USPS reviews 5,000 more post offices for reduced hours

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The Postal Service is working on phase two of POStPlan, its initiative to reduce hours and staffing at half the country's post offices.  From September 2012 through February 2015, the Postal Service implemented phase one — 13,000 small post offices had their hours reduced from eight a day to six, four, or even just two, and thousands of career postmasters lost their positions. 

Now the Postal Service is reviewing 5,000 more post offices for a downgrade and reduced hours.  These are the offices that were upgraded to Level 18 in 2012.  A list of the original 4,600 Level 18s, along with a map, is here.

There have been rumors lately that many Level 18 offices could be downgraded and their postmasters might find themselves out of a job.  These rumors seem to be confirmed by an August 12th filing with the Postal Regulatory Commission.

In the filing, the Postal Service tells the PRC that it wants to change the accounting methodology used for small post offices when preparing cost and revenue reports.  As the Postal Service observes, the changes caused by POStPlan and the ruling on the APWU arbitration last year have complicated the costing analysis, and the proposed changes would simplify things.  In the course of presenting the rationale for these accounting changes, the Postal Service says this:

“Over 5,000 other post offices have been designated as Level 18 and are having their work hours reviewed to determine whether they should have their hours reduced as well, just like the 13,000 post offices in the original POStPlan.”

The Postal Service had previously indicated that it would eventually review Level 18 post offices, and many POStPlan postmasters were worried about transferring to a Level 18 for precisely this reason.  It now appears that they may have been right to worry.

 

Valuing the post office

It's too bad that the Postal Service is contemplating further reductions in hours and more cuts to service.  As two recent surveys have found, people really do value their post offices.

After doing an in-depth quantitative survey of customers, a recent OIG report concluded this:

Both consumers and businesses place value on human interaction with a Postal Service employee at a post office rather than alternative access options such as postal counters in non-postal retail stores and self-service kiosks.

The OIG used a "willingness to pay" (WTP) factor to measure just how much people valued the post office, and the survey found that customers were very willing to pay for a post office operating a full 8 hours a day as compared to a postal counter in a private retailer (like Staples) or shortened hours at the post office.

The 2014 Household Diary Study, which came earlier this week, surveyed customers and came to a similar conclusion:

In spite of a declining frequency of visits over the past several years, the use of post offices for mailing services continues to dominate the mail service industry….  Even with the continued availability of mail-related products and services through alternative modes (such as Internet orders), in-person visits to postal facilities remain strong.

The Household Diary Study showed that 53 percent of all U.S. households patronize a post office at least once a month, and over 24 percent visit the post office three or more times a month.  That's far more than go to a private shipping company.  And these numbers only represent people who conducted business at the service counter.  It doesn't include the millions of people who go to the post office almost every day to pick up mail from their PO box or to drop something off at the blue box outside the post office.

 

Reviewing the Level 18s

The reviews of Level 18 post offices is taking place in addition to the annual review of all POStPlan offices, which can lead to an upgrade to more hours or a downgrade to fewer.  

Judging by the USPS response to a FOIA request submitted by postal watchdog Steve Bahnsen, it doesn’t seem likely that there will be a lot of changes for the Level 2, 4, and 6 offices as a result of these reviews.

The FOIA request encompassed about 1,500 Level 2, 4, and 6 POStPlan offices in six midwestern districts.  As of FY 2013, the Postal Service had upgraded 135 and downgraded only 14.  At that rate, only 120 of the 13,000 original POStPlan offices would be downgraded.

The Level 18s could be another story.

Back in December 2013, the Postal Service said that Level 18 downgrades would not occur until September 2016.  It’s not clear at this point if the APWU arbitration ruling has pushed things up to an earlier date or if the Postal Service is just getting ready for next year.  But whenever the downgrades happen, it's possible that a lot of offices could be impacted.

The arbitration ruling requires the Postal Service to create a minimum of 3,000 new full-time career jobs for clerks in Level 6 and 18 offices.  The Postal Service has already begun implementing the ruling, and there are now many Level 18 offices where there’s both a postmaster and a clerk, whereas before there was just a postmaster.  In many cases, there may not be enough work to justify two full-time postal employees. 

If a Level 18 office is downgraded, it’s not clear what will happen.  In some cases, the postmaster’s position might be eliminated, and the clerk would staff the office alone, under the supervision of a postmaster at an Administrative Post Office (APO).  That could be another Level 18, or it might be a Level 20.  In other cases, perhaps a full-time clerk would be replaced by a part-timer.

No information has been made public about how many Level 18 offices might be downgraded and have their hours reduced or how many employees might be impacted.  The Postal Service has not indicated how it is conducting the reviews, and it hasn’t shared any recent lists about which offices are being reviewed. 

Back in 2012, however, the Postal Service did give the PRC a list of the offices being upgraded to Level 18.  It had about 4,600 offices.  (If over 5,000 Level 18 offices are currently under review, another 500 or so Level 18s must have been added since then.)

We’ve taken the 2012 list of Level 18s and combined it with several other USPS lists so it shows not only the names of the 4,600 post offices but also other data about these facilities: which of them are serving as APOs, which have been subject to Delivery Unit Optimization (DUO), whether the facility is owned or leased, when the lease ends, the CAG designation (Cost Ascertainment Group), as well as some of the workload numbers from 2011.  As noted above, the list, along with a map, is here.

Here’s what one can learn from the data.

 

Analyzing the data

This list shows that about 2,280 of the Level 18 post offices are serving as APOs to other POStPlan offices.  Whether these are safe from downgrade or not is an open question. The Postal Service could downgrade a Level 18 APO to a lower level, and simply identify another office as its APO.

