Email Stomping Out Snail Mail as U.S. Postal Service Teeters on Bankruptcy

Paul Lilly

Think about the last time you mailed a physical letter. It's probably been awhile, unless you occasionally drop a line to your grandmother who refuses to purchase a PC. Now think back to the last time you fired off an email. Compare the frequency of the two and, in most cases, you'll find an enormous discrepancy. Turns out the shift towards digital communication is finally taking a toll on the United States Postal Service.

In an interview with The New York Times , Patrick R. Donahoe, the postmaster general, described the situation as "extremely serious." Donahoe said the U.S. Postal Service is on the brink of bankruptcy and will default if Congress doesn't step in and do something drastic.

The Postal Service doesn't have a big cash reserve, and according to NYT, it doesn't have the funds to make a $5.5 billion payment due this month. If that happens, the service could shut its operations during the winter months.

"The situation is dire," said Thomas R. Carper, chairman of the Senate subcommittee that oversees the postal service. "If we do nothing, if we don’t react in a smart, appropriate way, the postal service could literally close later this year. That’s not the kind of development we need to inject into a weak, uneven economic recovery."

Some 167 billion pieces of mail will flow through the U.S. Postal Service this year, which sounds like a big number, but is down 22 percent from five years ago, NYT says. Email, online bill payments, and the Internet in general is suffocating snail mail. In the past four years, the U.S. Postal Service has recorded $20 billion in losses, in part because it's legally required to provide weekly deliveries to 150 million homes and addresses.

So does this mean we can look forward to an email tax, maybe a penny per message sent? Not likely. Instead, Mr. Donahoe wants to cut costs by closing around 300 sorting facilities (bringing the total down to 200) and reducing the workforce from 630,000 to 220,000 by 2015.

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