US Postal Service bad news continues with plan to terminate 120,000 workers

US Postal Service bad news continues with plan to terminate 120,000 workers

Summary: The business model that served the US Postal Service for these past decades is increasingly collapsing as a viable strategy.

SHARE:
55

The news just getting worse and worse for the U.S. Postal Service -- and for we Americans who rely on it. This time, the USPS is considering cutting up to 120,000 jobs.

See also: US Postal Service plans to close 3,653 post offices. Here's a list.

It gets worse. In the draft document, the USPS acknowledges that to cut those jobs, it has to break labor contracts. The USPS further wants to cut costs by terminating the health care plans for its pensioners and many active employees, putting them into a USPS-administered plan.

See also: Is the U.S. Postal Service obsolete?

This move is only the latest in a desperate attempt by one of the nation's largest employers to rein in spending and cut costs. Unfortunately, it's unlikely to be the last.

As I've discussed before, the business model that served the US Postal Service for these past decades is increasingly collapsing as a viable strategy.

The agency is under pressure from all sides. Its personal communications business (the revenue from letter carrying) is collapsing as more and more of us communicate through email and social networking. Speaking personally, I can't remember when I last sent a letter, and I even get and pay bills via electronic transactions.

On the package carrying front, UPS and Fedex are increasingly competitive, capturing more and more of the market for the package business.

So, while revenue is dropping on one side of the equation, costs are going up on the other. Fuel prices are unpredictable, but health care and benefits costs continue to rise without any sign of relief.

Many Americans know the romanticized history of mail carrying in the United States and most of us hold a special place in our hearts for the Rockwellian image of the postal carrier.

But those times have changed, and this is why the future of the USPS is such a tech-centric story. Our digital technology has disrupted the postal service model as much as it has disrupted other industries, from newspapers and classified to the music and media businesses undergoing such radical transformation.

If you separate out the romantic view of whether the USPS "should" survive and you look at it in the cold light of whether it "can" survive, it becomes clear the US Postal Service is on a precipitous slippery slope.

A fundamental service that's survived since Benjamin Franklin's time might not make it another ten years -- unless the agency makes some radical changes to its business model and even fundamental approach and mission.

Only time will tell.

Topics: Legal, CXO, Health, IT Employment

About

David Gewirtz, Distinguished Lecturer at CBS Interactive, is an author, U.S. policy advisor, and computer scientist. He is featured in the History Channel special The President's Book of Secrets and is a member of the National Press Club.

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Talkback

55 comments
Log in or register to join the discussion
  • Who relies on the post office anymore?

    "The news just getting worse and worse for the U.S. Postal Service ? and for we Americans who rely on it."

    That's overstating the case. I pay exactly *2* bills via the post office--and both of them are government (taxes and water bill) and that amounts to maybe a grand total of 6 letters a year. :)

    Hardly something to depend on, especially once the city government gets its act together.
    wolf_z
    • Not obsolete, still relied upon by many!

      @wolf_z
      You live in a city and have put your life on the internet. Much of this country doesn't have the opportunities you and I have for doing that. The USPS is making a mistake closing the small town post offices and leaving those in places like New York City & San Francisco open. Rural areas need them, they do rely on the USPS. Even suburban areas need them. It's urban areas where high bandwidth broadband is available, although still over priced. These are the areas where people only mail 6 letters a year.
      mschauber
    • RE: US Postal Service bad news continues with plan to terminate 120,000 workers

      @wolf_z Evidently, a lot more people than you realize!
      T-Wrench
  • RE: US Postal Service bad news continues with plan to terminate 120,000 workers

    This will be hard on many people and communities and will likely have a ripple effect on the economy. Where will those laid off find another job? And at what salary/benefits?

    Perhaps, doing something about the huge volume of junk mail might help the USPS to contain costs?
    Rabid Howler Monkey
    • RE: US Postal Service bad news continues with plan to terminate 120,000 wor

      @Rabid Howler Monkey - precisely. A lost job or dwindled income WILL harm the economy.

      This will only continue the downward spiral. And it is too short-term. A company may as well say they will nix all jobs to remain "financially viable".

      Most jobs out there are "service" jobs, or are service job-paying despite needing a $60k 4-year degree. The roi is not there, then everybody gets told they are lazy or whatever else, usually by those at the top who gutted the system to begin with.
      HypnoToad72
      • RE: US Postal Service bad news continues with plan to terminate 120,000 workers

        @HypnoToad72 - And of course, we all know which political party loves to create service jobs, like car inspection stations, citrus tree inspectors, homeland security...oh, wait a minute...
        dlmohn
    • Ignoring the cost of the inefficiencies

      The positions are subsidized. Efficient parts of the economy transferring money to the less efficient.

      A lost inefficient job has the opportunity for that limited resource to be used more efficiently, creating value.

      Of course this doesn't happen immediately, but it also doesnt get any easier.
      Richard Flude
      • RE: US Postal Service bad news continues with plan to terminate 120,000 workers

        @Richard Flude - correction: The post office hasn't been subsidized by the government since 1983.
        Bob F.
      • RE: US Postal Service bad news continues with plan to terminate 120,000 workers

        @Richard Flude It's a public service like the fire department, or parks. Society supports 'inefficient' parts of the economy because society feels that having the service makes living in the community better, even if it's not 'economically efficient'.

