OKLAHOMA CITY – A request to raise the price of a first-class stamp from 55 cents to 58 cents has been filed by the U.S. Postal Service in an effort to achieve financial stability and to cope with slumping mail volume.
The price increase was one among a set of proposed rate increases and service changes filed May 28 with the Postal Regulatory Commission and would take effect Aug. 29 if approved by the commission. The proposal includes price hikes not only for first-class mail but also for magazines and marketing mailers.
Other provisions of the plan would lengthen de- livery times, reduce post office hours, consolidate locations, limit the use of airplanes to deliver the mail, and lengthen the delivery standard for first-class mail: to within five days in the continental U.S. instead of within three days.
They are part of Postmaster General Louis DeJoy’s 10-year plan for the Postal Service, which faces operating losses estimated at $160 billion over the next decade.
In 2020 the Postal Service delivered approximately 129.2 billion pieces of mail and packages to customers located in every state and territory, county, city, town and rural area in the nation. In 2011 the agency delivered 168.3 billion pieces.
First-class mail volume declined by 27.4% during that decade, and marketing mail volume shrunk by 23.7% during that period. Also, during the same decade, the number of U.S. Postal Service career employees nationwide declined by more than 61,000, to 495,941.
Total net operating losses of the U.S. Postal Service were $3.6 billion in Fiscal Year 2020, the Postal Regulatory Commission reported. At the end of the fiscal year the Postal Service had a net deficit of $80.7 billion, primarily the result of multiple years of net losses that started in FY 2007.
The Postal Service amassed billion-dollar surpluses for many years prior to the popularity of the Internet.
Although the Postal Service lost money in 2001 and 2003, the most significant losses came after passage of a 2006 federal law requiring the agency to pre-fund retiree health benefits.
The Postal Accountability and Enhancement Act ordered the USPS to pre-fund employee retiree health benefits for the next 75 years. While pre-funding other retiree benefits is normal for both private and government organizations, pre-funding health benefits is virtually unheard of.
Legislation was introduced in Congress last month that would scrap the requirement that the agency pre-fund its retirees’ health benefits. The legislation also would integrate the agency’s health care with Medicare, which would align Postal Service retiree health benefit plans with those of many private sector employers and state and local governments.
The Postal Service generally receives no tax dollars for operating expenses and relies on the sale of postage, products and services to fund its operations.
John McHugh, a Republican former congressman and a former Secretary of the U.S. Army under President Obama, said he’s been involved in Postal Service issues since 1995.
“The U.S. Postal Service has 157 million delivery points,” McHugh said. “No other organization in America has that kind of reach and penetration. Particularly in rural environments, it’s absolutely essential. In the era of e-commerce, it’s even more crucial. For rural community residents and small businesses, the only way they can afford to get that is through the Postal Service.”