New York
CNN
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On Sunday, the cost of a stamp is going up for the second time this year, increasing by 5 cents for first-class mail to 73 cents. You probably haven’t noticed.
And really, you might not care. But you should.
Most people don’t use mail like they used to – if they send mail at all. But the price of postage is a big deal for the millions of businesses and organizations that spend most of the $40.8 billion a year spent on mail, including letters, bulk mail, junk mail and periodicals. And the higher prices are causing them to cut back — and hurting the US Postal Service’s budget and, potentially, its ability to continue its essential services.
This includes everything from providing online shopping to life-saving prescription drugs. And this year, tens of millions of voters will cast their ballots in presidential elections by mail. And, above all, businesses still depend on the mail to help them reach customers and keep the economy afloat.
Postage rate increases were linked to inflation, usually increasing at most once a year. But Sunday will mark the sixth increase in three years, during which first-class stamp increases rose 10 percentage points faster than headline inflation.
Major mailers say the price hikes will soon drive them out of the mail, eventually drying up the agency’s budget.
“We think they’ve overstepped the mark in raising their rates,” said Michael Plunkett, CEO of the Postal Trade Association, which represents companies in the postal and shipping industry. “These rate hikes are not generating much additional revenue because they are taking volume out of the system that will likely never come back.”
The price of a first-class stamp reached 10 cents in 1974, just before the service’s 200th anniversary. By 2002, it stood at 34 cents, or half of today’s price before Sunday’s spike.
So if raising the price of stamps could ultimately jeopardize the postal service, why does the USPS keep raising the costs of sending a letter? The short answer is because the agency needs money – lots of it. The long answer is more complicated.
The Postal Service and the United States have grown side by side since before the country was born – literally.
Founding father Benjamin Franklin was appointed the first postmaster general in 1775, the USPS notes on its website. The service expanded to keep pace with the new nation and help unify the new country. It was a major reason that roads were built between its early cities. US 1, the first federal highway, began as the Boston Post Road to carry mail between New York and Boston and still continues under that name in many places.
“When Alexis de Tocqueville visited the new country, in 1831, the United States boasted twice as many post offices as Britain and five times as many as France,” Smithsonian magazine noted in October 2020. Today it has 640,000 employees located in over 30,000 facilities. nationwide.
However, the postage stamps took quite some time to appear. “Alexander M. Greig’s City Despatch Post, a private carrier of New York City, issued the first adhesive stamps in the United States on February 1, 1842,” according to the Postal Service. Congress then authorized postage stamps in 1847, and prepaid postage was required in 1855. The Pony Express—a feature in many Western movies and novels—came about five years later, in 1860.
And the postal service has made other appearances in pop culture and American history. The climax of the beloved holiday movie “Miracle on 34th Street” has (spoiler alert) The mail that saves Santa Claus on Christmas Eve. The characters of Cliff on the 1980s sitcom “Cheers” and Newman on the 1990s sitcom “Seinfeld” were letter carriers. The band The Postal Service was a darling of indie-pop near the turn of the century. And the 1985 novel (by David Brin) and the 1997 film (starring Kevin Costner) The Postman take the importance of delivering mail in a dystopian, sci-fi future.
But mail deliveries shrank with the introduction of new ways to communicate and connect.
Families and friends can communicate via email, text or apps. Bills can be paid electronically. Physical mail does not play the same role in American life as it once did. For many people, individual paper is as important today as VHS movies, computer discs and tapes. This century’s nickname for the traditional letter – snail mail – is hardly a compliment.
In its most recent year, the service sent 11.4 billion individual letters. That may seem like a lot, but it’s down 75% from 20 years ago. While stamp prices have doubled in that time, most experts point the finger at technology.
“For most families, postage is not a significant expense,” Plunkett said. “If the price of a stamp was a dollar, I would send the same number of Christmas cards later this year as I did last year.”
In contrast, online shopping has significantly increased package deliveries. But the Postal Service doesn’t have the lock on that business it has in its own mail service, said Kevin Kosar, a senior fellow at the American Enterprise Institute.
“Before the digital age hit, the Postal Service had a very valuable monopoly. Those days are gone,” he said. “The package business is growing, but this is not a monopoly business for them. It’s very competitive.”
But Plunkett and other critics worry that growth in the competitive package business won’t produce the profits needed to offset declining mail volumes.
Major mailers would never like the idea of paying more for postage. But they argue, with considerable evidence to back them up, that raising rates as fast as they have been increasing is driving away business the service needs and worsening its economic condition.
“By raising rates, its efficiency and productivity go down a lot,” said Art Sackler, executive director of the Coalition for a 21st Century Postal Service, another trade group representing business that uses the service. “Last year, by his measure, his efficiency fell the most in 60 years.”
Critics worry about the rate hike: Deteriorating finances and efficiency could force the Postal Service to run out of money, perhaps within a few years, and or begin to depend on direct taxpayer subsidies from Congress that it currently does not receive or cuts. back to staff and service.
The Postal Service under current Postmaster General Louis DeJoy laid out a 10-year plan in 2021 to modernize the service and curb continued losses. Previously, he told the Senate in April, the USPS had been in a “financial death spiral” for years, but that under the $40 billion modernization plan, “we are making the necessary changes to ensure that we are close to to serve the country well.”
But the plan, which includes restructuring the network of mail handling facilities, employing more full-time staff, improving transportation and delivery methods and investing in technology, has not lived up to early promises.
The service had projected that it would come out of the last fiscal year and have an annual profit of $1.7 billion in the current fiscal year. Instead, it lost $6 billion last year and is projected to lose another $6 billion or more in the current fiscal year, according to congressional testimony in April by Michael Kubayanda, chairman of the Postal Regulatory Commission’s rate-setting committee.
And some of the unions that represent postal workers are concerned that the modernization plan will try to improve finances while reducing the reliability of the service.
“The cost of a letter is still a good deal,” said Mark Dimondstein, president of the American Postal Workers Union. “I think there is good and I think there is bad in the plan. I think we have to adapt to the world of growing parcel business and declining mail volumes. Our concern with the 10-year plan is anything that slows down service.”
Kubayanda testified in April that he doubts the modernization plan will be able to achieve its financial and service goals.
“It seems increasingly difficult to have a universal postal system that reaches every American six days a week, at affordable prices, with reasonably fast and reliable service, and is financially self-sustainable,” he said.