First-Ever Layoffs Loom at Postal Service

— David Yao

The U.S. Postal Service faces a serious financial shortfall that is accelerating reductions in its workforce and raising the possibility of the first-ever layoffs of career employees.

Reduced mail volume, rising costs, and a newly enacted cap on rate increases all have taken a toll on the Postal Service’s finances. A gradual shift to electronic communications and bill payment is shrinking the number of first-class letters, a mainstay of postal revenues. And the current economic downturn has led to drops in advertising mail volume.

Increasing fuel prices have been a big factor in worsening postal finances, compounded by a legal restriction enacted two years ago against raising the price of most services beyond the rate of inflation. The cap on rate increases was a major victory for the big mailing industry, but combined with rising costs, it has seriously squeezed the postal budget. Full Story.