USPS responds to more Steve Pociask inaccuracies
While Steve Pociask would have you believe that he has the general public’s best interests in mind when he writes about how the Postal Service should change the way it operates, it is clear from his repeated distortions, it’s not the American consumer whose interests – and pocketbooks – he is looking out for.
Despite what Mr. Pociask implies, this month’s price adjustment had nothing to do with exigent price changes. The two penny increase in the price of a Forever stamp on January 22 was the first price increase for these popular stamps in three years. There was no postage price change last month for Postcards, for letters being mailed to international destinations or for additional ounces for single piece letters.
As provided by law, the Postal Service is permitted to adjust prices each.year by class of mail at the rate of inflation as measured by the Consumer Price Index (CPI). The January price change was hardly “contentious.” It was approved by the Postal Regulatory Commission (PRC) through the normal process and implemented without incident. Even with this moderate increase, postage prices in the United States remain a bargain and are among the cheapest in the industrialized world. Stamps, along with other Postal Service products and services, pay for our operations; the Postal Service receives no tax dollars for operating expenses.
The exigent surcharge that Mr. Pociask seems to be confused about was temporary and was never meant to deter or impact future price increased tied to the rate of inflation. The exigent pricing was tied to the long term effects of the Great Recession which severely impacted the Postal Service. Since fiscal year 2007, total mail volume has declined by 27 percent, resulting in reduced annual revenue of $21 billion per year. First-Class Mail—the Postal Service’s most profitable product—declined by 36 percent since 2007 and is expected to continue to decline as a result of divergence to digital forms of communications and the increase in online transactions.
The PRC-ordered rollback of the surcharge reduced Postal Service revenue and net income in 2016 by approximately $1 billion and $2 billion per year going forward, which is an irrational outcome, considering the Postal Service’s financial condition. The exigent surcharge softened the financial blow that the Postal Service suffered as a result of the massive loss of mail volume, and is the principal reason we achieved controllable income over the last two fiscal years. But again, the January 2017 price change was unrelated to the exigent pricing.
The Competitive product offerings through the Postal Service, including package delivery, ARE part of the Postal Service’s core function. Many of these product offerings are highly successful and help the Postal Service fund its Universal Service obligation to deliver mail to every business and residential address throughout the country. The Package business accounts for approximately 26 percent of total Postal Service revenue. Package products must cover their costs and are therefore subject to a price floor. In addition, today the competitive portion of these products as a whole must also contribute at least 5.5 percent toward institutional costs to help fund the universal service obligation. The Postal Service adjusts prices for these products annually, just like is done by other shipping companies. Unlike other shippers, the Postal Service doesn’t add surcharges for fuel, residential delivery, or Saturday delivery.
It’s true that the Postal Service does continue to face severe financial challenges. But Mr. Pociask’s bailout scenario can be avoided through continued aggressive Postal Service revenue growth and cost-control strategies, combined with key legislative and regulatory reforms that will enable us to meet the changing mailing and shipping needs of our customers well into the future.