The U.S. Postal Service plans to end Saturday mail delivery beginning in August, a sign that the long-suffering agency may finally be succumbing to e-commerce.
Postmaster General and CEO Patrick R. Donahoe said at a press conference Wednesday that moving to a five-day delivery week starting the week of Aug. 5 is a necessary cut because of the Postal Service’s accumulating deficits.
The plan drew immediate criticism – along with some praise – from members of Congress, and the White House pledged to review the decision. But it’s unclear whether the blowback will make much difference. Last year, the Senate passed legislation to prevent the Postal Service from moving to a five-day delivery week for two years – in part, to keep the trusted institution alive in an election year – but the House never acted on it.
“We are simply not in a financial position where we can maintain six days of mail delivery,” said Donahoe. The ease of online bill payments has led to the decline of first-class mail volume since 2008 – a major blow to the institution, he said.
In the past fiscal year, the Postal Service has seen a financial loss of $15.9 billion. Cutting Saturday service will save the Postal Service $2 billion annually, and it needs $20 billion to repay debts.
The financial loss coupled with the service’s loss of 22 percent to 25 percent of its mail volume over the past three years prompted the reduction to a five-day delivery service, said Augustine Ruiz, postal spokesperson for the Sacramento and Bay-Valley district in California.
The rest of the Postal Service’s Saturday operations will continue as normal; post offices and P.O. boxes will remain open and packages will still be delivered.
The service says it has been trying to reduce costs for years, cutting its workforce by more than 193,000 and reducing its cost base by about $15 billion since 2006.
The reductions have proven no match for the decline in mail volume. A Quinnipiac University poll from 2011 released Wednesday reported 79 percent of Americans support ending Saturday mail deliveries.
It’s estimated that 30,000 to 40,000 carriers will lose their jobs because of the cut, said Richard Gallegos, vice president of the Fresno Area American Postal Workers Union in California.
The White House says it only found out about the Postal Service’s decision to end Saturday delivery a day ago and is still reviewing it.
But, Press Secretary Jay Carney acknowledged after questioning, the White House called for Saturday closings in its budget last year.
Carney said that the proposal was part of a “series of proposals for reform of the Postal Service that would put it on much more firm financial ground.”
He said he couldn’t yet say whether the administration agrees that the Postal Service has the authority to make the move without congressional authorization.
Several members of Congress oppose the delivery cut, saying senior citizens and those who live in rural areas will be hard-hit by the Saturday reduction. Sen. Mark Begich, D-Alaska, said he is worried small business owners will be hurt by the shorter delivery schedule.
Sen. Bernie Sanders, a Vermont independent, helped draft last year’s bill and said he thinks ending services won’t solve the financial problem.
“Providing fewer services and less quality will cause more customers to seek other options,” Sanders said in a release.
The Postal Service acted without congressional approval on a matter that could negatively affect the economy and businesses nationwide, said Rep. Stephen Lynch, D-Mass.
Some think it’s a responsible decision for the ailing post office. Rep. Darrell Issa, R-Calif., chairman of the House Oversight and Government Reform Committee, told CNBC’s “Squawk on the Street” that the cut was a “money-saving smart move” for the Postal Service.
Ruiz, the California spokesman, said the Postal Service has needed legislative reform for years. Congress mandates the institution pre-fund its retiree health benefits, which made up 70 percent of the $15.9 billion lost in the past fiscal year. In order to keep the Postal Service healthy, Ruiz said, Congress must give the post office more freedom to run like a business.
There’s still hope for the Postal Service, he said. Ruiz said direct mail advertising is much more effective than any online equivalent, and that the service’s packaging and delivery volumes have increased by 14 percent since 2010.
“While it is a beast, we’ve been able to use it and tame that beast ourselves,” Ruiz said. “While more and more people have been buying and purchasing things online, someone still has to deliver it. So far, no one has figured out how to email a sweater.”