The U.S. Postal Service plans to drop mail delivery on Saturdays in an effort to save about $2 billion a year.
The agency, which lost nearly $16 billion last year, will go to a five-day delivery schedule starting the week of Aug. 5. It will continue delivering packages six days a week, as well as mail addressed to post office boxes.
"The Postal Service is advancing an important new approach to delivery that reflects the strong growth of our package business and responds to the financial realities resulting from America's changing mailing habits," Postmaster General and CEO Patrick R. Donahoe said in a statement. "We developed this approach by working with our customers to understand their delivery needs and by identifying creative ways to generate significant cost savings."
The Postal Service cited research that shows nearly 70 percent of Americans support switching to five-day delivery to help stabilize the agency's finances. Those surveys were done before the agency decided to continue delivering packages six days a week.
But labor unions representing postal workers slammed the move as disastrous.
“I think the Postal Service is willfully jumping into a death spiral,” said John Marcotte, president of the Michigan Postal Workers Union that represents 6,000 workers in Michigan. “They continue to lower service, slow down the mail and provide less options for our customers, and I think the loss in revenues will far outweigh any short-term gains in saved expenses.”
National Association of Letter Carriers President Fredric Rolando released a statement saying it would especially harm small businesses, rural communities, as well as elderly and disabled citizens who depend on Saturday service.
It was not clear exactly how the schedule change will impact workers. The agency said the $2 billion in savings will come from a combination of employee reassignment and attrition. Postal carriers’ contracts include a no layoff clause for workers with a certain amount of experience in exchange for not being able to strike, Marcotte said.
The Postal Service already has consolidated mail processing facilities throughout the country. It has either shut down or is in the process of ending processing operations in Flint, Gaylord, Kingsford, Lansing, Saginaw, Jackson and Kalamazoo.
“The only result I can see is delayed mail, increased costs to process the mail, and driving away large major mailers,” Marcotte said.
For example, mail that had been processed in Gaylord now goes to Traverse City, which Marcotte said makes it impossible for certain bulk mailers, such as the local newspaper, to deliver their products on time.
Some distribution workers were being reassigned to letter carrier positions, but now those jobs are in jeopardy as well.
The consolidations and delivery cutback has brought up discussions of privatization.
Privatizing the agency would force it to compete and would likely improve costs and service, said Michael LaFaive, fiscal policy director at the Mackinac Center for Public Policy, a free-market think tank in Midland.
“How much is the public supposed to endure in terms of cost and service for this archaic system of delivering mail?” he asked.
Marcotte opposes that option, saying it would harm rural residents since it’s more expensive to provide mail service in those areas.
LaFaive said he thinks the vast majority of postal customers would benefit from more competition.
“If I choose to live in Keweenaw Peninsula, I recognize that a first-class letter might cost more to have delivered, but with Internet service providers, I don’t need to send that many first-class letters anymore,” LaFaive said. “The idea that we would maintain a bureaucracy of this nature solely to accommodate rural residents is silly.”
The agency's biggest problem — and the majority of the red ink in 2012 — was not due to reduced mail flow but rather to mounting mandatory costs for future retiree health benefits, which made up more than $11 billion of the losses last fiscal year.
Since 2006, the Postal Service has cut annual costs by about $15 billion and reduced its career workforce by 193,000, or 28 percent.
The new delivery schedule accentuates one of the agency's strong points — package delivery has increased by 14 percent since 2010, officials say, while the delivery of letters and other mail has declined with the increasing use of email and other Internet services.
The Postal Service has repeatedly and unsuccessfully appealed to Congress to approve a five-day delivery schedule for mail and packages. The service is subject to congressional control even though it is an independent agency that does not receive tax dollars for day-to-day operations.
Congress has included a ban on five-day delivery in its appropriations bill. But because the federal government is now operating under a temporary spending measure, rather than an appropriations bill, Donahoe says it's the agency's interpretation that it can make the change itself.
The Associated Press contributed to this report.
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Email Melissa Anders at manders@mlive.com. Follow her on Twitter: @MelissaDAnders. Download the MLive app for iPhone and Android.