“There They Go Again:” Stamp Prices to Rise by a Nickel

If approved by the US Postal Rate Commission, the price of a first-class stamp will go up by five cents in July. It would be the fourth stamp price increase since January 2023.

America’s state-owned, monopolistic Postal Service, which is in the process of implementing a ten-year reorganization plan to improve its operations, claims that additional revenue is needed to cover the rising costs of delivering the mail. Taxpayers and stamp buyers have heard that excuse before from an agency whose budget is deeply in the red year after year. (The Postal Service lost more than $9.2 billion last fiscal year and hopes to avoid losing $100 billion over the next decade.) 

In addition to jacking the prices of most services up considerably, according to the Wall Street Journal, the Postal Service’s ongoing reorganization plan contemplates “delivering more packages”—in competition with FedEx, UPS, and other carriers—“and taking a couple of days longer to deliver mail,” raising average times from three to five days. Few layoffs of unionized postal workers or closures of small-town post offices are in the cards.

Major savings are expected from reforming the Postal Service’s health insurance coverage and retirement plans for retirees. Unlike most other federal governmental agencies, the Postal Service is required to account for those future budgetary liabilities.

Ben Franklin, the nation’s first Postmaster General, must be turning over in his grave. Although mail volumes were markedly smaller in the late eighteenth century than today, Franklin’s innovations—one of which was to put mail riders on the road at night—reduced the time for letters to be delivered and replies received between Philadelphia and New York to 24 hours.

As I wrote in 2010, it’s now long past time to privatize the US Postal Service. Germany’s Deutsche Post sets the standard. Strongly opposed by German postal workers, who feared job losses, that state-owned monopoly became a private company in 2000, eventually merging with international package carrier DHL.

A 2009 study published by Canada’s Frontier Centre for Public Policy documents that Deutsche Post’s privatization generated immense benefits: postal rates fell by about 16 percent initially and, because of the substantial cost savings introduced under the watchful eyes of shareholders, the company expanded its operations into other European nations that likewise had scrapped their public sector postal monopolies, thus adding jobs rather than cutting them. The sale of Deutsche Post’s assets to private owners also allowed the German government to reduce its public debt.

Deutsche Post today faces the same decline in mail volumes as the US Postal Service but can weather the email and online payment storm better by leveraging its trucking and package delivery businesses. A first-class German stamp now costs 0.85 euros (about 91 cents); the US Postal Service proposes to raise its stamp price to 78 cents on July 14, so Americans seem to be getting a bargain.

However, that bargain comes at a price associated with the inefficiencies of all state-owned enterprises: administrative bloat, sluggish innovation, an inability (or weak incentives) to control costs, and failure to cater to customers’ demands.

Freeing the US mail from the dead hand of government is a better solution for the 21st century than continuing the never-ending cycle of stamp price increases.