Reported Next Postal Rate Increase
I thought the U.S.
Postal Service just raised postal rates in January. So why are they
considering another one now?
The U.S. Postal Service claims they have no other option but to raise current postal rates by an average of 15-20% (even more than that for magazines) because they will lose money this year.
But doesn't the
Postal Service need the money?
The fact that it may lose money this year does not justify a rate increase. From 1995 through 1999 the Postal Service made over $5.5 billion in profit. Even when the Postal Service "lost" $200 million last year, it still had a positive cash flow of $1.2 billion from operations. It also has borrowing authority to help smooth out annual fluctuations. As a $68 billion organization that is the second largest civilian employer in the U.S., the Postal Service certainly has alternatives to raising prices, especially in these troubled economic times. The law does not require the Service to raise rates in years it loses money. It only has to "break even" over time.
Won't this rate hike
help solve the Postal Service's financial problems?
No. Raising rates in fact will be counterproductive. Higher and higher rates simply drive mail away from the postal system. A "death spiral" of progressively higher rates and reduced volumes will doom the Postal Service. The long-term viability of the postal system depends on its ability to contain costs and operate with greater efficiency and productivity.
Does the Postal
Service have any other options besides another rate
hike?
Absolutely. A business faced with a slowdown will cut
costs and rationalize operations before raising prices. That's what the
USPS should do too. There are many ways to cut costs within the Postal
Service without imposing another rate increase on its customers. In
fact, last year, the MPA worked closely with the Postal Service and
Congress to jointly identify more than $150 million in cost-savings
measures. We will continue to work with them to identify measures that
will help ensure a viable, timely and cost-effective method to deliver
magazines. The Postal Service also should freeze hiring, eliminate extra
unneeded capacity (like closing underutilized mail processing plants),
and improve productivity.
So the MPA is
willing to work with the Postal Service?
We are more than
willing to work with the Postal Service. We are their customers. We are
dependent upon the postal system for distribution and delivery. 85% of
our magazines reach the reader through the U.S. mail. We want them to
succeed and be the most reliable, affordable postal system that they can
possibly be. But it is hard to work with a partner that is driving you
to financial distress through excessive, unnecessary rate hikes.
Why is MPA
suggesting a freeze on hiring?
The Postal Service needs to go
on a diet. We are calling for a hiring freeze to reduce agency expenses
rather than strapping another unfair postal rate hike on the backs of
consumers. While a hiring freeze would not be a cure-all for spiraling
out-of-control costs at the Postal Service, it is what a private sector
business would do under the circumstances and a sensible alternative to
raising rates at this time while enabling the Congress, the new
Administration, the USPS Board of Governors and the incoming Postmaster
General to fully review the future of the Postal Service.
But won't a hiring
freeze cause problems for customers?
We are not asking the
Postal Service to lay off current employees. We are simply asking that
they do what any business facing these kinds of costs would do. At a
time when the economy is slowing and the private sector is cutting back
and downsizing, the Postal Service should not be continuing to staff up.
In the last 20 years the Postal Service has added a quarter million
people while investing billions in automation. The only effect the
Postal Service should feel from a hiring freeze is a positive one - a
brighter financial future.
How does the Postal
Service feel about proposed reform?
The Postal Service, by
its own admission, is in a downward spiral. Their costs are increasing
three times faster than their revenues. Productivity has decreased in
most recent years. Even the Postal Service Board of Governors - in a
unanimous decision - declared that it was time for postal reform.
Business as usual is not working - there needs to be a serious effort to
deal with the problems, not just the symptoms.
Have Members of
Congress expressed concern about the possible rate
increase?
Yes. We have had discussions with and received
support on this issue from both sides of the aisle and on both sides of
Capitol Hill. The real issue here is about preserving the U.S. Postal
Service, and that notion resonates across party lines.
So the issue for the
MPA is greater than just a postage rate hike?
We feel it's
time to step back and examine the bigger picture. The U.S. Postal
Service is facing increasing difficulties and an uncertain future. If
reform is not implemented soon to stop spiraling out of control costs at
the Postal Service, the long-term impact on the American public is going
to be devastating. Imagine the impact on the economy and the nation as a
whole if our postal system collapses.
WHAT'S NEW | RATE HIKE | PRESS CENTER | WHO'S SAYING WHAT | CONTACT US