Not Surprising - USPS 2012 Cuts Do Not Create Projected Savings

(This article first appeared in the January/February 2019 issue of the American Postal Worker magazine) 

The Office of Inspector General (OIG) Oct. 15 report proves what postal workers have been shouting for years – cuts to mail processing and service is not the answer to the challenges facing the Postal Service.

In 2011, the Postal Service embarked on a disastrous endeavor to close and consolidate more than two hundred mail processing facilities in an attempt to save money. In 2015, the Postal Service began the second part of its reckless cost-cutting program – called the Operational Window Change (OWC) – revising its First-Class Mail (FCM) service standards. These changes included the elimination of single-piece overnight FCM service and shifting some First-Class pieces from the two-day service standard to a three-day service standard, as well as additional closings and consolidations of processing plants.

The Postal Service claimed these changes would lead to savings of over $1.6 billion over the 2016 and 2017 fiscal years. But, according to a new audit report from the OIG, the results haven’t even come close to that.

How far off? The OIG was only able to identify $91 million in savings over the course of the two-year period – almost 95 percent below expectations. The OIG report concluded that “it is unlikely the Postal Service will ever achieve the projected annual $805.5 million OWC savings.” The OWC changes have led to devastating decreases in good union jobs, processing productivity, and customer service and satisfaction.

Increased Mail Processing Costs and Decreased Customer Service

During the first phase from 2011-2015, the Postal Service closed 141 processing facilities. While the Postal Service did not fully implement its plan to consolidate 82 plants in the second phase, the USPS did fully consolidate 17 facilities and partially consolidated another 21 facilities.

Closing these facilities and cutting these jobs, the Postal Service said, would lead to savings of almost $679 million per fiscal year and greater processing productivity. The OIG, however, found the opposite on both counts.

The report notes that overall mail processing costs have actually increased by $153 million since the start of the OWC. These findings occurred even as mail volume decreased by 12.4 percent. In addition to these failures at the expense of postal workers, the Postal Service’s overhauls have been a disaster for customer satisfaction and on-time mail delivery. FCM single-piece and commercial service scores decreased in the first year of the OWC, as delayed mail rose to more than 2.4 billion pieces in 2015. While service scores and delayed mail improved in 2016 and 2017, the numbers worsened again over the course of the first two quarters of the 2018 = fiscal year, with delayed mail increasing to over 2.6 billion pieces. It is clear that service standards are deteriorating not because of postal employees, but because of decisions of upper management.

The report underscores the long-standing position of the American Postal Workers Union that the Postal Service cannot succeed by cutting service. The path to success should include restoring overnight delivery standards, reopening processing facilities, providing the best service possible and hiring sufficient workers to carry out the mission of the Postal Service.

The full report is available here.