In case you haven’t heard, the US Postal Service has proposed raising stamp prices yet again. I guess we can consider ourselves lucky this time around, as we dodged the seemingly annual spring stamp price increase.
This time around, they’re proposing a $0.02 increase in the price of a first class stamp ($0.44 to $0.46), effective January 2011. There would also be corresponding increases in other postal rates.
This latest increase is being driven by a steep drop in mail volume which has reportedly fallen by 20% since early 2007. This decline has resulted in a $7B annual budgetary shortfall, and the proposed increases will only generate about $3B.
The proposed increase now sits with the Postal Regulatory Commission, who oversees the USPS. The commission has 90 days to vote on the proposal.
Oh, and in case you’re curious, you might want to check out my historical graph of stamp prices which I last updated in 2008.
The local Bulk Mail employees informed me that the local not-for-profit that I work for will have to make major changes to the way we do mailings in 2011, which heavily increases our costs. When I explained that we have budget issues and we are very small, the two postal employees informed me that the USPS is trying to exclude small businesses and not-for-profits from sending bulk mail as it costs the USPS way too much money. I find this very sad! We either have to hire a mailing company or buy software at a cost of over $4,000 while still paying bulk mail permit fees.
See Article 1, Section 8, Clause 7 of the United States Constitution.
The USPS will never go away, unless ratified by 3/4ths of the states.
The only way to make money on a postal service is to let them cut service to rural areas and some dangerous urban ones – and that’s not going to happen.
There’s money in delivering in dense areas, not in less-dense ones. I’ve lived in places UPS wouldn’t go and thank God for USPS.
Clearly the postal systems needs an overhaul. It seems like they keep trying to do the things the way they always have instead of investing in efficiencies. And they keep trying to apply the same bandage (raising stamp prices) to the symptoms.
Pre-sorted bulk class makes up most of the mail we receive at our house, and aside from holiday and birthday cards, and the occasional hand-written note to my mother, I don’t send anything by First Class USPS. I have been using Media Mail heavily this year, though, as I’ve been unloading old books on Amazon.
The problem is that the perceived cost of an email is zero. You cannot lower the cost of a stamp enough to make someone feel like the value proposition is better for a slower service when email is instantaneous and free*.
So yes, their only option is to raise prices.
* Yes you are paying for email, but the costs are hidden and amortized over many higher value services.
So if I understand correctly, demand for stamps is down. Therefore, the logical thing to do is raise prices – right?
I wonder what economist is in charge of the post office.
To be fair to the USPS, they are semi-private in that they are responsible for paying their own bills, while at the same time facing a number of strict governmental restrictions/mandates. WikiPedia refers to them as “quasi-governmental.” Sure, they have a monopoly, but they’re also required to serve everyone everywhere equally well, and for the same price. It’s sort of a worst of both worlds.
Nickel: That is a good point. They will probably do both eventually.
Eden and Todd – I totally agree. USPS just needs to go private (or cease to exist). If they were actually trying to make a profit maybe they would be efficient and not have so much fat.
This has negligible impact on the average American.
As more and more of us move to the internet for most written communication needs and daily transactions, and use FedEx, UPS and the like to packages, the USPS is nearing obsolescence in my opinion.
They should increase the price even more so that more people will switch to using e-mail which is free and fast.
If your balance is short every year then .02 will not solve the problem.
To BIG is the problem…The USPS has the same problem GM had…
To BIG and slow to change and not enough FAT CUTTING… Get serious about the same problem time after time.
have some goals USPS all these band-aids are just that, and they will be sold off one day….
Eden is probably right but I am still sad about the demise of the handwritten letter. I use email all the time and rarely write a letter any more but those were the days. It was so fun to get a letter in the mail. Guess it’s a totally dying (dead?) art.
Ummm, what’s a stamp? 😉
Seriously though, I think I’ve bought one stamp in the last two or three years. I don’t think I’m atypical of my generation (33). No wonder their revenue is in decline.
I communicate in person or online. My payments are all electronic or mailed for me (for free) by my bank. And the few pieces of mail that I respond to are usually official government things that are postage paid.
R.I.P. Postal Service. I think it’s time to let it die and hand over physical delivery to the private agencies.
Rob: Given the size of their deficit, I suspect that all possible options (price increase, service decreases) are still on the table.
I wonder what happened to their proposal of stopping mail delivery on a specific day (I think it was Tuesday)? I woud rather have that happen as opposed to prices going up again.