Observation #36 - Postal Rate Increases
Jul 22nd, 2010 by Alex
The U.S. Postal Service hasn’t turned a profit since 2006. Since when does a government-run organization have to turn a profit? Do any of our government programs turn a profit?
The management blames the steady decline in pieces of mail that people are sticking in the mailbox. I don’t know about you, but I haven’t seen that. I get about the same amount of personal correspondence in the mail that I always have. Overall, I’ve seen a steady increase in the amount of junk mail.
I wonder if the Post Office increases the rates for bulk mail every time they jack the rates for First Class stamps. If they don’t, they should. Why should bulk mailers get such a good deal? They’re already getting a bulk rate, so just give them a slightly less good deal. Add a few cents to their rates and I’m sure the budget would swing back into the black in no time at all. Makes sense too, since the majority of what’s being delivered is the bulk mail to begin with.
#1: The post office is not supported by tax dollars anymore, so seeking profit seems like a good plan to me. If nothing else, profits can help an organization survive lean years. (http://en.wikipedia.org/wiki/United_States_Postal_Service: “Since its reorganization into an independent organization, the USPS has become self-sufficient and has not directly received taxpayer-dollars since the early 1980s….”)
#2: I believe the current hike will dramatically affect bulk mailers. For example, according to this Consumerist article, corporations shipping parcels lighter than one pound will see a 23% rate increase: http://consumerist.com/2010/07/usps-raising-rates-on-people-who-still-use-usps.html
A couple of comments:
The US Postal Service is actually a quasi-governmental organization, kind of like Fannie Mae, Freddie Mac, Sallie Mae, etc. They are required to have a balanced budget, and even more importantly, they are required to prepay their pensions, unlike most other governmental jobs with retirement benefits.
The proposal to raise the cost of stamps also includes a rate hike for bulk mailers. It is a rather significant one that far exceeds the rate of inflation - and the industry is not happy about it.
Really, the only way for the USPS to remain competitive is to close and consolidate a significant number of post offices, reduce mail delivery in extreme rural and woodland areas, and raise rates.