Don't lay off 120,000 postal workers in the middle of a jobs crisis

First, do no harm.

I appreciate that the U.S. Postal Service is facing a world of reduced revenue due to the Internet. But right now, in the middle of a yearslong jobs emergency, is not the time for talk of layoffs.

Until the jobs crisis is resolved — i.e., for the foreseeable future — the USPS should not be considering 120,000 layoffs. Until the jobs crisis is resolved, the USPS should not be considering 120 layoffs.

It should not even be uttering the L-word out loud.

Slate’s Annie Lowrey reports that:

The fiscal situation at the USPS is bad—really bad. According to its most recent quarterly report, the USPS lost $3.1 billion between April 1 and June 30. Add that to billions of dollars in losses racked up since the recession hit—the USPS has been in the red for 18 of the last 20 fiscal quarters. It has also amassed tens of billions in unfunded liabilities, mostly in pension and retiree health-benefit obligations.

The problem is not mismanagement. The problem is that the USPS has an enormous, expensive physical and human infrastructure. It operates more than twice as many U.S. outlets as McDonald’s. It runs the largest vehicle fleet on Earth. It has a staff of nearly 600,000, despite considerable reductions in the last decade. To pay for all those people, trucks, and buildings, the USPS needs to handle a lot of mail. …

Mail volumes have plummeted more than 25 percent since 2006. Moreover, the mix has gotten cheaper — more bulk mail, fewer first-class letters. … The USPS plunged deep into the red in 2007.

Those are daunting numbers. Almost as daunting as the numbers facing the newspaper industry due to its own struggle to retain revenue in the face of competition from the Internet.

What did the newspapers do in response to those numbers? Mass layoffs. It didn’t work.

It didn’t work at all. It so utterly failed to work that it’s astonishing that anybody would even consider saying, “Hey, I know, let’s try what the newspaper industry tried!” The stupid and cruel approach turned out also to be ineffective.

There’s reason to think it wouldn’t be effective for the USPS either. The Great Recession hit the USPS hard. Just like any other business, they’ve seen their revenues drop along with aggregate demand and the total number of employed people. Whatever savings might be gained from layoffs would also exacerbate the current jobs crisis — further reducing overall demand and thus, also, worsening the USPS’ current revenue problems. The expected cost-savings would thus never fully materialize.

So the timing would be bad for the USPS as well as for the economy as a whole. Layoffs amidst a jobs crisis mean less benefit and less savings for the employer. And layoffs amidst a jobs crisis mean increased hardship for those laid off.

Fortunately, layoffs aren’t the only measure being considered:

To help ease the immediate cash-flow problem, the USPS wants Congress to drop a requirement that it prefund retiree health care benefits — staving off financial apocalypse for a year or two and giving time for other changes to take effect.

Right now, the service is paying for retiree health benefits for letter carriers who haven’t been born yet and who, thanks in part to such accounting rules, might end up born into a world without a U.S. Postal Service to work for.

Devin Leonard’s BusinessWeek cover story, “The U.S. Postal Service Nears Collapse,” looks at some of the innovative steps European postal services have taken to reduce costs and increase revenues, including things like:

… [Creating] digital mail products that allow customers to send and receive letters from their computers. Itella, the Finnish postal service, keeps a digital archive of its users’ mail for seven years and helps them pay bills online securely. Swiss Post lets customers choose if they want their mail delivered at home in hard copy or scanned and sent to their preferred Internet-connected device. Customers can also tell Swiss Post if they would rather not receive items such as junk mail.

Sweden’s Posten has an app that lets customers turn digital photos on their mobile phones into postcards. It is unveiling a service that will allow cell-phone users to send letters without stamps. …

Brad Plumer notes that the service has other options as well:

One thing that doesn’t often get noticed about the U.S. Postal Service is that it has vast — and extremely valuable — real-estate holdings on its books. Many post offices, after all, are in prime positions in the center of town. But no one knows how much the buildings are actually worth. The Postal Service values its properties at their purchase price, rather than their fair market value. The total purchase price value comes to about $27 billion, but since many of these buildings were bought decades ago, their fair market value is presumably much, much higher. …

So, back in July, the USPS Office of the Inspector General came up with a novel idea: “If the Postal Service were to leverage its real property assets at the fair market value, that amount would likely cover the remaining $55 billion of unfunded liability in its retiree benefit funds.”

There are many more possibilities and ideas being considered for revitalizing the USPS and strengthening its fiscal footing. Considering the challenges it faces, everything should be on the table — everything except layoffs.

Not now. Not in the middle of a jobs crisis.

Because the first rule, as always, is do no harm. And 120,000 more public sector layoffs in the middle of a massive jobs crisis would do a great deal of harm.