USPS forced to take "unprecedented" step of cutting prices

When was the last time you heard an announcement of prices going down? I don’t mean a temporary “sale” on toasters for Black Friday where they’re actually just jacking up the prices for a few weeks so they can “cut” them to boost holiday sales. We’re talking about an actual reduction in the base price of goods or services. Well hang on to your hats because the United States Postal Service is about to reduce their rates, in spite of all their well known budget problems. Of course, as this article in Government Executive explains, they’re not exactly doing it out of the goodness of their hearts.

The U.S. Postal Service will reduce the price of its offerings on Sunday, including decreasing the cost of a stamp for only the second time ever and the first time in 97 years.

The price drop comes after a protracted legal battle following the scheduled expiration of a temporary, emergency surcharge the mailing agency instituted to recuperate the losses it suffered during the recession. The cost of a stamp for a regular-sized letter will drop two cents to 0.47; international letters will drop from $1.20 to $1.15 and postcards will decrease from 35 cents to 34 cents.

While the price change is inconsequential to the occasional mail user, the exigent surcharge has caused significant backlash in the mailing community and continues to drive divisions between postal management, its customers and members of Congress.

The Post Office received an emergency (but temporary) increase in the grips of the recession, but that excuse has now expired and the higher prices must, by law, be scaled back to their pre-recession levels. Some might view this as no big deal, particularly when you consider that in February of this year they reported their first profit since 2011, even as the President suggested they should cut more than 10K jobs.

USPS posted a net income of $307 million in the first quarter of fiscal 2016, the first such gain since the fourth quarter of fiscal 2011. Profits grew $1.1 billion over the same period last year, when the Postal Service lost $754 million. Operating revenue ticked up 3.3 percent to $19.3 billion between Oct. 1 and Dec. 31, 2015, driven largely by a record volume of package delivery.

Shipping and package revenue increased by 13.5 percent in the quarter, which included the holiday period. The first quarter is typically the best of the year for the Postal Service.

The one question which comes to my mind first is to ask how many of you are really impacted by this in a significant way. In the era of email, online payments and electronic banking, how many letters do you really send on a weekly or monthly basis? We have a couple of accounts where we haven’t set up any sort of automatic payment plan so we send out a few checks, but other than that it’s not very much. There are packages to send at Christmas and the odd birthday gift here and there, but it doesn’t add up to all that much. (And I’m including the dozens of horseradish shipments I send out at the end of the year.)

There’s also the fact that I remain amazed, as I have been since childhood, at the idea that I can take a letter or other document, stick it in an envelope, have someone come to my home, pick it up and see it arrive on the other side of the country in a few days for half the price of a cup of coffee at the local gas station. It’s truly incredible if you think about the distances involved and the vehicles and infrastructure required to make that happen.

In reality, the only people who were seriously complaining about the last price increase were those in the mass mailing business. Advertisers and other spam generators are the hardest hit, but do you honestly feel all that bad for them? I probably throw away better than 75% of the trash that shows up in my mailbox unopened these days anyway. Sure, it affects the direct mail operations of political campaigns, but that’s an expense which is shouldered by political donors, not the public at large, and it’s basically baked into the campaign cake from day one.

If the USPS starts losing money again as soon as this rate reduction takes place we should probably consider a new motion to put the rates back where they have been recently. Is it really any skin off your back?