WASHINGTON — The souring economy and changing lifestyles are dramatically affecting one of the most dependable institutions in American life: the U.S. Postal Service.
Troubled banks are mailing fewer credit card offers. Declining new-home sales mean vacant houses sitting with empty mailboxes. And as consumers switch to paying bills online, first-class mailings are drying up.
Now, a new trend in consumer activism — do-not-mail lists pending in 18 states — threatens to reduce deliveries of catalogs and other "junk mail" that make up the largest volume of postal deliveries.
Because of these factors, postal officials are expecting an operating deficit of $1-billion this year, the largest since 1995, and are looking for creative solutions.
"We cannot afford, literally or figuratively, to begin (the year) … more than $1-billion in the red," Postmaster General John Potter told a Senate subcommittee Wednesday. "We would never be able to dig out of that hole."
Potter said he wants to explore the possibility of renting space in the 37,000 post offices across the country to banks and other commercial interests. He said, however, that legal restrictions governing federal property could get in the way of, say, installing a Starbucks in the local post office.
"Other countries have the same challenges, but they look at their assets and use those assets to generate revenue. They use their retail outlets as banks," Potter said. "That type of flexibility is something I think we need to explore."
The looming deficit is a sharp reversal from the past several years. As recently as 2004, the Postal Service had a $3.1-billion surplus but has since been struggling against growing competition from FedEx, DHL, UPS and other delivery services. The Internet also has posed a threat, with the explosion of e-mail and an increase in the number of consumers who pay bills online rather than send a check in the mail.
First-class mail, the Postal Service's most profitable type, has been dropping steadily. The amount of first-class mail, which includes letters and bill payments, fell to 96-billion pieces in 2007 from 98-billion in 2004.
The holiday season in December was the first in which mail volume was less than the previous year.
At the same time, standard mail — advertising circulars, catalogs, fundraising appeals — has grown to 104-billion pieces in 2007 from 101-billion in 2005.
The explosion in standard mail has not gone unnoticed by consumers, and many have begun asking lawmakers for a national "do not mail" registry similar to the telemarketing Do Not Call phone registry, where advertisers would have to stop mailing catalogs and other unwanted mail to those on the list.
"I see catalogs of clothing, furniture and food, and I have no idea how they even get my name," said Maryland Delegate Karen Montgomery. "I'm infuriated. We throw out the equivalent of a grocery bag of unwanted mail each day. We used to have a trash can in the post office, and most of people's mail went into the trash. I just thought, this is ridiculous. What it does, of course, is to keep the post office in business."
Montgomery proposed "do not mail" legislation late last year, making Maryland one of 18 states to consider such a registry since 2007. Soon after she filed her bill, she said, she was inundated by lobbyists who represent the Postal Service and direct marketing industry.
Montgomery withdrew her bill but says she will reintroduce it after more research and a consultation with the state attorney general.
At Wednesday's hearing before the Senate subcommittee, Potter talked about the Postal Service's lobbying efforts against "do not mail." "We're working very hard to inform people about the role that mail plays in the economy, as an employer of millions of Americans," said Potter.
It seems unlikely that mail volume will return to previous levels once the economy improves, thanks to shifts in the way Americans are communicating and doing business, Potter said.
To solve its immediate headaches, the Postal Service will reduce labor costs by cutting overtime and using more seasonal workers, Potter said. The service also plans to raise the cost of stamps and premium services in May, taking advantage of major reforms passed by Congress last year that clear the way for annual rate increases. The cost of a first-class stamp will rise a penny, to 42 cents, and will increase every May thereafter, officials said.
Under the reforms passed by Congress, postage for letters can increase no higher than the rate of inflation, but fees for package delivery can be raised to compete with rates charged by FedEx and other private competitors.