USPS wants to hike stamp prices in July. It's just the beginning of a plan to raise prices at 'an uncomfortable rate.'
The U.S. Postal Service is expected to increase prices in July, raising the cost of a Forever stamp from 58 cents to 60 cents. And that may not be the only price hike in the near future.
Postmaster General Louis DeJoy said May 5 he expected the Postal Service to continue to raise prices "at an uncomfortable rate" until the agency becomes self-sufficient.
The USPS proposed the rate increase a month ago, on April 6, the same day President Biden signed the Postal Service Reform Act of 2022, legislation meant to bolster the agency, which has faced financial challenges as well as stiff competition from shippers such FedEx and UPS.
In addition to ensuring six-day-a-week mail delivery, the new law is expected to save the agency an estimated $50 billion over the next decade, DeJoy said. That comes primarily from ending the requirement of the USPS paying into a health benefit fund for current and retired employees for 75 years into the future. Retired postal employees now are required to enroll in Medicare.
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But the new law alone won't bring solvency to the agency, which has suffered 14 straight years of net losses. The USPS still expects to lose $110 billion over the next 10 years, DeJoy said while speaking to a Postal Service board of governors meeting.
Additional price increases are needed, DeJoy said, "until such time as we have accomplished our objective of projecting a trajectory that shows us becoming self-sustaining – as required by law."
USPS mail prices expected to increase
The U.S. Postal Service has proposed the following price increases to take effect July 10.
Product Current Prices Planned Prices
Letters (1 oz.) 58 cents 60 cents
Letters (metered 1 oz.) 53 cents 57 cents
Letters additional ounce(s) 20 cents 24 cents
Domestic Postcards 40 cents 44 cents
International Letter (1 oz.) $1.30 $1.40
The Postal Regulatory Commission is reviewing this price hike and is expected to approve it, said Stephen Kearney, executive director of the Alliance of Nonprofit Mailers, which estimates nonprofits account for about 10% of all USPS mail volume.
The PRC did not return a request for comment.
The last price hike for Forever stamps came in August 2021, when the USPS increased the price three cents to 58 cents.
What other USPS prices have risen?
Earlier this year, USPS raised rates on Priority Mail and Priority Mail Express by 2.7% (rates starting at $7.37, up from $7.16) and 4.3% (starting at $23.50, previously $22.75).
Will there be more USPS price hikes?
Postmaster General DeJoy has said they are needed.
The Postal Service will likely seek another price increase of 3% to 5% in January, but Kearney's organization opposes the current and future ones.
The Alliance of Nonprofit Mailers, along with the Association for Postal Commerce, petitioned the Postal Regulatory Commission last month to reconsider the USPS' rate increase leeway. "They do not need these excessive rate hikes now," Kearney said.
Does the USPS need this price hike?
Members of Congress differ. Before approving the rate increase, the Postal Regulatory Commission should consider how the passage of the postal reform legislation has changed the financial situation of the USPS, said Rep. Carolyn Maloney, D-N.Y., who chairs the House Oversight Committee..
A member of that committee, Rep. Gerry Connolly , D-Va., agrees. “Postmaster General DeJoy’s plan to raise prices while degrading service is a recipe for disaster," he said in a statement to USA TODAY. "We just passed Postal Reform to restore financial stability to the Postal Service. We can’t undo that progress by making prices uncompetitive.”
Connolly references concerns about the change in standards for first-class mail delivery times that went into effect in Oct. 1, 2021. Now USPS has a four- or five-day standard for mail traveling 931 miles or more. In the past, the agency had a standard of delivering all first-class mail in three days.
But most first-class mail (61%) and periodicals (93%) will be unaffected by these changes, while single-piece first-class mail within a local area will still arrive in two days, USPS says. Overall, 70% of the first-class mail volume should arrive in between 1-3 days.
"The Postal Service will increase time-in-transit standards by 1 or 2 days for certain mail that are traveling longer distances," said USPS spokesman David Coleman. "By doing so, the Postal Service can entrust its ground network to deliver more (first-class mail), which will lead to greater consistency, reliability, and efficiency that benefits its customers."
The concern is that "when mail service slows, people use the mail less," said Porter McConnell, co-founder of the Save the Post Office Coalition.
Declining volumes – and competitive pricing – are factored into the agency's 10-year strategic plan, announced in March 2021 by DeJoy. The USPS' rate increase takes into account inflation, too, said Rep. James Comer, R-Ky., the ranking Republican on the committee.
“The Postal Service must operate like a business to be financially sustainable," he told USA TODAY. "A key component of the recently passed postal reform bill was to allow the Postal Service – not Congress – to make business decisions.”
Instead of raising rates, the Postal Service should take advantage of abilities allowed within the reform act to partner with local and state agencies to provide services such as hunting and fishing licenses, providing broadband service – or even a Wi-Fi signal in the parking lot – electric vehicle charging and grocery delivery, McConnell said. "Other government agencies often partner with the private sector to expand their presence, but nobody has more reach than USPS," she said.
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New USPS trucks still at issue
Postal prices and delivery times are not the only issues facing the Postal Service. The agency has gotten some backlash for its plan to replace its fleet of delivery trucks. The Environmental Protection Agency and Democratic lawmakers have argued the plan involves the purchase of too many gas-powered vehicles and too few electric ones.
The Postal Service has said it will make 20% of its new vehicles battery-powered in the initial $2.98 billion order for 50,000 vehicles. It plans to buy as many as 165,000 new trucks.
But earlier this week, Oversight chairwoman Maloney sent a letter to DeJoy seeking documents about the environmental analysis the USPS used in its decision. "I am concerned that the Postal Service relied on flawed assumptions to justify the purchase of gas-powered trucks while underestimating the cost savings and environmental benefits from electric vehicles,” Maloney wrote.
This follows Government Accountability Office testimony during an April House hearing that a Postal Service analysis used to justify its purchasing plan was faulty, by overstating EV maintenance costs and understating gas prices. Meanwhile, 16 states including California and New York have sued to require the Postal Service to complete a more thorough environmental review before making the purchases.
Regardless of these issues, DeJoy has done a good job setting up the Postal Service for success in the long-term, said Gaston Curk, of OSM Worldwide. The shipping company, headquartered near Chicago, partners with USPS for last-mile delivery.
"The viability of the post office is strong," he said. "It's just going to take some years to really get it back in the shape that we need it to be in."
But there may be some short-term pain for USPS customers. "Inflation and oil prices really have a huge effect (on the Postal Service)," Curk said. "Until that gets stabilized I think we are going to see some pretty unfortunate, but healthy increases in postage costs."
Contributing: The Associated Press
Follow Mike Snider on Twitter: @mikesnider.
This article originally appeared on USA TODAY: How much do stamps cost? USPS prices to go up in July (and beyond).