Postage Stamp Increase, First-class postage stamps could rise to 49 cents starting in 2014 under a Wednesday proposal by the cash-strapped U.S. Postal Service. The increase would raise about $2 billion in additional revenue a year.
Under the plan, first-class mail postage would rise 3 cents, or 6.5%. Pricing for other mail, including postcards and packages, would also rise on Jan. 26.
The Postal Service’s governing board said the increases are needed due to the “precarious financial condition” of the Postal Service, which is under congressional mandate to fund billions in future retirement benefits of postal workers.
“Of the options currently available to the Postal Service to align costs and revenue, increasing postage prices is a last resort that reflects extreme financial challenges,” Board of Governors Chairman Mickey Barnett said.
The Postal Service posted a $15.9 billion net loss last fiscal year and expects to record a loss of $6 billion in the current fiscal year, due largely to pre-funding payments for retiree health benefits.
The rate hike will require approval from the Postal Regulatory Commission because under federal law, rates cannot be raised over the the rate of inflation, currently about 2%.
Rep. Darrell Issa, R-Calif., who chairs the House Oversight and Government Reform Committee, said in a statement that the rate hike was only a near-term solution.
“Today’s rate increase is a desperate cry for help from an insolvent Postal Service. Revenue and volume are down dramatically and our mail delivery service, hamstrung by Congressional mandates and onerous labor contracts, has been unable to sufficiently reduce costs.”
“This rate hike and the ones sure to follow will only push more and more private sector customers to stop using the mail altogether,” Issa said. “The rate increase poses a direct threat to the 8 million private sector jobs that are part of the mailing industry as businesses shift from paper-based to electronic communication and mailers are priced out of business.”
Recently, the Postal Service proposed other cost-saving measures, including ending door-to-door delivery for millions of consumers.
Mary Berner, president of the Association of Magazine Media industry trade group, said higher postage rates are a stop-gap solution that would clip member’s profits and accelerate the Postal Service’s losses.
“No private company would increase prices when sales are already plummeting,” Berner said. “(This) will cause significant declines in mail volume and further job losses across the industry without addressing the USPS’s core issues. The consequences of this decision will be felt by the entire mailing industry, the Postal Service, and consumers.”