The cost of stamps has [http://www.cagw.org/site/PageServer?pagename=news_NewsRelease_06262002"]risen](
[url) for the third time in three years and it’s now up to 37 cents per letter and the Postal Service is 13 billion dollars in debt. If the Post Office really wants to be an efficient self sustaining business, like they claim, jacking up rates every year is not the way to win customers.
Here is a linkwith similar questions that says it’s all about anthrax precautions and reduced mail volume.
It would seem that if a (real) business had reduced volume and special costs for emergencies the answer would not be to raise prices (competitors would eat them alive) but to cut costs by right sizing and becoming more efficient. Is this out of the question for the Post Office because of it’s entrenched civil service roots, Postal Unions and quasi-private status? Or is 37 cents for a letter “such a deal” that we don’t fully appreciate?
I heard that one problem is that younger people have turned to email rather than letters, along with paying bills via the internet. If businesses ever decide to make this change it will be the end of the post office, as we know it. In 1964, when I started in business, we would get orders in the mail and business letters were very common. In the last 10 years before I retired we never got a business letter (form letters don’t count) in the mail and the only orders were from companies who confirmed orders given over the phone. Lower phone rates and the fax were also important in the change.
In fact, the price of a first-class stamp hasn’t risen faster than inflation. A stamp went from 29¢ to 32¢ in January 1995. 29¢ in 1995 is worth 34.2¢ today (not exactly accurate, because the inflation calculator I used has the 1995 average; presumably January is lower than the average, since prices generally rise, so inflation has increased even faster since January 1995). Of course, depending on your starting point, you surely could find some pretty egregious examples of stamp price increases relative to inflation (such as, say, January 1, 2002 to July 1, 2002).
Of course, price increases no doubt drive some consumers away, and drive others to substitutes. But depending on the price elasticity of first-class postage stamps, revenues may increase enough to offset both the lost volume from the price increase itself, exogenous volume declines, and increases in costs. And besides, the USPS doesn’t have any direct competitors for first class mail.
Believe you me, the Post Office has an armada of economists to consider these issues. They also have issues most businesses don’t have to worry about, such as the political issues related to price increases and competitors nipping at their heals over their monopoly powers, and other issues some businesses have to worry about, such as very effective unions making cost savings very difficult.
All of this means that increases in the cost of first-class mail are very tricky propositions, and not to be undertaken lightly.
And none of this is to be taken to mean that they’re not money-grubbing sleazeballs, and that I’m not finding every way possible to slap a 37¢ stamp on anything.
I would basically say the reason is because for years and years(and still today as well) postal costs have been very very very very cheap in this country. Youre just spoiled, so when costs creep ever so slowly up – still well below the industrialized world’s average, mind you – you think there is some kind of unwise business practice going on.
Its tax dollars paid, government run, and run at a huge loss in this country. Increased volume or no the price eventually has to start going up. It has been far too cheap for too long to begin with.
I would basically say the reason is because for years and years(and still today as well) postal costs have been very very very very cheap in this country. Youre just spoiled, so when costs creep ever so slowly up – still well below the industrialized world’s average, mind you – you think there is some kind of unwise business practice going on.
Its tax dollars paid, government run, and run at a huge loss in this country. Increased volume or no the price eventually has to start going up. It has been far too cheap for too long to begin with.
“Money-grubbing sleazeballs” my ass. Like people who whine about taxes and gasoline prices, postal rate complainers have never lived outside of the US and dont know how good weve got it here.
Dead wrong. The U.S. Postal service is NOT run at a huge loss. It has been, for most of its recent history, ENTIRELY self-sufficient. The first-class rate, the express mail rate, and the parcel rate are incredibly cheap, not because of taxes, but because they do not make a profit.
In point of fact, I have lived outside the United States, and travelled extensively, and have paid higher prices for gas and postage. But that is relevant to absolutely nothing. So what if our postage is 80% or 50% or 20% of anyone else’s? I don’t pay foreign rates now; I used to pay 34¢ to mail my bills, and now I have to pay 37¢, or find some other way to communicate.
