Postal Service Price Hikes? Return to Sender | Commentary
Let’s see if you can follow this logic.
The U.S. Postal Service is seeking a rate increase that is three times the rate of inflation through an “emergency” (or “exigent”) rate increase request.
So what is the emergency? The emergency, says the Postal Service, is the recession. Yes, that recession, the one that officially ended several years ago. The Postal Service knows well that the recession is over, because their revenues are already increasing as a result.
The Postal Service Board of Governors approved this rate request in September and, later this month, the Postal Regulatory Commission will determine if a permanent postage rate increase is justified.
You might ask: What effect did digital diversion — such as email ubiquity and electronic payment of bills— have on mail volumes during the recession?
According to the Postal Service, the answer is none. Zero.
Huh? Their reasoning is clear when you understand that by associating all of their losses with the recession, rather than digital diversion, the Postal Service conveniently paves the way for a greater increase in postage rates. You see, volume losses due to digital diversion, unlike those from a recession, aren’t eligible for an emergency rate increase. Now you can see why the Postal Service is playing this game.
Why does this matter? Because if the Postal Regulatory Commission approves the rate increase, there will be serious consequences for all of us.
You will pay more. Postal customers will pay an additional $1.8 billion annually. Forever.
Americans will lose jobs. Raising rates so steeply will only lead to increased use of electronic platforms, further driving down mail volume. Needless to say, this will also lead to a loss of jobs.
Charities and the people that depend on them will be hurt. Charitable organizations will have to dramatically cut back on a main source of crucial fundraising: mass mailings. Less funding will mean fewer services for those who need them most.
What will not happen if the Postal Regulatory Commission approves the rate increase?
The Postal Service still won’t fix itself. A badly needed legislative fix, ensuring the Postal Service’s long-term stability, will lose its momentum and be significantly less likely to pass Congress.
It will prompt a death spiral for the Postal Service. Mail volumes will decrease even more rapidly, making the Postal Service’s costly infrastructure — one that’s far too big and more expensive than it can afford — even more urgent a problem.
Imagine owning a bookstore and losing customers to Amazon; the last thing you’d do would be to discourage your remaining customers by hiking prices. Yet that’s exactly what the Postal Service is proposing.
This is a can we can’t afford to kick down the road. Despite the Postal Service’s dismissiveness of electronic diversion, the rest of us know it’s real. The Postal Service’s problems can only be solved legislatively. Driving away more volume through unsupported and inappropriate price hikes is the wrong way forward.
Mary Berner is president and CEO of the MPA, the Association of Magazine Media, whose more than 260 members publish nearly 1,000 magazine titles.