US Postal Service Needs $1 Stamp

The U.S. Postal Serve (USPS) is broken, and some think the damage is permanent. It continues to lose money. It admits delivery times will get longer. Its image is tattered because of, among other things, difficulties delivering ballots in the last election.

The USPS is also bloated. It has well over 500,000 career employees and more than 100,000 “non career” workers. There are over 31,000 post office locations, some of which are in America’s smaller towns. The USPS insists on six-day delivery almost everywhere, although few Americans need this.

The increase in the price of a First-Class stamp has been extremely modest recently. In 2012, it was $0.45. Today the figure is $0.60. While the Postal Regulatory Commission has final approval over prices, USPS management has not made a strong enough argument for more aggressive increases. Without question, unless the USPS cuts tens of thousands of workers, its financial losses will continue. The only alternative is to raise revenue.

The USPS needs to determine the price elasticity of First-Class rates. It does not need to worry about much of the American population. These people have turned to e-mail for both letters and files that used to be mailed. Bills, which were once an essential part of what was delivered, are now often done electronically. If Americans were forced to, many would turn completely to the use of electronic mail. A $1 First-Class stamp would not hurt these Americans financially.

The USPS also needs to consider what its competition charges. FedEx and UPS each charge more for most letter delivery, particularly those that are not delivered “next day.” Based on that measure, a $1 stamp is more than affordable.

The USPS will not escape its current dilemma unless it either makes massive cuts in people and offices or gets the public to pay more for something they can afford to pay more for.

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