The decision by the U.S. Postal Service to stop Saturday mail delivery beginning Aug. 5 has left customers nationwide wondering what's next for the beleaguered government agency.
Locals walking into the Gilroy Post Office at 100 Fourth St. Tuesday were no different.
“Is it a symptom of something bigger?” wondered Pam Smith of San Martin as she arrived to pick up her mail.
It's all a matter of business acumen according to Augustine Ruiz, a Corporate Communications Manager for the Postal Service.
Postal workers aren’t losing any hours, he explained. They’ll just be switching one of their two weekly days off to Saturday.
The Dispatch attempted to speak with local Postal Service workers about the change, but all inquiries were directed to Ruiz.
The scheduled cancellation of Saturday mail delivery will save the Postal Service $2.2 billion a year through operational costs by having less vehicles on the road, using less fuel and covering a wider area for package deliveries with fewer employees.
Taken in light of the annual operating costs, however – $80.9 billion in 2012 according to the 2012 Progress and Performance Report the Postal Service delivered to Congress - Ruiz acknowledges that the money saved from cutting Saturday mail delivery is only a “dent.”
The Postal Service will continue to deliver packages Monday through Saturday, as shipping and package revenue is up 4.7 percent compared with the same time last year. Post offices that are usually open on a Saturday will continue with business as usual, Ruiz noted, but mail delivery will no longer be available.
“If they get enough service, they'll be open,” he explained. “There is nothing in the new plans to change that.”
The urgency behind the agency's plan for fiscal conservancy becomes apparent after a glance at its Progress and Performance Report, which shows the Postal Service made a net loss of $15.9 billion in 2012.
A federally mandated payment on Sept. 30 of $5.6 billion to pre-fund retiree health benefits looks set to exacerbate the agency's financial woes.
On top of that, October's outlook is equally dismal with a $1.4 billion payment scheduled to the Department of Labor for worker's compensation.
These sort of fiscal trials and tribulations are nothing new, however.
In 2012, the Postal Service defaulted on payments designed to pre-fund retiree health benefits to the tune of $11.1 billion, according to the Postal Service website.
On Wednesday, Postmaster General Patrick Donahoe spoke in front of a senate committee to explain the dire straits the Postal Service is languishing in.
“We are losing $25 million a day,” he admitted.
According to Donahoe, in October last year the Postal Service only had enough cash to fund operations for a total of four days. Donahoe sees this as a “razor-thin margin” for a company that has almost 495,000 “career” employees, and delivers almost 40 percent of the world’s mail.
Whatever the reasoning behind the change, Pam Smith – the San Martin resident who cares for a total of four elderly residents in Gilroy, Morgan Hill and San Martin – said that decision has left her charges “confused and concerned.”
“They've been asking questions about whether or not the country is falling apart,” she added.
One client of 95 is too old to be “worrying about the economy,” Smith said.
The economy, on that note, is the driving force behind the Postal Service's decision to cut Saturday mail delivery, as small fluctuations can have a dramatic impact on an entity that receives absolutely no tax dollars for operating expenses.
For example, if fuel prices increase by one penny at the pump, explained Ruiz, then transport costs for the Postal Service rise by $8 million a year.
“But prices never go up by just one penny,” rued Ruiz.
As the new delivery system comes into play in early August, there is, perhaps, a sunny side for Postal workers who didn’t usually get weekends off. Previously, they were contracted to have Sunday and one other day of the week off, Ruiz explained.
“Now it'll just be Saturday and Sunday,” he added.
In today's current economic climate, Fernando Silva of Gilroy thinks the Postal Service might be getting it right with the plan to stop Saturday mail delivery.
“We should all be in this together,” laughed Silva.
As Silva sees it, the whole nation has been collectively belt tightening since the Great Recession of 2007. Why should the Postal Service be any different? he asked.
“It's just the nature of the beast,” he quipped. “It’s not going to kill anybody.”