Death, Taxes, and Rising Postal Rates

Benjamin Franklin said there were two certainties -- death and taxes -- in life, but had he lived long enough, he probably would have included rising postage rates in that same category.

Once again, another increase in postage rates will accompany the dawn of another new year as the U.S. Postal Service recently announced a proposal for a 2-percent rate increase on several types of mail in late April. According to Newspaper Association of America (NAA), the exact date is estimated to be April 26, 2015. The news does have a silver lining of sorts, however, as regular letters and cards will remain at the current rate of 49 cents per envelope/single-piece stamp. The price of mailing larger letters/envelopes, magazines, packages, junk mail and ads, postcards and international mail will increase 1.966 percent, effective onApril 26. The rate for letters weighing more than an ounce will increase a penny, from 21 to 22 cents per added ounce. The cost of international letters will go from $1.15 to $1.20 and postcards will bump up from 34 to 35 cents.

In spite of cutting or scaling back several services, as well as the personnel downsizing that led to the loss of more than 100,000 jobs over the last few years, the U.S. Postal Service is still apparently hemorrhaging cash and said the rate increase is needed to achieve financial stability. Inflation is one of several factors at play, according to the USPS, which reported last week that it estimates its increase proposal will result in $900 million per year for the USPS, but only about $400 million for 2015 with the new rate kicking in almost five months into the year.

The USPS lost approximately $5.5 BILLION last year and the agency said primary reasons included an annual struggle to maintain the necessary volume for first-class mail and Congress-mandated requirement to prepay more than $5 billion annually for retirement health benefits. Other problems include the USPS not receiving any tax dollars and a continuing trend in which consumers are relying more and more on email and the Internet for communication, correspondence, and other services. Direct streaming of services such as Netflix, which initially helped boost USPS business for a while via the delivery and return of those flat red envelopes with DVD's inside, has also helped to lessen postal service usages as people opt to stream movies and TV shows through the net onto their computers and smart TVs.

The proposed rate hike will have to be approved or refused by the Postal Regulatory Commission by March 1, 2015.

While that may be bad news for most, if not all consumers and especially the direct mail industry, it is good news to businesses specializing in more cost effective, economical, and simply cheaper mailing and shipping services.

Peggy Hudson, the Direct Marketing Association's senior vice-president of government affairs, said in a recent press report that the latest rate hike plan represents another attempt by the USPS to squeeze the direct mail industry that rely on that method to reach most of their customers. She has understandably encouraged the commission to deny the rate hike proposal.