USPS Continues To Struggle, Despite Increasing Costs

Postmaster General John Potter said the U.S. Postal Service has cut its staff by 25,000 this year bringing postal employment below 635,000, down from about 800,000 in 1999.

The agency still faces a potential $6.5 billion loss this year and even with increased borrowing and other changes it could finish the year with a $1.5 billion shortfall. Postal rates went up earlier this month by two cents to 44 cents for a first class stamp. However, that isn’t expected to be enough to offset the likely losses.

The post office is seeking permission from Congress to reschedule some of its contributions to a retiree health care fund, which would reduce spending this year by $2 billion. Potter said the largest reason for the current struggles is the economic downturn on top of a decline in first-class mail as people turn to the Internet. The agency is expected to handle about 170 billion items this year, well below the peak of more than 210 billion, Potter said.

More than 10,000 city carrier routes have been eliminated over the last several years as postal officials determined they could combine routes because of the reduction in mail volume and the increasing share that is sorted in advance by mailers. Each route that is eliminated saves the agency about $100,000, and also may mean no longer needing a vehicle, Potter said.