Infrastructure

First Class Mail May Hit 58 Cents

The U.S. Postal Service (USPS) could not be in worse shape financially. This means, among other things, the possibility tens of thousands of postal workers could lose their jobs, and hundreds of post offices could be closed. A number of observers believe that these actions are long overdue. They think the organization as it is currently constituted belongs to the 19th and 20th centuries.

The USPS revenue was $18.9 billion in the quarter that ended March 31, up from $17.8 billion the year before. The loss for the period was brutal—$1.7 billion, compared to a loss of $1.9 billion in the same period a year earlier. Postmaster General and Chief Executive Officer Louis DeJoy commented: “With our Delivering for America plan, the Postal Service will become a growth-oriented, high-performance organization that operates with greater precision, achieves 95 percent on-time delivery, and does so at a lower cost to serve.” Since it was none of those things in the recent past, it is a huge question about how it can achieve the goals anytime.

To help solve this problem, USPS has presented some of its plans for a 10-year turnaround program. This has just been given to the Postal Regulatory Commission (PRC). Part of this program is to raise the price of a first class letter from 55 cents to 58 cents. The PRC could turn this down. The logic for the move is confusing. First class mail volume has dropped. The USPS believes it can make up for that by raising prices. Of course, the increased prices could drive people away from the use of first class mail.

The proposal:

First-Class Mail prices would increase by 6.8 percent to offset declining revenue due to First-Class Mail volume declines. In the past 10 years, mail volume has declined by 46 billion pieces, or 28 percent, and is continuing to decline. Over the same period, First-Class Mail volume has dropped 32 percent, and single piece First-Class Mail volume — including letters bearing postage stamps — has declined 47 percent.

The UPSS is huge. There are 31,330 post office locations. Some are in very small towns and handle almost no volume. The number of career employees at the USPS totaled 495,941 last year. Much of this system is set up for six-day-a-week delivery, which has become unnecessary.

The 58 cent stamp will be another sign that the USPS cannot run efficiently.

Click here if you wonder why the USPS needs 31,322 post offices.