Postage Prices Set to Increase Again in 2011
Posted on Fri, Jul 23, 2010
Does it seem like the cost of a postage stamp just went up? That’s because it did: Last year, the Postal Service last increased the price of a first-class stamp to 44 cents, up from 42 cents in 2009. Yesterday the Postal Service met to discuss a new rate increase and they have agreed that it’s time to increase rates once again. Technically, the law prohibits a price increase that’s greater than the rate of inflation, which for the last year has been 0.9 percent. But under “unusual circumstances,” the Postal Service can sidestep the law and increase postage rates by more, which is what they plan on doing.
Why is the post office increasing rates greater than the rate of inflation? “The Postal Service faces a serious risk of financial insolvency,” postal vice president Stephen M. Kearney said. The post office lost $3.8 billion last year, despite cutting 40,000 full-time positions and making other reductions, and Kearney said it is facing a $7 billion loss for this year and the same for fiscal 2011, which begins in October. The rate increase would bring in $2.5 billion, meaning there still would be a large loss for next year.
How Much and When Rates Will Increase
5% Increase. A first-class stamp will go up 2 cent from 44 to 46 cents. While your average letter will be going up a few cents, everything else is increasing as well. Priority mail, express mail, addtional first class postage, media mail, and so on. Across the board, most services will see about a 5% increase. One noticeable increase comes to the mailing of periodicals. Those mailings are slated to see a whopping 8% increase. The new rates still need to be approved, but with almost certainty they will be, and then the new rates will take effect on January 2, 2011.
How This Will Affect You
It effects you whether print or email! You don’t send letters and use email instead, you pay all of your bills online, and the increase won’t really matter to you. It’s true that an extra two cents for a stamp isn’t going to break the bank for most people who only mail a handful of items a year, but these postage increases don’t stop there and even if you don’t mail anything these days you may still feel the pinch.
Think about the companies that rely on the postal service to ship their products and communications to consumers. What does a 5% increase in postage mean to a company that already spends tens of millions of dollars a year on postage?
Just one example - Netflix. Their core business model resolves around sending you movies in the mail. In fact, media mail, which Netflix mailings fall under, is slated to get a 7% increase. This would end up costing Netflix upwards of $50 million more on shipping costs in 2011. That’s on top of the already hundreds of millions being spent on shipping.
- What About Less Service?
Five-day delivery. Despite lower mail volumes and reduced revenues, the USPS network must support an additional one to two million new addresses each year. In order to maintain universal mail delivery, the USPS would like to eliminate in-home delivery on Saturday (the lowest volume day). Such a move would require Congressional action.
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