One of the ways US Postal Service plans to cut expenses is the closure of 2,000 “money-losing” post offices. Sounds reasonable- any business would be eager to shed operations that aren’t pulling their weight. But it raises the question- how do you know when a post office is losing money?
You’d think it would be a simple matter of looking at the office’s books, and comparing revenue to expenses- and you’d be wrong. In most cases, very little of the revenue collected at a PO window or bulk mail unit actually pays for services provided by that post office. If you buy a book of Forever stamps your local office, and use them to mail letters from, say, your work location, the post office credited with all of the revenue has done none of the work you paid for. A bulk mail unit may collect millions every year for mailings that are promptly trucked to drop locations elsewhere, and never even get near the PO that pockets the revenue.
Almost half of the cost of mailing a letter is the labor intensive, delivery part. The rest is transportation and processing en route- none of which is normally handled by the office that collected your money.
So how do you decide if an office is losing money if you can’t just look at the office’s balance sheet? Unfortunately there is no easy answer. You could calculate a delivery “workload credit” by measuring delivery volume, but you’d need to do it by class and rate, and you’d also need to differentiate by delivery type- box, rural, walking route, etc. While the USPS does track that sort of data as part of the rate setting process, it doesn’t do it down to the individual post office level.
So how will the USPS come up with its list of PO’s to be closed? Your guess is as good as mine…