The Last Resort? USPS® Proposes 5.9 Percent Rate Hike
By Abby Garcia Telleria
Won’t Go Down Without a Fight
Earlier this year, the Postal Service™ came out with guns blazing – working with lawmakers to propose cost-cutting initiatives that included eliminating Saturday and door-to-door delivery. But those measures – including this most recent push to raise rates – are still pending a final decision. The Postal Regulatory Commission (PRC) is expected to review all the options.
It would seem that the Postal Service has exhausted all efforts to right its ship.
Postmaster General Patrick Donohoe recently spoke before the Senate Committee on Homeland Security and Governmental Affairs, saying they had no choice but to take this drastic measure. “We did not want to take this step, but we had little choice due to our current financial condition,” Donahoe said.
Here’s the rundown on some of the proposed changes:
- Letters (1 oz.) – 3 cent jump to 49 cents
- Letters (additional ounces) – 1 cent increase to 21 cents
- Letters to international destinations (1 oz.) – $1.15
- Postcards – 1 cent increase to 34 cents
- Saturation mail – Current rates at $0.115 – announced rates at $0.121 – a 5.2 percent change
No surprise here – the rate increase is intended to generate $2 billion in revenue for the Postal Service. But is it enough to help salvage the “precarious financial condition” of the agency?
The Postal Service recorded a $15.9 billion net loss last fiscal year and expects to record a loss of roughly $6 billion this year. Add to it, the USPS stated that it currently has an “intolerably low level” of available liquidity even after defaulting on its obligation to make prefunding payments for retiree health benefits.
Needless to say, those in the industry are none too happy about the proposed rate increase. Most expressed concern that the rate hike would be almost four times the 1.6 percent increase in the Consumer Price Index (CPI) – in other words, the postage rates would be above the rate of inflation.
“Mailers, including (our) members, are also struggling with tight budgets, and the above-CPI rate increases are likely to accelerate the long-term erosion of mail volume,” stated the Alliance of Nonprofit Mailers.
The Direct Marketing Association (DMA) also released a statement calling the move “misguided,” and saying it was “extremely disappointed,” and that the action will “significantly harm the Postal Service and the mailing industry in the very near future.”
According to the DMA statement, “Rather than lowering prices at times of weak sales — a common practice in businesses across the United States — the Board of Governors has misguidedly decided that raising prices will help cure its lack of sales. On the contrary, the problem of decreased mail volume will only worsen as mailers cease to rely upon the United States Mail to reach consumers.”
At any rate, we will continue to update you on new developments … stay tuned!
— Abby Garcia Telleria is a senior copywriter at Melissa Data. She can be reached at email@example.com.