Desperate for cash, Postal Service hikes stamp price

A 1-cent jump in the price of stamps comes as the USPS struggles to stop the financial bleeding.

By Bruce Kennedy Jan 25, 2013 4:15PM

Image: Mailbox (Corbis)For those of us still using snail mail, there’s another price hike coming from the U.S. Postal Service.


Starting on Sunday, and as announced last October, the Postal Service will be raising the cost of a first-class stamp by a penny, to 46 cents.


Postcard stamps also increase 1 cent to 33 cents, and letters to all international destinations will now have one set price of $1.10.


Not that these rate hikes are likely to have any significant impact on the USPS’ ongoing financial woes.


While it has seen record growth in its package delivery business, the Postal Service continues to bleed money, hobbled by what one of its press statements calls “an inflexible business model that hinders its ability to be self-sufficient.”


For fiscal 2012, the Postal Service defaulted on $11.1 billion in mandated payments to the U.S. Treasury -- which in turn contributed to a record loss of $15.9 billion.


The USPS receives no tax dollars for its operating expenses, relying on the sale of postage, products and service for funding. It’s been reducing its annual cost base by about $15 billion since 2006 and has cut its workforce by 168,000, or 24% -- while reducing hours, closing some small post offices and consolidating others.


Part of the issue is the rise of email and other more immediate forms of communication. The Postal Service’s volume of single, first-class mail has reportedly been cut in half since 2002 -- and its total mail volume is down 25% since 2006.


And the New York Times reports USPS is losing out to private shipping companies like UPS (UPS) and FedEx (FDX) on long-term shipping contracts.


There’s a petition on the White House web site, meanwhile, urging the Obama Administration to "Save the Post Office."


“The Postal Service is not a federal agency,” the petition notes. “It does not cost taxpayers a dollar. It loses money only because Congress mandates that it do so.”


The petition goes on to warn that if Congress doesn’t take action, the USPS could go bankrupt later this year -- and it urges lawmakers “to free the Post Office from its congressionally mandated obligations and allow it to raise additional revenue so that it can become self-sustaining once again.”


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206Comments
Jan 28, 2013 12:41AM
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Dump the union, put all new hires and current emplyees on 401Ks, freeze active employee pensions,  fire the lazy and hire people willing to work, pay wages equal to the value of actual work performed,
Jan 27, 2013 11:41PM
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hELL.......I just wanted to hit #100 again, haven't got time to read...woooohoooo..
Jan 27, 2013 9:51PM
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When the postal service can dump their pension plan costs on the tax payers maybe they will get profitable. Wish I could have retired at 55 with about 90% of my pay. Man what a life.
Jan 27, 2013 9:19PM
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Only deliver residential or rural mail on Monday, Wednesday and Friday. Behind the scenes transport carries through as currently done but limited to a 40 hour work week. Carriers are used to sort mail and work the counter on non delivery days to fill out their 40 hours. 
If you don't like this then be willing to pay 60 cents for a stamp to keep the current business model going. Revisit and adjust yearly. Like anything else, if you expect service, pay a proper price to get it.
Jan 27, 2013 9:19PM
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A continued example of a Government run program that can't succeed. I understand that there are stipulations and practices that are not fully within the government decisions. But the reality is simple if the government is within striking distance everything becomes a failure.
Jan 27, 2013 3:07AM
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We need our postal service and we need to support them in any way we can.  If it was not for the postal service.  Many would not receive their daily mail.  The problem is not the postal service.  The problem is the people that control their service.  Read your history and know who is controlling all your life services.
Jan 26, 2013 8:37PM
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In our area the houses do not have individual mail boxes.  There are group mailboxes consisting of 16 separate mailboxes.  One mail carrier is able to deliver mail to our entire area.  The carrier opens the master door to all of the separate mailboxes and tosses mail in just as it is done at the post office for PO boxes.  Since labor is its largest cost, if the Postal Service would replace house mailboxes with group mailboxes and not replace retiring mail carriers, seems this would go along way toward stopping the "bleeding."  Maybe this makes too much sense.
Jan 26, 2013 5:50PM
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Correction:  PBGC is the Pension Benefit Guaranty Corporation.  Regarding IBM and other large corporations shifting their pension plans for previously retired persons and setting new plans for the future; just know that pension risk are being shifted and companies will not absorb those cost  any longer.  This even more critical when you consider what the congress has done to the post office.
Jan 26, 2013 5:30PM
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I think your article on the post office needs some balance if it is to be credible.  The congress accelerated the post office's pension funding costs thereby requiring a payout of $15,000,000,000.00 of over a significantly shorter period than normal, practical or acceptable.  It should also be noted that many renowned companies are dumping their under funded pensions onto the PBGC.  When one considers the fact that FEDEX gave $645,000.00 in campaign contributions to the RNC along with UPS giving them slightly more than $250,000.00, is anyone thinking that they just love the RNC or are they expecting a windfall?  The post office is not a government run organization even though they are regulated by same.  Their results of operation are positive which makes them profitable!  Whenever regulations change drastically to cause such an organization to fall upon hard times, we the public should question the motives behind such action. My final thought applies to second comment about the PBGC.  The same congress that ruined the post office also allowed companies like IBM to change their pension funding methodology thereby causing a serious shortfall for many retirees.  These companies were then allowed to dump their pension administration onto a government organization named the Pension Board Guarantee Corporation(PBGC) which is funded by taxpayers. Who then then do you think gets screwed, taxpayers or big wealthy corporations?  Who picks up that slack?  In addition, many municipalities are experiencing extremely serious under-funding regarding their pensions and this also affects the balance sheet of many corporations.  All retirees and potential retirees should closely examine their pensions and even their 401Ks or 403Bs.
Jan 26, 2013 3:12PM
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I still use the USPS, but very seldom.  A book of twenty stamps will last me around nine months.  A few handwritten letters, a few birthday and Christmas cards, otherwise everything is electronic.  Congress needs to allow the USPS to look for other sources of revenue, but I don't see that happening under the current nightmare in Washington.  Too bad.
Jan 26, 2013 11:13AM
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Privatize the Post Office. It will make money then. Or at least not bleed billions per quarter in its' total dysfunction.
Jan 26, 2013 9:43AM
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The US Postal Service spent $100 Million on advertising on the 1992 Olympics