That’s one thing that makes this country great. I have the choice whether to pay their prices or find some other way to get done what I have to get done.
And they are money-grubbers.
Money-grubbers who might dispute your contention that tax dollars pay for their service (I don’t believe they’ve had a general subsidy since 1983) and that they are government-run (they are an independent branch of the executive, with operational authority vested in the 11-member Board of Governors, generally appointed to staggered 9-year terms, who may only be removed for cause–the USPS is not run by Congress, and is not your typical government agency).
I suppose European countries, which charge twice our postal rates and deliver one-tenth the distance ours does, must really be raking it it big time! How do they get away with it?
It is not only the mail that is effected by email. Since 1999 in our hotel our reservations call volume has decreased. But the number of reservations has increased. How? Internet sites. In 1999 only 2% of our reservation came in via internet sites. Now we currently run at 40%. We have reduced staffing from 12 full time to 4 full time employees.
But the post office is to be blamed too. I would gladly use the mail. They DON’T DELIVER it to me. I have complained and complained to my post office and still most of the time I don’t get mail. I have filed complaint after complaint. NOT ONCE has it been acknowledged. I went in person and the post office told me to have my bills sent registered. Like the companies would do that or why should I pay more NOT to get my mail. I pay ALL my bills on line.
> The cost of stamps has risen for the third time in three years
That’s not true. According to the chart, the cost of stamps rose in 1991, 1995, 1999, 2001, and then this year. You could say that it’s risen three times in four years, perhaps.
If there’s anything to be blamed here, it’s the fact that the increase in 2001 was only one cent. If you want to only increase the price of a stamp about once every three or four years (and that’s what the Post Office would like to do) in order to approximately pace inflation, that means that you should be increasing the cost by about three cents. Note that when the Post Office only increases the cost of a stamp about once every three or four years, given that there’s inflation every year, this means that the Post Office expects to make a profit for a couple of years and then lose money for the third and maybe fourth year.
Looking at what the Post Office does in a single year is a bad business practice. It’s as ridiculous as those companies that went broke in the long run because they tried to have a big increase in profits every year. The real test for the Post Office is not what it did in the past year, but whether over, say, the past ten years, the costs have approximately matched inflation and the average yearly balance has come out to approximately breaking even.
Nowadays, you can mail something within the European Union, no matter which country, and still pay only the domestic rate. So Euorpean distances are approaching American ones.
There are two reasons postal rates have increased beyond inflation starting, say, from the 3c rate that I grew up with. First, the post office lost business big time to the phone (personal letters just about disappeared) as rates nosedived. This happened less in Europe where the PTTs made damn sure that the phone rates would stay high to protect the Post office part of their business. But there is another factor that people don’t consider. I ask you, how has the growth in rates compared to the growth in salaries? I am sure that wages have grown much faster than inflation. But this has a corollary. Labor-intensive services like the post office and public transit have seen their costs rise much faster than inflation, since probably 75% of their costs are labor. Their prices have risen accordingly. Public transit has also succumbed to loss to other (highly subsidized) private transit.
> There are two reasons postal rates have increased beyond
> inflation starting, say, from the 3c rate that I grew up with.
No, once again, the cost of a stamp has kept pace with inflation at least since 1971. If you have evidence otherwise over a longer period, please give us a chart of the cost of a stamp and the inflation-adjusted cost since that time.
Here is a listing of the actual first-class postage rate in cents and the cost in 2002 cents for every year starting in 1913. Sorry, I don’t know how to post a picture in this forum, so you’ll have to make due with numbers.
Analysis:
Postal rates were significantly cheaper in the 1920s, 50s, and 60s. The rest of the decades, including the most recent three and the current one, are consistently near 35 cents.
And the reason USPS loves bulk mailers so much?
It’s to make their system more efficient. When there’s plenty of bulk mail, there’s a lot of stuff delivered to a house at once, reducing the manpower cost per piece to deliver.
So why don’t they spread those savings around to all the customers, now that your letter is cheaper to deliver as well?
Mainly because the PO is no longer a political appointment, that would embarass a single president if people complained.