The Shrinking Service: Why Are Post Offices Closing?

http://www.wwnytv.com/news/local/The-Shrinking-Service-Why-Are-Post-Offices-Closing-139864753.html

Story Published: Feb 21, 2012 at 6:35 PM EST Story Updated: Feb 22, 2012 at 1:01 PM EST

7 News reporter John Moore spent the last month assessing what the loss of post offices means in northern New York, and the reasons for the Postal Service's difficulties.

What emerged is a more complex picture of the Postal Service's woes, one that is not consistent with the popular image of wasteful government spending or a business model doomed to failure.

Most importantly, a 2006 law passed by Congress appears to have crippled the Postal Service's finances. That law required the Postal Service to 'pre-pay' employee benefits for many years into the future, a decision that cost the Postal Service billions of dollars.

It leaves people inside the system scratching their heads.

"That is to say, an employee or a child was born 20 years from now, will hopefully retire in 35 years, we have to pay for their health benefits for when they retire, today," said Ken Montgomery, the head of the letter carriers union in Rochester.

"I think if the mandate was never imposed, the postal service would be operating right about break-even like we had been in 2006," Edward Phalen, the Postal Service manager for upstate New York said. "Possibly even had somewhat of a profitability."

To be sure, the internet has affected the Postal Service, as it has most things. But if you go back only five years, to 2006, the Postal Service moved a record 213 billion pieces of mail. The internet was already a dominating, world changing force at that point.

The recession was a truer turning point for the Postal Service, officials say. As business worsened, the volume of mail dropped dramatically.

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