 

Between 2001 and 2004 the US Postal Service spent $31.9 Million on advertising for the Lance Armstrong cycling team.

 

It does not take a PhD to figure out that technology has played a huge role in the demise of the US Postal Service.  The fact is - the US  Postal Service has ignored how technology has reduced their business, i.e.: e-mail. e-cards, on-line bill-pay, etc.  The pension plan can't be funded and rates continue to escalate.  If it was not for JUNK-MAIL it would be out of business.

 

Every time the discussion about eliminating Saturday delivery or closing post offices comes up, nothing is done.  It is a business and hard business decisions need to be made, if it is to survive.

 

The answer is always raise the rate.  I did not do anymore or less business with the post office because they sponsored Lance Armstrong. 

 

The POST OFFICE IS A QUASI-GOVERNMENTAL AGENCY OUT OF CONTROL LIKE THE REST OF THE GOVERNMENT!

Jan 26, 2013 1:26AM
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They should just double the price of a stamp and pizz everybody off.  Then we can get some real cost cutting out of them.
Jan 25, 2013 11:39PM
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Why do we keep throwing good money after bad money with the USPS? Half of the employees are on drugs, but the drug certainly isn't Speed. Why keep delaying the inevitable, with the postal structure and unions it cannot survive in a real world.
Jan 25, 2013 11:23PM
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A long time ago, the congress, in thier infinite stupidity, raided the bank acccounts of the Postal Service and never paid them back. At that time ,the U.S.Postal Service was the only dept. ,under the heading U.S., that had a surplus in thier accounts, not lost on the congress, who at the time ,could not pay thier way out of the bathroom. So they "borrowed " from the service and at a later date, required the Postal Service to pay to the treasury a whopping 5Billion dollars per year, for what, some of us have been asking that for years,but lately the congress has increased that amount. These congressional shennaigans have added to the Sevices ability to compete with private sector package shipping companies, whose stock is undoubtably held by some of those in congress or thier families. Well, now, if the Postal Service goes bankrupt, who do you think is going to benefit,,,, the package shipping companies, then thier stock value increases and the stock holder makes more money,i.e... the members of congress and thier "straw buying" families.    Now, I think, a good way to start , is for congress to get out of the way and allow an institution ,of the original United States to continue thier work on a level playing field, without government interference. For once, I would like to see congress and Washington, as a whole, "practice what you preach",get out of the way and let them do what they do best, that's Deliver, something congress has not done in a very long time!

Jan 25, 2013 8:50PM
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Obama's solution is to raise postage prices for the 1%.  Since they make more than the rest of us they should pay "their fair share" of USPS costs.  For the 1%, mailing a standard letter should be raised to $1,000 for inside the USA and $10,000 per letter for outside the USA.  Postcards would be treated as full letters under the 1% pay plan.  Obama says that this would cause the USPS to finally be able to balance it's budget and he predicts that revenue will increase by 70 billion dollars each year allowing the postal service to rehire all of the 24% of it's workers that were laid off over the last few years.  This sacrifice by our top earners will help to redistribute the wealth to the middle class and working poor who desperately need help.  After this announcement Bill Gates held a press conference to urge a boycott of the postal service and informed the general public that Fed-Ex will be happy to take on the extra load of personal letters.
Jan 25, 2013 8:32PM
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Since the Post Office is listed as a constitutional mandate in the U.S. Constitution, we will need an amendment to free it from government control.

 

Obviously, trying to keep financial independent with while being government run has not and will never work!

Jan 25, 2013 8:25PM
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Government takes over where the PRIVATE sector fails.
WHICH private business would step up to deliver mail to remote rural areas without INCREASING the price significantly? NONE! The private sector would DROP all areas that don't give a quick profit. Thus, we would get an inconsistent delivery system.
I suggest that USA does what most other developed nations have done: skip Saturday delivery - close all offices on Saturdays.

Jan 25, 2013 8:21PM
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The Republicans want the USPS to be taken over by FedX and UPS.  The USPS needs to charge what these 2 companies would charge and they'd make money more then these 2 companies because there would be no CEOs getting multimillion dollar salaries and bonuses.  The USPS has better benefits for the workers then either of these 2 companies give their workers.  Remember when Former President Bush wanted Social Security replaced with the stock market.  That would have been a big disaster but the Republicans are about the rich and people who don't know it, need to wake up.  The people who profit the most from capitalism should pay the most in taxes.
Jan 25, 2013 8:14PM
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If the post office was able to cut the pensions in half, they would be solvent. The unions are killing them.
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