnee]

After the Greensburg tornado the temporary PO was a gathering spot where people would congregate and gossip: just like the PO of olden days. Now we are not sure if USPS will build back. That would leave our county seat with no direct mail contact.

[TerraSapient]

Simple.

USPS is mandated by law to deliver to any address, anywhere. The private mail services are not. That alone justifies their existence--private industry doesn't have to serve everyone, but USPS is. If private mail delivery services were legally mandated to deliver everywhere USPS does at the same rates, could they?

... They get a bad rap only from people who got bad service from someone (although, in general, service is fast and efficient) and from people who assume everything should be privatized as an article of faith.

The first portion of this response is what I was driving for. USPS being mandated by law to deliver to any address is a valid point. Could a privatized delivery service operate under the same mandate? I don't see why not. Could they still maintain a profit? Again... I don't see why not. I have never walked into FedEx or UPS to deliver a package within the US and had them reply "Sorry, that location is in the sticks, we don't go there". They take my money and my package and off it goes.
Could they do it at the same rate? I frankly do not know, and I do not feel that the government has any business mandating the fee a company can charge for delivering mail.

As for the second part of this response. It makes me crazy when you have 1 idea that is contrary to the typical liberal mainstream and are then labeled a conservative. Wanting to downsize government when it comes to non-essential services does not make one right-winged. So, I will restate my original question, do we really need USPS anymore?

As for answering JimPlans question about what types of impacts would result if a downtown lost their PO, I think the answer would vary largely depending on the city. Having lived in nearly vacant downtowns several times. The last major downtown I lived in had a PO, however it lacked practically everything else, including drug stores, grocery stores, a place to buy a meal on the weekend or after 5 during the week. The PO was largely not on my radar.
It didn't appear to me that the PO being there made any impact whatsoever on whether other businesses would opt to locate in the vicinity. In fact, the PO was pretty much alone on the entire block.

[wburg]

The first portion of this response is what I was driving for. USPS being mandated by law to deliver to any address is a valid point. Could a privatized delivery service operate under the same mandate? I don't see why not. Could they still maintain a profit? Again... I don't see why not. I have never walked into FedEx or UPS to deliver a package within the US and had them reply "Sorry, that location is in the sticks, we don't go there". They take my money and my package and off it goes.
Could they do it at the same rate? I frankly do not know, and I do not feel that the government has any business mandating the fee a company can charge for delivering mail.

So, in other words, your own answer to your original question (whether USPS could be practically privatized) is "maybe" (since "I don't see why not" doesn't really imply any measure of certainty or proof, just a generalized sense that it should work out the way you think it should) and "I frankly do not know."

Oh yeah, one other thing--USPS doesn't just drop off, they also pick up. Add in that variable.

As for the second part of this response. It makes me crazy when you have 1 idea that is contrary to the typical liberal mainstream and are then labeled a conservative. Wanting to downsize government when it comes to non-essential services does not make one right-winged.

And I don't think anyone said you were a conservative (I didn't)--pardon me if your assumption that the USPS should be eliminated and replaced with a private company was in any way an assertion that you assume that government agencies should be privatized.

So, I will restate my original question, do we really need USPS anymore?

I don't see why not.

[JimPlans]

I don't know why this issue interests me so much, but I keep looking into it.

I did some checking on the effect of closing post offices, and the real issues seems to be that closings cause ZIP code boundary changes and that rural areas may have a high dependence on the existence of a post office or ZIP code to define their existence.

First of all, I'm still not sure that all post office locations have their own ZIP code. Some seem to just be retail outlets, so closing them doesn't cause ZIP code boundaries to change.

Some changes in ZIP code boundaries result in increased insurance rates. Why? Because insurance companies often base rates on the demographics present in a particular ZIP code area. So, local citizens could see increased auto and health insurance premiums if they lose their post office. Could they see lower rates as well? Sure, if you believe that insurance companies ever lower their rates

Other changes have resulted in public safety issues, when resources are dispatched using ZIP code data and are sent to the wrong place. I would expect that this is a temporary issue solved through updating address records, but it has occurred. See the research report below for more issues.

