Indian Time - A Voice from the Eastern Door

The US Postal Service (USPS) is raising the price of stamps again on Sunday, January 21, and the increase will be the fifth one in just two years, the most mailing rates have increased in any two year period during the 248-year history of the postal service. Prices will increase across all First-Class mail products by 2 cents per stamp, with the cost of a First-Class Mail Forever stamp rising from 66 cents to 68 cents.

First-class mail is the highest revenue-generating mail class, accounting for $24.5 billion, or 31% of USPS revenue in 2023. Stamp prices increased in July as well, from 63 cents to 66 cents, after jumping from 60 cents to 63 cents in January 2023. Rates for catalogs and newspapers will see increases well, which will affect consumers and businesses alike.

Two years ago, Postmaster General Louis DeJoy launched the “Delivering for America” (DFA), a 10-year strategic plan intended to “modernize and revitalize the Postal Service.” At the start of this new initiative, DeJoy promised the USPS would break-even in 2023, but the net loss reported at the end of the 2023 fiscal year in September, totaled $6.5 billion. This loss is shocking compared to the prior year, which yielded a net income of $56.0 billion in 2022.

DeJoy confirmed at the same time that the substantial net loss recorded in 2023 was also impacted by underfunded retirements caused by actuarial revaluation, the process by which the current cost of future pension obligations is evaluated. The United States Postal Service, which currently has 640,000 employees, reported a 2.6% increase in employee compensation and benefits costs to $52.8 billion.

While DeJoy claims the loss includes $2.6 billion in inflation costs “above what we projected and what we were able to recover, he was forced to admit his disappointment, saying, “we are not happy with this result.” DeJoy emphasized that the USPS has reduced the $160 billion in losses projected in 2021 “to less than $60 billion,” but continued to confirm that the projected outcome this year will also be bad. “Despite substantial planned reductions in our cost of operations and growth in our package revenues, we will not reach breakeven results in 2024.”

When announcing its $6.5 billion loss for fiscal year 2023 in November, USPS leadership noted that mail volume had slipped by nearly 9 percent, while package volume decreased by over 2 percent. “These unprecedented postage increases are just driving down mail volume and fueling more fiscal instability for USPS,” said Kevin Yoder, Executive Director of nonprofit advocacy group Keep US Posted.

“The Postal Service just posted an operating loss of $6.5 billion in 2023 and is projecting a $6.3 billion loss in 2024, all after receiving a $120 billion windfall from Congress in 2022,” said Yoder. “It’s time for Louis DeJoy to abandon the Delivering for America plan’s twice-annual stamp increases [because] traditional mail is still the biggest money-maker for USPS, and each rate hike just drives more mail from the system.”

In March 2022, the US Senate voted overwhelmingly to provide the USPS with about $50 billion in financial relief over a decade, and help alleviate unexpected future retirement costs by requiring retirees to enroll in a government health insurance plan. The 79-19 Senate vote followed bi-partisan approval in the House of Representatives in early February 2022. By April 2022, President Joe Biden had signed that legislation, which was intended to provide USPS with financial relief to be spread over a decade.

As a result, Representatives Emanuel Cleaver (D-MO) and Sam Graves (R-MO) have teamed up with other members of Congress to send a letter on Monday to the USPS Board of Governors, urging them to delay any further stamp increases this year until the effects of the twice-a-year increases on mail volume and revenue are better understood. Yoder expressed support for this move, emphasizing: “Congress must act before taxpayers have to bail out USPS. We applaud Congressmen Cleaver and Graves for taking the lead to confront these destructive stamp hikes while there is still time.”

While raising the price of one stamp by 2 cents may not seem like much of an serious expense to many, the cost for lower income Americans who mail their rent checks and other bills does add up, especially when rates are being raised so often. Moreover, DeJoy has given no assurances that his 10-year plan will indeed reverse the financial course of the USPS, yielding any kind of profit.

Considering that USPS received $50 billion in funding from Congress nearly two years ago, it makes no sense that another price increase is justified, especially when the volume of First Class mail has decreased so significantly. Rather than earning the USPS more profit, these price increases appear to have pushed consumers to forgo sending mail whenever possible.