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CNN
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On Sunday, postage rates went up for the second time this year, increasing by 5 cents to 73 cents for first-class mail. You probably didn’t notice.
To be honest, you probably don’t care, but you should.
Most people, even those who send mail, aren’t using the mail like they used to. But postal costs are a big issue for millions of businesses and organizations that spend most of their $40.8 billion annually on mail, including letters, bulk mailings, junk mail and periodicals. Rising rates could force them to cut back on postal spending, hurting the U.S. Postal Service’s budget and impacting its ability to continue providing vital services.
That includes everything from deliveries of online purchases to life-saving prescription medications. And this year, tens of millions of voters will cast their ballots by mail in the presidential election. And above all, businesses still rely on the mail to reach customers and keep our economy running.
Postage increases have traditionally been tied to inflation, usually increasing at most once a year, but Sunday’s rate hike was the sixth in three years, during which first-class postage rates have risen 10 percentage points faster than the overall rate of inflation.
The major postal companies say steep price increases will draw customers away from the post office and ultimately drain its budget.
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“We think the rate increases are excessive,” said Michael Plunkett, CEO of the Postal Trade Association, which represents companies in the mail and delivery industry. “They’re not generating much additional revenue because they’re taking a lot of packages out of the system that will probably never come back.”
The price of a first-class stamp reached 10 cents in 1974, just before the 200th anniversary of the postal service. As recently as 2002, before the Sunday hike, the price was 34 cents, or half its current price.
So if raising postage costs could ultimately jeopardize the postal service, why does the USPS continue to raise the price of mailing a letter? The short answer is because the Post Office desperately needs money. But the long answer is more complicated.
The Postal Service and the United States of America have grown side by side, literally since before the birth of the nation.
Founding Father Benjamin Franklin was appointed the first Postmaster General in 1775. It is mentioned on the USPS websiteThe service expanded to keep up with the development of the new nation and to hold the young country together, which was a major reason roads were built between early cities. The first federal highway, US 1, began as the Boston Post Road, carrying mail between New York and Boston, and is still called by that name in many places today.
“When Alexis de Tocqueville visited the young country in 1831, America boasted twice as many post offices as England and five times as many as France.” Smithsonian magazine pointed out in October 2020The company currently has 640,000 employees in over 30,000 facilities across the country.
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A woman buys stamps in Siren, Wisconsin, 1941.
But postage stamps took much longer to appear. “The City Dispatch Post of Alexander M. Greig, a private mail carrier in New York City, issued the first adhesive postage stamps in the United States on February 1, 1842.” According to the post officeThe parliament then Postage stamp from 1847In 1855 prepayment of postage became mandatory. The Iconic Pony Express The events depicted in many Western movies and novels took place in 1860, about five years later.
Post offices have also featured in pop culture and American history, including the climax of the beloved holiday movie “Miracle on 34th Street.” (Spoiler alert) The post office rescues Santa Claus on Christmas Eve. Cliff from the 1980s sitcom “Cheers” and Newman from the 1990s sitcom “Seinfeld” were both mail carriers. The band “The Postal Service” It was a popular indie pop song around the turn of the century, and the 1985 novel (by David Brin) and 1997 film (starring Kevin Costner) “The Postman” portray the importance of mail delivery in a dystopian sci-fi future.
But as new ways of communicating and connecting were introduced, postal delivery shrank.
Family and friends can stay in touch through email, text, and apps. Bills can be paid electronically. Physical mail doesn’t play the same role in American life as it once did. For many people, letters are as important today as VHS movies, floppy disks, and cassette tapes. “Snail mail,” the nickname for traditional mail in this century, is hardly a compliment.
In the most recent year, the post office delivered 11.4 billion pieces of mail. That may seem like a lot, but it’s down 75% from 20 years ago. The price of stamps has doubled in that time, but most experts blame technology.
“For most families, postage is not a big expense,” Plunkett said. “If postage cost $1, I would send out the same number of Christmas cards later this year as I did last year.”
Universal History Archive/Universal Images Group/Getty Images
Workers load mail onto trucks at the loading platform in 1938.
By contrast, online shopping has significantly increased package delivery, but the Postal Service doesn’t have as much of a monopoly on online shopping business as the Postal Service does, said Kevin Kosar, a senior fellow at the American Enterprise Institute.
“Before the digital age, the Postal Service had a very valuable monopoly. Those days are over,” he said. “Parcel business is growing, but it’s not a monopoly for the Postal Service. It’s very competitive.”
But Plunkett and other critics worry that the growth of the competitive package business won’t generate the profits needed to make up for the decline in mail volume.
The big postal companies would never like to raise postal rates, but they argue, with considerable evidence, that raising rates as sharply as they have in the past would drive away customers who need their service and worsen their economic situation.
“When you raise prices, you dramatically reduce efficiency and productivity,” said Art Sackler, executive director of the Coalition for 21st Century Postal Service, another trade group that represents companies that use the postal service. “Last year, the coalition measured the biggest drop in efficiency in 60 years.”
Critics worry about the rate hikes because declining finances and efficiency could mean the Postal Service could run out of money, possibly within a few years, forcing it to either rely on direct taxpayer subsidies from Congress that it currently does not receive or cut staff and services.
Led by current Postmaster General Louis DeJoy, the Postal Service laid out a 10-year plan in 2021 to modernize service and curb ongoing losses. DeJoy told the Senate in April that the Postal Service had been in a “financial spiral” for years, but under the $40 billion modernization plan, the service is “making the reforms necessary to continue serving the country well into the future.”
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Postal workers sort, load and deliver mail in Los Angeles in 2020.
But the plan, which includes restructuring the network of mail-processing facilities, adding full-time staff, improving transportation and delivery methods, and investing in technology, has not progressed as originally promised.
The postal service broke even last fiscal year and projected a $1.7 billion profit this year, but in April, Postal Regulatory Commission Chairman Michael Kubayanda, who sets rates, testified before Congress that the service lost $6 billion last year and is on track to lose more than $6 billion this fiscal year.
And some unions representing postal workers worry the modernization plan will improve finances by making the service less reliable.
“Letter prices are still high,” said Mark Dimondstein, president of the American Postal Workers Union. “I think there’s good and bad in this plan. I think we have to adapt to a world of growing package business and less mail. My concern with the 10-year plan is anything that leads to a decline in service.”
Kubayanda testified in April that he doubted the modernization plan would meet its financial and service goals.
“A universal postal system that provides affordable, reasonably fast and reliable service to all Americans six days a week and is financially self-sustaining seems increasingly difficult to achieve,” he said.