Because of past complaints, the USPS does have a system in place that allows areas to have a chance to challenge boundary changes. Often, the boundary change will go through anyway, but areas can win the right to keep their local name on their address even though they will get a new ZIP code.

For example, Mt. Washington is a neighborhood in Baltimore (ZIP code 21209). Letters sent to addresses in Mt. Washington are supposed to be addressed "Mt. Washington, MD 21209." If its post office is abolished, everyone in Mt. Washington will get a new address, most likely "Baltimore, MD 21210." Mt. Washington residents could petition to have the name "Mt. Washington" added as an alternate acceptable address for 21210, so at least they could continue to have their community name represented in their address. I expect that the ability to add alternate addresses to ZIP codes would solve most complaints about ZIP code changes due to post office closings.

I would also worry that there will be lots of post office facilites left vacant and rotting after they are closed. If memory serves, the old post office in downtown Northampton, MA was empty for years before it was redeveloped into office space. However, it seems that one strategy to stem losses at the USPS is to sell surplus facilites, so perhaps this won't be a major issue.

As for rural areas, I may be violating my smart growth credentials, but I don't see why rural post offices can't lose money. While it's good to have people pay the true cost of their services, I don't see the USPS as solely a service business, but as a government entity with responsibilities to all citizens. So, when I found out that the USPS decided not to cancel air delivery to the 20-odd addresses in Central Idaho's Frank Church River of No Return Wilderness, I was pleased. Even if it costs $46,000 a year to deliver the mail (or about $2,300 per address), I think that's a good investment (plus, I like the fact that some parts of the lower 48 are so vast that someone still has to flit around the back country in a Cessna to deliver mail).

Like I said earlier, it seems that there are going to be thousands of Post Office closings in the next few years, so these issues will probably start showing up in everyone's jurisdiction soon.

Zip Code Boundary Review Process

Congressional Research Service report on issues surrounding changing ZIP code boundaries

[TerraSapient]

So, in other words, your own answer to your original question (whether USPS could be practically privatized) is "maybe"

That sums it up. It would be difficult to say yes or no without first thoroughly examining the impacts.


JimPlans, that was mighty fine detective work. Particularly in reference to insurance rate issues.
Since we will be seeing thousands of PO closing in the years to come, I wonder how the insurance companies are going to deal with this.

I don't necessarily feel that saying rural POs can lose money goes against your smarth growth credetials. I feel the same way about mass transit. Despite the bus system or rail system not breaking even - I feel it is a worthy investment in infrastructure and helps even out some of the economic disparities in an area (particularly in Honolulu where the cost of land near the urban core is so high, that only the affluent can afford to live within its boundaries).

One last thing to ponder... since USPS is not supported by tax payer money (thanks for the article - I had no idea), and is thus forced to cover its own expenses, are we suggesting that POs are important enough that they should be supported by tax payer dollars? If USPS is running in the red and has to close thousands of POs to break even (avoid bankruptcy), does that mean we should bail them out?

[Cardinal]

The Post Office can be broken up into two functions. There is the distribution function, where mail is collected, sorted, and distributed to its destination. For that, al lthat is really needed is a network of processing centers, each serving a geographic area of perhaps several hundred miles. Then there is the retail function, which most of us think of as the "post office". At the beginning of the postal service and for its first century or more, this function was carried out by private individuals commissioned by the postal service to serve as the local postmaster. (Remember Sam Drucker, the general store owner/postmaster in Hooterville?) The postal service could return to this model, especially in some of the smaller "unprofitable" post offices in rural communities.

[JimPlans]

Update: Post Office loses $8 billion dollars, announces more than 3,600 post office closings:

Nearly 4,000 Post Offices Might Close: NYT

Like Cardinal pointed out, the USPS wants to "outsource basic services, like selling stamps and shipping flat-rate packages, to local businesses like pharmacies and groceries."

The List

[Gotta Speakup]

Aren't most of the proposed office closings in areas where the representatives are ant-government? Maybe we should give them what they want.

[DetroitPlanner]

Aren't most of the proposed office closings in areas where the representatives are ant-government? Maybe we should give them what they want.

Not really most of the post offices in Detroit will close.