Postal Service to Cut Work Force;
9,000 Jobs to Be Eliminated by 2004 to Reduce Expenses
Stephen Barr

03/21/2000

The U.S. Postal Service, under pressure from the Internet and large mailers 
opposed to higher postage rates, announced yesterday it will cut overhead and 
staff in an attempt to reduce expenses by $4 billion over the next four years.

"We are barely keeping our heads above water. We are facing declining 
margins," Postmaster General William J. Henderson said in a speech at the 
National Postal Forum, the premier mailing industry trade show, held in 
Nashville.

About 9,000 jobs in postal operations and mail processing will be eliminated 
by 2004, primarily through attrition and hiring freezes. The work force 
reduction comes on top of about 11,000 jobs already left vacant over the last 
two years as the Postal Service cut costs to meet revenue goals.

On an annual basis for the next four years, Henderson said, the Postal 
Service would save $100 million on overhead, $100 million from more efficient 
paperwork and purchasing procedures, $100 million in transportation and $700 
million in "breakthrough productivity" changes aimed at reducing costs in a 
variety of areas, including automation, staffing, scheduling and business 
procedures.

In addition, for fiscal 2001, the Postal Service plans to cut about 300 jobs 
at postal headquarters, up to 200 jobs at area offices and up to 900 jobs in 
the field, spokeswoman Judy A. de Torok said. The plan to eliminate the 
administrative positions was disclosed by the National Association of 
Postmasters after a headquarters briefing last week.

The Postal Service receives no tax dollars for its labor-intensive operations 
and under law must break even over the long term. Although it has operated in 
the black for the last five years on revenue of about $63 billion, postal 
officials announced in January they would seek to raise first-class and other 
postage in 2001.

The proposed rate increase, which will be studied by the independent Postal 
Rate Commission, was greeted with stiff criticism from business mailers. 
Yesterday, Henderson acknowledged the proposed postage hike "was traumatic 
for many of you."

The Postal Service must find ways to "bring our internal cost structure down 
and restrain prices," Henderson said. "That is the only way we will survive 
as key segments of our letter mail volume migrate to electronic messaging."

According to Jupiter Communications, an Internet research firm, Americans 
will send an estimated 343 billion messages from their home computers in 
2002. The Postal Service, in contrast, expects to handle only 107 billion 
pieces of first-class mail that year.

Henderson told mailers at the Nashville forum that cutting costs alone would 
not prevent future rate increases. "We must help you grow your industry. . . 
. We have to have volume and its associated revenue to thrive in the future. 
There simply isn't any other way."