        Heck, free roads are pretty inefficient too. It's more 'efficient' to charge everyone who uses the roads a road use fee equivalent to their usage instead of taxing everyone. But it's a public service.
        snberk341
      • Subsidies aren't just money

        Bobsfall it can also take the forms of Government sanctioned monopolies. We can calculate a monetary value of this subsidiary. <br><br>Society has a choice to support public services, but let's not delude ourselves re their costs. <br><br>Roads aren't free, they're paid for indirectly. This maybe an efficent way to finance them rather than 100% user pays (eg toll booths every 10m). The largest inefficiency with roads is the public departments that build and maintain them. The massive inefficiencies and waste in these departments drains other public services as well as the private sector. <br><br>These costs, as we see in the debt problems of the US and EU, are massive yet typically unrecognized by taxpayers. As I said, in the end the same fix will be applied (cut expenditure) - it doesn't get any easier.
        Richard Flude
    • They make money on junk mail

      @Rabid Howler Monkey -- The post office makes its money on junk mail. First class is a loser or at best breaks even. From a post office revenue point of view, the more junk mail, the better.
      bmeacham98@...
    • Still would lose jobs.

      @Rabid Howler Monkey Junk mail has been the one savior for the USPS and keeping employee's. If it were not for junk mail I would not get mail some days! Its not the Junk mail itself, but how little the USPS charges for it.
      jscott418-22447200638980614791982928182376
      • RE: US Postal Service bad news continues with plan to terminate 120,000 workers

        @jscott418 THE POST OFFICE NEEDS our HELP ! ! ! We can all help the Post Office at ZERO cost to the tax payers. We all need the Post Office. The P.O. is part of America ! ! Here is one of my ideas that I started to do and now some freinds are helping by taking part. This will help bring in REVENUE for the P.O. at no cost to you (Tens of $Millions or much more maybe $BILLIONS if we can get it to go VIRAL ; ) Help me TECHIES & YOUTUBERS. This could get the post office out of debt and stop the use of "JUNK MAIL" and save some trees to boot. It started with 1 (me) about 6 weeks ago "6-7-11" and now I know at least 34 of us are doing it ! ! ! But we need more, Millions more ! ! ! It's very easy, and it's part of what you already do with your mail. Look at it and TOSS the JUNK on a daily basis. ***So lets make it pay off. I call it ** "JUNK MAIL REVENGE" ** ! ! ! ! Here is how it works; When you get junk mail from any one that provides you with a "NO POSTAGE NECESSARY IF MAILED IN THE UNITED STATES" return envolope... (in other words the sender gets charged for each postage paid return envolope, and sometime at a premium of up to about REPLACE.75) just open that JUNK MAIL take out the postage paid envolope, LICK it and SEND IT BACK !!! Put in a note asking them to stop sending you their junk mail or write stop sending on the envolope. I get about 10 a week mostly from Banks, Credit Card Companies and Lenders. You know, the ones that sucked TRILLIONS of Dollars out of the pockets of every day AMERICANS and put this country into a historic TAILSPIN never seen before with their greed for profit at any cost. And than we bail them out??? It's time for them to bail someone out. And the P.O. couldn't be a better choice. We will all gain, AMERICANS across the board will win. LETS STICK IT TO THEM ! ! ! ! Start today and tell your friends ! Put this on facebook ! Twitter ! YOUTUBE ! and anywhere else you can think of. This will work ! ! Three cheers for us all ! !
        ruaspecker
    • RE: US Postal Service bad news continues with plan to terminate 120,000 workers

      @Rabid Howler Monkey

      That junk mail is actually a revenue source for the USPS.
      lonniemcclure
  • RE: US Postal Service bad news continues with plan to terminate 120,000 workers

    Please don't tell me that you have a special place in your heart for the mailman unless you mail a letter once in a while or pay a bill by mail once in a while. I wonder if the author of this article does that. The computer has made people so lazy that they can't pay at least one bill my mail.
    stumiller
    • RE: US Postal Service bad news continues with plan to terminate 120,000 workers

      @stumiller How come you use a stove instead of building a fire when you want to cook? It has nothing to do with laziness. There are better, more efficient ways to do it, so they do.

      Not to mention the post office are so slow (or the companies are so slow in mailing them out) that I often get bills the day before they're due.
      Aerowind
  • Other details

    Remember, that the USPS is the countries single largest employer. A staff reduction due to improvements in back end sorting operations, consolidation of sorting facilities and reductions in non-bulk delivery was inevitable. The USPS simply needs less people now that it has fewer facilities and these facilities continually improve sorting automation. Let the USPS continue to look for ways to reduce cost as its business model changes -- for example, stop Monday deliveries.
    Your Non Advocate
    • RE: US Postal Service bad news continues with plan to terminate 120,000 workers

      @facebook@... Wow. I am now morally obligated, at the risk of being labelled 'lazy', to use a slower, more expensive service to do something that I can do more cheaply and conveniently with a different service?

      You might want to re-think that one.
      chipbeef
      • What?

        @chipbeef what? Did you read my post at all?
        Your Non Advocate
      • RE: US Postal Service bad news continues with plan to terminate 120,000 workers

        @facebook....Oops. Threading got me...was supposed to be @stumiller. My bad.
        chipbeef