Business Costs & Regulation

Postal Rates Headed Higher -- Again

With payrolls in jeopardy, a desperate Postal Service seeks more revenue.

Come January, mailers will have to pony up more for postage. In the cards: A 2¢ hike in the price of first-class stamps -- to 46¢ each -- and up to a 5% boost in postage for magazines, catalogs and bulk mail.

The U.S. Postal Service (USPS) realizes that raising rates will accelerate the shift by businesses and other mailers to e-mail and nudge businesses to increase their targeted Web advertising efforts.

But the USPS is in more immediate straits as it continues to rack up operating deficits. It may not be able to meet its payroll next year in light of a deficit that’s likely to balloon beyond the $7 billion in red ink it expects to run this fiscal year, which ends in September.

Stopping Saturday mail service as planned will help stanch the red ink. But it will take at least a year after Saturday service is halted -- likely sometime next year -- before big savings are realized.

We expect the USPS to seek a special dispensation from the Postal Regulatory Commission in early July for what amounts to an emergency rate increase. The USPS does have the authority to unilaterally boost postage prices, but any increase cannot exceed the inflation rate in the previous 12 months, and in the current slow motion economic recovery, inflation is nearly zilch.

Look for the regulatory commission to OK the rate hikes by fall.

Business mailers will scream, claiming that the 2006 postal reform law intended for emergency rate increases to be approved only in the wake of an extraordinary event, such as a pandemic or a terrorist attack, that slammed postal revenues, and not in a recession-provoked downturn in mail usage.

“We’ve had 20 recessions since 1900 and the postal service has been looking at and planning for drops in mail volume for the past decade, so the decline now can’t be a surprise to it,” says Jerry Cerasale, senior vice president of government affairs for the Direct Marketing Association, a trade group representing companies that reach consumers by mailing promotional material.

Most Popular

Is the Stock Market a House of Cards?
investing

Is the Stock Market a House of Cards?

The stock market volatility we’ve been experiencing and the apparent disconnect with the broader economy have some investors wondering just that. But …
October 12, 2020
Stock Market Holidays in 2020
Markets

Stock Market Holidays in 2020

Is the stock market open today? Take a look at which days the NYSE, Nasdaq and bond markets take off in 2020.
October 12, 2020
10 Worst Things to Keep in Your Wallet
Scams

10 Worst Things to Keep in Your Wallet

Storing your passport book or card, a spare key, or any of these other important items in your wallet leaves you open to identity theft -- or worse.
October 9, 2020

Recommended

Election 2020: Joe Biden's Tax Plans
taxes

Election 2020: Joe Biden's Tax Plans

With the economy still in trouble, tax policy takes on added importance in the 2020 election. So, let's take a look at what Joe Biden wants to do abou…
October 22, 2020
PPP Loan Forgiveness Applications are Now Easier
Coronavirus and Your Money

PPP Loan Forgiveness Applications are Now Easier

Small businesses that received PPP loans of $50,000 or less can now apply for forgiveness using a simplified application form.
October 16, 2020
The Most Expensive Natural Disasters in U.S. History
Economic Forecasts

The Most Expensive Natural Disasters in U.S. History

Wind, water, fire and drought have all wreaked havoc on the United States. What’s been the worst?
August 26, 2020
Vote by Mail: A State-by-State Guide to Absentee Ballot Voting
Politics

Vote by Mail: A State-by-State Guide to Absentee Ballot Voting

With health authorities recommending people continue to social distance, the idea of voting by mail is becoming an increasingly hot topic.
August 4, 2020