Current USPS Rates

The United States Postal Service (USPS) submitted its first round of proposed increases for 2023 to the Postal Regulatory Commission, which approved the increases. They took effect on January 22. Here are the highlights:

• The First Class stamp went from $0.60 to $0.63.
• First Class Presorted Letter Rates went up on average by 3%.
• First Class Flat Rates (4 oz and less) went up on average 13%.
• Marketing Mail Letters went up on average by 3%.
• Marketing Mail Flats (4 oz or less) went up on average by 9%.
• Marketing Mail Flats (over 4 oz) went up on average 16% at the piece level and 2% at the pound level.

What does this mean for nonprofits?

The mail is a vital conduit for the nonprofit community. It has outsized importance to us. Commercial mailers typically have numerous options for reaching their customers and potential customers. Nonprofits usually do not have the same array of options.

What needs to be done?

TNPA strongly believes a long-term solution to endlessly skyrocketing postal rates can only be found through structural reform of the USPS and its funding methods. In essence, the USPS cannot successfully be run as a business while incorporating substantial and obligatory public service missions in its operations. The ideal policy for the nonprofit sector — and all mailers — would be a return to the original goals of the Postal Reform Act of 2006 — predictable rate increases, as to both amount and timing, in line with the rate of inflation.

What is the current situation?

These hefty increases were made possible when the Postal Regulatory Commission (PRC) granted the USPS a new rate authority in late 2020. The authority is an add-on to the previous system, which permitted increases only up to a ceiling determined by the annual consumer price index (CPI), a measure of inflation.

The consequence of this new authority to increase rates has been accumulated increases between 15.7 and 19.6% in a mere 18-month period (see the chart below).  This can be a severe shock to the system of any kind of mailer, particularly so, considering how stretched many nonprofits have been coping with the demands of the pandemic.

The situation can only get worse if the status quo persists. USPS will enjoy this new add-on authority for another 3-4 years. When it has run its course, nonprofit mailers will have absorbed increases of 50-60% from start to finish.

How did we get here?

Specifically, the 2006 Postal Reform Act limited price increases to a formula derived from the Consumer Price Index (CPI). Therefore, since 2006 (aside from a small increase due to the Great Recession) postal rates increased approximately at the rate of inflation (the CPI), predictable as to both amount and timing.

Under the 2006 Act, the PRC was given the task of conducting a ten-year review of the law’s effectiveness. The PRC concluded USPS’s poor financial health was due to the CPI cap (as opposed to a lack of operational efficiency or control of costs). It therefore proposed a new formula, adopted in December 2020, which gave new ratemaking authority to USPS, permitting variable surcharges to be added to the CPI.

What can we do now?

Collectively, mailers took a logical first step. A coalition of mailers’ associations sued the PRC in late 2020 asserting that it did not have the authority to raise rates above the 2006 Act’s CPI cap. TNPA contributed to this effort.

On November 12, 2021, the US Court of Appeals (DC Circuit) ruled against the suit filed by the mailers. The court ruled the PRC acted within its authority, thus allowing the large rate increases beyond the CPI to continue.

With this disappointing court decision, the focus moved to Capitol Hill. H.R. 3076, the Postal Reform Act of 2022 was then working its way through the Senate — it had already passed the House in May 2021. There was a lukewarm reaction in the Senate to the entreaties by mailers to modify the bill to include pricing caps. On March 8, 2022, the Senate passed the House Bill (H.R. 3076) without amendment. On April 6, 2022, President Biden signed the measure into law.

While the legislation has several positive provisions, including moving the large postal retiree healthcare cost off the Postal Service and moving it to Medicare where most retiree healthcare costs reside, the legislation does NOT have any language limiting future postal rate increases.

With the passage of the postal reform legislation, our challenge now is to gain enactment of legislation which would force the PRC to do a new, second study of the postal rate structure, taking into account the freeing of the USPS of the large retiree healthcare cost. It will be no easy task to get this legislation enacted, but in the Senate at least, a bipartisan group of 7 Senators seems ready to push forward on this effort.

Further complicating our challenge is the fact that even if the legislation mandating a new postal rate study were enacted, there is no guarantee that the PRC will in a new rate study conclude that the pricing structure should be fundamentally changed.

TNPA will continue to work closely with other umbrella organizations representing nonprofit mailers. TNPA has also joined an important coalition, Keep US Posted, a group of organizations committed to a reliable, affordable USPS. TNPA is in this battle for the long haul to make badly needed changes to the Postal Service.