Why the Postal Service Keeps Raising Prices

A Stamp Costs How Much?

Stamps could get more expensive… again. On Tuesday, the United States Postal Service (USPS) proposed a whopping 7.8% price hike starting in July.

If the proposal is approved by a regulatory commission, the price of Forever stamps would climb from 68 cents to 73 cents. Sending domestic postcards and certified mail would also become pricier. This follows several price increases since 2019, when Forever stamps cost 50 cents a piece.

So what’s going on at USPS? Why do rates keep climbing at this pace?

A Unique Business

The USPS isn’t like a regular company that sells products to turn a profit. Rather, it’s a government agency that doesn’t regularly receive tax dollars (unlike other agencies), aside from cash infusions like the one Congress authorized in 2022.

For the most part, USPS relies solely on the sale of stamps and other services, but is required by law to deliver mail to every address, even in remote areas, no matter if that would be a costlier endeavor. That gives the postal service a unique disadvantage when competing against private mail carriers like FedEx (FDX), UPS (UPS), and DHL, who can avoid less profitable routes and don’t need government approval to raise rates in the face of rising costs, for example for fuel.

The rise of email has also hurt demand for USPS services. In 2000, when many Americans still used dial-up internet, the U.S. Postal Service handled more than 207 billion pieces of mail. Last year, it handled around 116 billion.

The Future of Snail Mail

USPS expects to lose $6.3 billion this year. Ouch.

In 2022, Postmaster General Louis DeJoy said he would “most likely be advocating” for price increases in the near future, adding that consumers should get used to “uncomfortable” rate hikes.

If you send a lot of mail and are building a budget, think about factoring rising costs into your plans. DeJoy’s 10-year “Delivering for America” plan stresses the importance of “pricing changes” to reach “financial stability and service excellence,” so this is not the last stamp price increase we’ll see.

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