Why Does the Price of Stamps Keep Increasing?
Breaking Down the USPS “Delivering for America Plan”
On July 14, 2024, the price of a first-class stamp was increased from $.68 to $.73. This is the 6th rate hike since 2021. Postal rates are climbing faster than inflation.
But why? We explain why United States Postal Service (USPS) postal rates went up and what higher postal rates mean for the paper industry.
The Delivering for America Plan (DFA) was published in March of 2021 by Postmaster General Louis DeJoy. The goals for the plan were to:
- Achieve financial stability;
- Improve postal service; and
- Reorganize key networks like delivery and processing.
It is important to note: As these goals were developed, stakeholder input was not solicited from those who rely on USPS – like the paper industry.
Understanding the Postal Service Reform Act of 2022
The bipartisan Postal Service Reform Act was signed into law in 2022, giving USPS $50 billion in relief of financial obligations and budget deficits. The legislation aimed to:
- Increase financial stability for USPS;
- Increase transparency;
- Improve postal service; and Keep U.S. mail as a competitive option.
One of the provisions was mandating 6-day-a-week delivery for mail. However, the bill did not address postal rate uncertainty.
Are Postage Rate Increases Helping USPS?
The short answer is no. Through the DFA, USPS increased postage rates to help address financial challenges. Since 2021, postage rates have increased a record 5 times. In fact, postal rates have risen faster than inflation!
Meanwhile, USPS continues to suffer financial losses as well as service and operational issues. Here are a few examples:
- Financial: In FY2023, they lost $6.5 billion. They are estimated to lose another $6.3 billion in FY 2024. The U.S. government’s fiscal year starts on October 1 and ends the following year on September 30.
- Mail Volume Declines: Rate hikes have contributed to driving steep declines in mail volume. Mail volume is the total number of pieces of mail delivered. Annual volume since 2020 has declined by 13 billion pieces, or 10%.
- Service: Just 83% of first-class mail was delivered on time in the beginning of 2024 compared to the DFA target of 95%. That’s the lowest service level in 3 years.
This is unsustainable for the Postal Service and those who rely on them for their business and communication, such as industries like ours and the families who live and work in our communities.
Postage Rate Hikes and Service Issues Affect the Paper Industry
USPS is an essential service to our industry and those who use our products, delivering approximately 39% - or nearly $6.5 billion worth - of communication papers produced in the U.S. Things like:
- Postcards;
- Billing statements and promotional offers; and
- Personal mail like a birthday card or letter to a friend or family member.
These rate hikes make mail less affordable, reduce on-time delivery service, and drive down mail volume. Our industry relies on USPS. We need consistent and timely service, and postal rates that are predictable and affordable.