Tucson would lose $49 million in economic activity as a result of its mail processing facility’s consolidation to Phoenix, an analysis report shows.
The U.S. Postal Service Tucson processing and distribution center on Cherrybell Stravenue is one of 82 mail processing and distribution centers in the country facing consolidation as part of the agency’s cost-cutting measure. The Tucson facility’s consolidation to Phoenix has been pushed back from its original date of April 15, 2015, to July.
Economic impact analyses of five of the 82, including Tucson’s, were conducted by the Fiscal Policy Institute, a nonprofit think tank based in New York.
The five sites were chosen because they represent different regions and economy sizes, said James Parrott, deputy director and chief economist at the institute. The four other facilities evaluated by the institute are in Youngstown, Ohio; New Orleans; Huron, South Dakota; and Newburgh, New York.
The report showed that 320 postal jobs would be lost in Tucson, nine of which are contract mail truckers. Parrott cited a February 2012 USPS report for the number, which is different from the 259 the agency has given on multiple occasions.
Peter Hass, a USPS spokesman, explained the discrepancy by saying that it could potentially be because of attritions that may have taken place since 2012.
The average salary of a nonmanagerial postal worker is about $54,000, which is twice the median salary for Pima County residents, the report said. With benefits and health insurances added, the postal labor compensation comes out to be about $81,000. The total loss of direct income for postal employees would amount up to about $26 million, according to the report.
Using the 259 figure provided the postal service, the direct income loss would be about $21 million, the report says.
“The most critical thing to consider I think is when you lose 320 good middle-income jobs that are hard to come by in today’s economy, those are not easily replaced,” Parrott said.
The report also tracked indirect losses by local businesses supplying to the mail processing facility. With less business, local providers working with the postal service would likely reduce their workforce, Parrott said. The analysis projected an additional loss of 198 jobs, which amount up to about $4 million in income.
Other related industries in Tucson, including real estate, banking and trucking, would lose about $5 million in revenue, the report said.
“If you reduce the volume of postal service by ‘x’ amount, you’re going to cause ripple effects in the supply industry,” he said.
Tucson’s loss is Phoenix’s gain in the consolidation, the report continues. The Phoenix mail processing facility would gain 289 total jobs, 166 of which are direct postal service jobs. Overall, the total economic gain for Phoenix is estimated at $27.5 million.
But Phoenix’s gain is not enough to offset the state’s loss, the report said. The analysis projected that the state would experience a net loss of about $21.5 million.
The Tucson-Phoenix consolidation would save the USPS about $14 million annually, according to postal service reports. Nationwide, the agency hopes to save up to $3.5 billion a year through its “network rationalization” effort.
The institute’s analysis concluded that the “USPS figures on ‘savings’ do not account for the substantial adverse employment and economic impacts on Arizona or the lost tax revenues to the federal, or state and local governments.”
The postal service has to respond to the declining mail volume, thus a decline in revenue, said Hass, the postal service spokesman. It also needs to adapt to the changing mailing habits of the American public, he has said in the past in regard to the Tucson facility’s consolidation to Phoenix.
“We can’t just continue to do business by leaving things as they are,” he said in an interview. “We have to make operational changes.”
Regarding the prospective postal job losses in Tucson, Hass denied that postal jobs would be “lost,” saying that in the last decade, the USPS has reduced 205,000 positions and none of them were through layoffs. The agency plans to transfer Tucson employees to other locations or positions.
“We are not planning to have any layoffs,” he said. “For us, the term ‘job loss’ is inaccurate.”
Attrition or no attrition, American Postal Workers Union President Mark Dimondstein said postal workers would be forced into other regions, positions, unwanted retirement or would need to find alternative employment in their communities.
The consolidations are a “misdirection” of the outgoing U.S. Postmaster General Patrick R. Donahoe, he said. “This is a slash-and-burn approach,” he added.
First-class mail volume is undoubtedly down with the rise of digital communication, but as much as delivery services lost to the Internet, it also gained, too, the union president said. Package delivery volume is up, and the agency should be “creative” in adjusting its service to accommodate American communities, he added.
Fifty-one U.S. senators have called for the consolidations and service standard changes to stop and asked for a moratorium. But its not clear if they’ll pursue legislation, Dimondstein said. The change of mail delivery service goes into effect in January, and next week may be the “last chance” Congress has for a moratorium.
“This has negative — deep negative — economic consequences, far beyond what’s going to happen to the individual postal workers,” he said.
The consolidation hurts not only Tucson, but the state as a whole, Tucson Mayor Jonathan Rothschild said after reviewing the economic impact analysis.
“Congress — if they’re going to do the right thing — needs to act on that auditor general’s report to make sure the post office is running in the most efficient way,” Rothschild said. “Closing of the Tucson office is not the best thing for the city or region.”
Contact reporter Yoohyun Jung at email@example.com or 520-573-4224. On Twitter: @yoohyun_jung