Help Wanted: Math Teacher for the Postal Service


July 17, 2011

The decision to reorganize the Postal Service’s network and close thousands of post offices—16,000 of them over the next six years, according to the Postmaster General—is based on dozens of “retail optimization” studies done over the past few years.  There’s no shortage of numbers demonstrating why it’s good business for the Postal Service to do retail out of supermarkets, Office Depots, and kiosks instead of old-fashioned post offices.

The math deployed by the Postal Service and its consultants can be quite impressive.  In one study called "The Postal Service Retail Facility Location and Size Problem" (pdf here) by Anthony M. Yezer, Professor of Economics at George Washington University, there's a whole slew of numbers and equations, like this one:

That's a lot of brain power to justify closing a small rural post office.  But the logic is cruel, the math is fuzzy, and the numbers don’t add up. 

Just consider the way the Postal Service calculates how much money a particular post office is making or losing.  Most postal revenue comes from commercial mail, and all this revenue is credited to the place where it enters the system, usually a large urban facility.  The post office that bears the cost burden of delivering this mail gets none of the revenue.  That’s why nearly every post office looks like it’s losing money—nine out of ten, according to what the Postal Service recently told the Postal Regulatory Commission.  The only ones that are profitable are those that get income from the big mailers.

Consider, too, how much it costs to operate a post office and to rent or own the space.  The ten thousand smallest post offices represent less than one percent of the USPS budget of nearly $70 billion a year.  And closing 16,000 of the most "under-performing" post offices—half the post offices in the country—would save less than two percent of the USPS budget.

But it gets worse.  What the Postal Service saves by closing post offices comes at the expense of the people it’s supposed to be serving.  Take the case of Etna, New York.

Etna is located in Tompkins County, in the “dark forest” of the southern Finger Lakes region, a great vacation spot and home to Cornell University and Ithaca College.  Many of the towns and villages in the area have names like Ithaca, Homer, Hector, and Ulysses because the surveyor’s clerk had a fondness for Greek and Roman history, and there was a classical ferver going around, as evidenced by early nineteenth-century architecture—all part of the desire to associate post-War of Independence America with ancient Greek democracy.

Named after Mount Etna in Sicily, the town got its first post office on January 16, 1823.  The first postmaster was Henry B. Weaver, and over the next 182 years, a succession of fifteen postmasters would serve the people of Etna.  A year ago, postmaster Barbara J. Van Dusen resigned.  She may be the last of the Etna postmasters.  The Postal Service never replaced her, and for the past year, the post office has been run by an officer-in-charge.  Now the Postal Service is using the absence of a postmaster as a reason for closing the post office.

Etna, New York

In May the Postal Service held a meeting at Houtz Hall, the community center where the Postal Service rents space for the post office, to hear comments from the town’s citizens about the impending closure.  The Postal Service scheduled the meeting for 10 a.m. on a Thursday morning, when most people are at work.  As the Cortland Standard reported, about twenty people attended, and it doesn’t sound like they were very happy.  They didn’t like the idea of mailboxes—the snow plows knock them down—or cluster boxes either—they freeze up—and neither has the security of a post office.  And they didn’t like the idea of driving three miles to the next-nearest post office in Freeville.  And they didn’t like losing a place that’s been there for their whole lives, a place many can walk to, a place where they chat with neighbors, a place that helps give identity to the town.

The Postal Service operations manager who ran the meeting is named Michelle Krul.  She’s responsible for about 100 post offices in the Albany district.  Her job can’t be any fun right now, going around to small towns like Etna, explaining the Postal Service’s logic for why it has to close the post office.  She told the folks at the meeting what Postal Service representatives have been telling people across the country—the Postal Service is losing billions of dollars, and it is looking to cut costs.  But “no decision has been made,” the Postal Service is “still gathering data from surveys, and we are taking this middle step, with many steps beyond this one.”  And every comment will be considered before a final decision is made.

As anyone who’s been following these closing stories knows well, the decision has probably been made already, and the Postal Service is just going through the motions.  Soon the people of Etna will find a “final determination” notice on the wall in the post office, and they will have 30 days to appeal to the Postal Regulatory Commission, which almost always upholds the decision of the Postal Service.  The post office will probably be closed by winter.

Though cruel to the citizens of Etna, the decision to close the post office will be based on hard-nosed analysis of data (done with the help of a new computer program).  But when the Postal Service does its calculations, it’s only looking at one side of the ledger—theirs.

The Postal Service rents 448 square feet in the Etna Community Center for $4,480 a year.  An officer-in-charge typically gets about ten bucks an hour, but this position will need to be replaced by a mail carrier, who probably gets union wages, so there won’t be much savings, if any, in labor costs.  So what will the Postal Service save by closing Etna’s post office?  A whopping $5,000 a year?

Now consider the other side of the balance sheet.  Etna has a population of 5,725.  How many trips will need to be made to the Freeville post office, three miles away?  Let’s say 500 a week.  So:

500 trips/week × 50 weeks/year × 6 miles/trip ÷ 30 mpg × $4/gallon = $20,000

That’s $20,000 the citizens will be paying for gas to drive to another town’s post office.  It would be cheaper if every person in Etna paid a $1 a year to the Postal Service to keep the post office open.

Then there’s the cost of new mailboxes (box and post, about $50) and digging the post hole, and replacing them when the snow plow knocks them down.  And there’s the change of address on credit cards, checks, and a driver’s license ($17.50 in NYS). 

And then there are the tough ones to figure.  How do you measure all the lost time in driving to Freeville?  What’s the environmental impact of all those extra fuel miles?  (Actually, you can calculate that one: It's about 150,000 pounds of CO2 per year.  So much for the Postal Service boast about how green and eco-friendly it is.)  

And how do you measure the loss of customer good will?  After seeing your post office closed, where are you going next time you have to mail a package, the post office in another town, or UPS?  One woman at the Etna meeting said she mails over 35,000 pieces of mail a year out of the post office for the National Audubon Society.  Think she may be looking for another delivery service?  (By the way, with all the business she brings in, the Etna post office may actually be running at a profit.)

The corporate mentality that has seized the Postal Service seems to have lost its sense of values.  It can tell you to the penny how much it will save by closing a post office, but the damage it’s doing to the country is immeasurable.  The post office is the one place where the federal government makes its presence felt in a town.  It’s where the flag flies.  Many people who don’t like much about the government do like their post office, and they don’t want to lose it.  When a post office is closed, it leaves behind a bad feeling for the government.  How do we figure that into our calculations for how much money the Postal Service will save when it closes the Etna post office?

(Photo credits: Cartoon used with permission from www.cartoonstock.com; Danby State Forest in Tompkins County; Houtz Hall, home of the Etna p.o., by Doug Kerr; hearing with USPS, by Joe McIntyre, for the Cortland Standard; I love Etna tote bag)

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On Privatization

Good Reading on Postal Privatization

Also: Sarah Ryan's "Understanding Postal Privatization: Corporations, Unions, and the "Public Interest"


 

Privatization in the UK

save your p.o.

Organizing to Save Rural Post Offices


A Community Organizing Toolkit

Revised November 2012

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