Buy Forever Stamps Today: Prices Going Up This Much After Sunday
NEW YORK (MainStreet) The price of a stamp will go up on Sunday again.
Effective January 26, the United States Postal Service will raise the price of its first class stamps by three cents, from 46 to 49 cents apiece. Heavier letters will cost another penny, up to 21 cents per additional ounce after the first. The rate hike, greater than inflation, is intended to raise an additional $2 billion for the Postal Service over the next year.
All existing Forever stamps will remain valid, as any stamp from this line can be used to mail a letter no matter what the postal rate.
Under ordinary circumstances the Postal Service caps price increases at inflation; however Sunday's increase is approximately 50% higher than that. In an announcement on its website the Post Office attributed the difference to its "precarious financial condition."
"Of the options currently available to the Postal Service to align costs and revenues, increasing postage prices is a last resort that reflects extreme financial challenges," read the press release announcing the rate hike. "[I]f these financial challenges were alleviated by the timely enactment of laws that close a $20 billion budget gap, the Postal Service would reconsider its pricing strategy."
Over the past 20 years, the Postal Service has faced increasing financial challenges, driven in large part by its unusual position within the government. As a federal agency the Postal Service has its responsibilities set by Congress (including which offices it can or cannot close). Yet as a self-financed agency, the Postal Service currently receives no funds to carry out these obligations; in other words, it cannot restructure its services or expenses but has to raise all of the money to pay for them.
This issue, combined with increased competition from private carriers and email as well as heavy pension obligations, has results in heavy losses for the Postal Service. In 2012, the agency ran at a $15 billion loss, and even with the coming rate increase expects to lose $6 billion over the coming year.
It is, however, arguably impossible for the government to allow the Post Office to collapse altogether as it's constitutionally required to operate. How Congress will balance that obligation with the Postal Service's steady losses is unclear.
Written for MainStreet by Eric Reed, a freelance journalist who writes frequently on the subjects of career and travel. You can read more of his work at his website www.wanderinglawyer.com.