WASHINGTON, D.C. – The U.S. Postal Service (USPS) is being criticized for its proposal to raise stamp prices again in July. This proposed increase comes amidst declining mail volume, leading some to question its effectiveness.
Keep US Posted Calls for Rethink
Keep US Posted, a nonprofit advocacy group representing consumers and businesses reliant on the USPS is urging the Postal Regulatory Commission to reject the proposed price hike. The group also calls on Congress to re-evaluate the Delivering for America plan, a 10-year plan implemented by Postmaster General Louis DeJoy that included twice-yearly stamp price increases.
The USPS proposed increase would raise the price of a first-class stamp from 68 cents to 73 cents, representing a nearly 7.4% increase. This increase significantly outpaces current inflation rates, which sit around 1.622%.
Concerns About Price Hikes and Mail Volume
Kevin Yoder, Executive Director of Keep US Posted, argues that frequent price hikes significantly contribute to declining mail volume. He points to a 9% decrease in mail volume in fiscal year 2023, the same year the Delivering for America plan projected the USPS would break even. The USPS has also projected a $6.3 billion loss for 2024.
Yoder emphasizes the potential for a vicious cycle: "Price hikes are driving disastrous declines in mail volume, which is still the biggest money-maker for the USPS."
Report Raises Doubts About Pricing Model
A report by NDP Analytics, commissioned by industry groups, suggests the USPS's pricing model may be flawed. The report argues that the model underestimates consumers' sensitivity to price changes and relies too heavily on historical data. It suggests frequent price hikes could exacerbate the USPS's financial problems by decreasing mail volume.
The USPS Responds
In defense of the proposed increase, the USPS cites rising operational costs, including employee wages, fuel, and transportation. They argue that price hikes are necessary to maintain reliable mail service across the vast geography of the United States, particularly in rural areas where private competitors may not be profitable.
USPS Acknowledges Challenges
The USPS acknowledges the decline in mail volume but emphasizes its commitment to innovation and modernization efforts. These efforts include expanding package delivery services, which are experiencing significant growth due to the rise of e-commerce.
The Path Forward
The Postal Regulatory Commission has the final say on whether to approve the proposed price increase. They will likely weigh the USPS's financial needs against the potential for further mail volume decline. Meanwhile, Congress may consider legislative solutions to address the USPS's long-term economic health, potentially including changes to its service mandates or funding models.
Finding a Balance
The challenge lies in finding a balance between ensuring the USPS's financial sustainability, essential for maintaining a critical public service and keeping postage rates affordable for consumers and businesses that rely on it.