In the original POStPlan, the daily Adjusted Earned Workload (AEWL) was the key factor for determining whether an office would be downgraded and by how much. The AEWL range for a Level 6 office was 4.00 to 5.74.  That meant if the workload was between 4 and slightly less than six hours per day, it justified keeping the office open six hours a day rather than eight.

Using the 2011 AEWL data that the Postal Service shared with the PRC in 2012, the list shows that there were only 77 Level 18 post offices with an AEWL below the 5.74 cutoff.  It doesn't seem likely that the Postal Service will review 5,000 post offices for reduced hours and find cause to reduce hours at only a few dozen.  But it’s not clear how downgrading many more will be justified.

The average AEWL for the Level 18s was 8.34, more than enough to warrant full-time hours.  About 2,650 offices had an AEWL between 5.75 and 8, which would presumably also be enough to justify a full eight-hour day.  

A couple of thousand other offices had an AEWL greater than 8, indicating the need for a second employee, at least part-time.  A few hundred offices had an AEWL over 13 — presumably high enough to require two full-time employees.

Here’s how the figures break down using the 2011 AEWL numbers.

AEWL
Number of offices
Less than 5.74
77
5.74 – 6
452
6 – 7
1306
7 – 8
868
8 – 9
581
9 – 10
400
10 – 11
253
11  – 12
180
12  – 13
123
13 – 14
103
More than 14
215

It should be emphasized that these numbers are based on AEWL data from 2011, and things have changed since then — some post offices may have an increased workload, while others may have a smaller load.  

For example, many offices have lost their letter carriers as a result of Delivery Unit Optimization.  The list shows that over the past four years about 650 of the Level 18 offices have been DUOed.  About 450 of these are main post offices, and the other 200 are APOs.  Without carriers to supervise, these offices may have a lower workload than in 2011.  (We don’t have any data on offices that have not been DUOed.  Many may not have had carriers to begin with.)

We’ve also heard that some PO box customers have dropped their box because the rental prices have gone up (many PO boxes were switched over to competitive pricing).  That means less revenue and a smaller workload.  (For more about the PO boxes, see this comprehensive post by Mark Jamison.)

It's possible that when doing the Level 18 reviews the Postal Service will not use the AEWL data at all.  Perhaps it will use an entirely different measurement tool.  Whatever it is, it's likely to incorporate revenues.

 

Looking at revenues

When the Postal Service explained POStPlan to the PRC for an advisory opinion in 2012, it provided some financial data about all 17,728 offices impacted by the plan.  The average revenue for all of them (including the 18s) was about $76,000.  The Level 18s themselves averaged more than twice that amount, about $172,000.  You can see these revenue numbers here.

Using the average revenue numbers and the data on workhours provided to the PRC, we had made some very rough estimates back in 2012 for the annual revenues at each POStPlan office, based on a methodology described here.  The Postal Service does not release revenue numbers on individual post offices — unless they’re being discontinued — so our estimates were strictly guesswork and not particularly reliable for individual post offices.  They can, however, help with the overall picture. 

About 1,100 of the Level 18 post offices probably bring in less than $100,000 in revenues (they average about $78,000).  About 2,400 bring in $100,000 to $200,000 and average about $140,000.  About 1,100 others bring in more than $200,000 and average about $320,000.  A hundred may bring in more than $500,000 in annual revenues and average about $640,000.

While the Postal Service has based its POStPlan levels and operating hours on workhours rather than revenue, these numbers give some indication of the cost-revenue calculations the Postal Service is doing.  

Management hasn’t had much to say about the Level 18s, but eventually the Postal Service, the APWU, or the postmasters associations should be providing more information about what's ahead: How the Level 18 reviews are being done, how many post offices may have their hours and/or staffing reduced, and how many employees will be impacted.

In the meantime, it would appear that hundreds, perhaps thousands, more communities could see the hours at their post office reduced.  Given the results of the OIG survey and the Household Diary Study, one has to wonder, does it really make sense for the Postal Service to cut hours at even more post offices?  


 

UPDATE: Here's some more information about the Level 18 reviews that appeared back in 2013 on the NAPUS website

When a level 18 is reviewed under WSC [Workload Service Credit system] and falls below the ZOT [Zone of Tolerance] for level 18, it will then be considered under the ZOT for POStPlan. If the office has an AEWL of 5.25 or higher, it will remain a level 18. If it has an AEWL of 5.24 or less, it will be adjusted to the new level of office. If the office is vacant, it will be posted at the level it earns. If the office is encumbered, the Postmaster will be given a RIF notice that will be enforced no sooner than 180 days. If the Postmaster does not wish to move and would prefer taking a level 6 part-time position, they are afforded that opportunity as a RIF impact. If the Postmaster does not find another position and does not wish to reduce to part-time, the RIF will be exercised no sooner than 180 days and the office will assume the hours of a level 6 office. If the office increases in WSCs, the standard procedure contained in current regulations apply.

Using the data from 2011, there are only 47 Level 18 offices with an AEWL less than 5.25.  That would mean the number of Level 18 offices likely to see their hours reduced would be relatively small.  This doesn't explain, then, why the Postal Service would inform the PRC that it is reviewing 5,000 offices for a reduction in hours as if this were a significant fact.  It would hardly be worth mentioning.


UPDATE: On August 27, 2015, a week after this article was published, the Postal Service submitted a Notice of Errata to the PRC, in which it revised the August 12 filing.  The revised version deletes all reference to the review of Level 18 offices.  The Postal Service's explanation for the revision is that "some of the background information provided in the attachment regarding the POStPlan procedures had not been updated to accurately reflect the current situation. Therefore, pages 2 and 3 have been revised to remove inaccurate information."


(Photo Credit: Level 18 post office in Auburn PA, by Evan Kalish/PMCC)

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