U.S. Postal Service cutback numbers: Handle with care


When it comes to predicting the impact of its proposed mail processing plant cuts, the U.S. Postal Service has been throwing out some pretty big numbers that don’t always seem to jibe.

Back in February, for example, a USPS spokesman said the downsizing would eliminate 35,000 jobs; under a revised plan unveiled this month, that figure dropped to 28,000. And while USPS officials have pegged the projected savings at about $2.1 billion, they’ve also used the figure, $4.1 billion.

What gives?

Well, it’s complicated and some of the figures are in flux, the Postal Service acknowledges.

The estimated job effect, for example, is “constantly evolving as we continue to develop this plan,” spokesman Mark Saunders said in an email. To take just one factor that’s changed since the Postal Service first advanced the plant downsizing strategy last summer, the USPS career workforce (which would bear the brunt of the job cuts) has continued to shrink, while the mail carrier’s reliance on lower-cost temps has increased.

The plan “will continue to evolve as we implement this in phases, finalize the details and get a better understanding of how many employees will choose to voluntarily retire this year,” Saunders said. The $2.1 billion savings estimate comes from a filing last month with the Postal Regulatory Commission, the oversight body that’s reviewing a proposed change in first-class mail delivery standards tied to the plant cuts.

More than half of that dollar amount would come from reduced labor costs and productivity gains. But with fewer plants, the Postal Service would also need less maintenance, fewer contractors, etc., bringing the total expected savings up to $2.1 billion in comparison with fiscal 2010 levels.

On top of that, the agency then calculated the “per piece” costs associated with the new reduced network and applied that number to estimated mail volume in 2016 when all the changes are supposed to be fully in place, according to another spokesperson, Sue Brennan.  By the Postal Service’s reckoning, that would lead to another $2 billion in cost reductions for a total projected annual savings of $4.1 billion, she said.

When dealing with proposed reductions of this scope, uncertainty is probably inevitable. The bottom line: take these numbers with a grain of salt–and don’t be surprised if they continue to change.


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