Postal Decrease

mailboxes-rowOn April 10, 2016, the USPS decreased the postage on first-class letters and postcards as well as international stamps. Yes, you read that right – a decrease in postage! The last time there was a decrease in postage was almost 100 years ago in 1919! Postage was increased from 2 cents to 3 cents in 1917 in response to WWI and was dropped back to 2 cents following the war.

Here’s a bit of more current history. The USPS was hit hard by the Great Recession. In 2008 alone, sales dropped $7 billion. US postage prices are capped by Congress and tied to the rate of inflation. In 2013, the USPS requested a 3 cent exigent increase to cover losses due to the recession. Congress agreed to a 2-year increase and, despite protestations from the USPS, insisted that the price roll back 2 cents (allowing a one cent increase for inflation) after the 2-year period was over.

The USPS took the matter to court, which upheld the PRC’s decision. It should come as no surprise that organizations such as the Alliance of NonProfit Mailers and the Direct Mailer’s Association were happy with the court’s decision to enforce the roll back. The USPS, in a February 2016 press release, reports that the decrease will result in a $2 billion a year increase in net losses.  They want the price limits to be changed so they can adjust rates to better reflect the costs of mail delivery.

There many theories on where the USPS’s financial problems lie. The Postal Service itself points to the drop in first class mail – possibly due to more paperless options. Others point to the pre-funding of retiree health plans mandated by Congress. Still others cite presort mailing companies which have lobbied congress to keep rates low and demand deep discounts.

At the end of the day, the USPS is still a vital force and the only service that has the capabilities of reaching every person in the country regardless of how rural for only 47 cents. That price, by the way, is among the lowest of industrialized countries. According to a chart in the WSJ in 2012, the lowest postage was found in Qatar at 12 cents and the most expensive was in Denmark at $1.46.  Out of the 56 countries listed, the US came in at 14.

It might be a good time to stock up on Forever stamps!

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