Economic and fiscal impacts of proposed consolidations involving 5 postal facilities

November 10, 2014.  The American Postal Workers Union asked FPI to estimate the net economic and fiscal impacts of proposed consolidations involving five postal facilities around the country. The proposed consolidations were part of a nationwide “cost-savings” plan that would have further slowed mail delivery times. One of these involved a proposal to downsize sorting operations at the mail processing center in Newburgh, New York, in the lower Hudson Valley and to consolidate these operations at the Albany processing and distribution facility, 90 miles away. The consolidation would have involved the loss of 360 postal jobs in Newburgh and an increase of 128 postal jobs in Albany. The Postal Service released its own study about the potential impacts on postal operations but that analysis dramatically understated the overall community economic impact.

FPI’s economic impact analysis of the proposed Newburgh downsizing concluded that the net annual savings to the USPS were dwarfed by the net decline in labor incomes in Newburgh and New York state overall associated with the loss in postal jobs, with job losses sustained in businesses that support postal operations as well as losses related to reduced consumer spending associated with middle-income paying postal jobs.  In addition, the federal government and New York State would lose personal and business income and payroll taxes and local governments would experience a decline in property and sales taxes associated with the downsizing of postal sorting operations.

The other four proposed consolidations involved postal facilities in ; Huron, South Dakota; Tucson, Arizona; New Orleans; and Youngstown, Ohio.

FPI did not attempt to quantify the impact of these postal operations downsizings on businesses and consumers who would experience longer delivery times and poorer service as a result. Even though the round of consolidations that FPI analyzed was subsequently put on hold, the Postal Service reduced service standards in January 2015, with a significant portion of single piece first class mail being reduced from one-day to two-day expected delivery times.

Postal service operations and employment have already been scaled by considerably since 2000. In New York State, postal employment declined by 38 percent from 2001 to 2014, greater than the one-third job decline nationally.

The Postal Service’s plans for further consolidations are not the result of postal operations losing money. Rather, it stems from an effort by some Washington officials seeking to privatize the post office. One of the key tactics in pushing that agenda has been the 2006 Congressional legislation requiring the Postal Service to fully prefund retiree health benefits 75 years into the future over a 10-year period, at a cost of approximately $5.5 billion annually. This is a requirement that no other public or private entity in the United States must follow, and was instituted to put the public’s postal service out of business, clearing the way for greater privatization.  The Postal Service is the nation’s largest employer providing middle income paying jobs and it disproportionately employs workers of color who represent 43 percent of the postal workforce compared to a 34 percent share of the entire U.S. workforce.

See also FPI’s May 13, 2016 testimony at the public hearing convened by the Grand Alliance to Save Our Public Postal Service.