U.S. Postal Service May Close Thousands of Post Offices

The U.S. Postal Service is considering closing in excess of 2,000 post offices across the country this year. The new recommendation comes on the heels of the appointment of Patrick R. Donahoe's as the 73rd Postmaster General. The USPS also announced it will ask the Postal Regulatory Commission to allow the increase of some postage prices.

The Wall Street Journalreports that "Beginning in March, the agency will start the process of closing as many as 2,000 post offices, on top of the 491 it said it would close starting at the end of last year. In addition, it is reviewing another 16,000 -- half of the nation's existing post offices -- that are operating at a deficit, and lobbying Congress to allow it to change the law so it can close the most unprofitable among them."

Currently, the USPS can close offices only over maintenance problems, lease expirations and other very limited reasons that don't include profitability.

The postal service lost $8.5 billion in its last fiscal year, and the question of where it will get money to fund deficits has become an increasing concern in a period of government austerity.

Any plan to shutter offices will face some resistance in Congress. As the Journal points out, "Under U.S. law, mail delivery is a 'basic and fundamental' government function meant to 'bind the nation together' by providing service to 'all communities' at a reasonable price."

A Blow to Employment

Closing post offices may be one way to cut sharply into the agency's deficit -- but it's a political football. Few members of Congress want to support closures in their districts. However, the debate over an increase in the federal debt cap has begun, as has the issue of whether government spending can be cut by $100 billion a year.

In addition, a streamlining of the USPS could make unemployment worse in the U.S., just as the private sector has begun to add jobs. There's no estimate of how many jobs the service might lose if it closes 2,000 offices, but it's likely to be many thousands. What might be a short-term win as part of deficit reduction could be a long-term loss for employment and the economy.