USPS & Postal Policy
Impact of Recent Postal Rate Hikes: Express Your Concerns
The Postal Regulatory Commission (PRC) has requested comments on the impact — as to both size and timing — to organizations of the August 20, 2021, rate increase of approximately 7%. Take a few minutes to explain to the PRC how those increases impacted your nonprofit work. Stakeholders should submit comments via email to email@example.com or by letter to the Commission at 901 New York Ave., N.W., Ste. 200, Washington, DC 20268 by July 31, 2022.
Postal: What is the issue?
USPS has announced new postal rates to take effect July 10, 2022. The First Class stamp goes from 58 to 60 cents (a 3.4% increase). Pre-sorted First Class rates will go up considerably more, 6.9% for letters and 9.2% for flats. While Marketing Mail (formerly known as Standard Mail) commercial letters will rise an average of 6.2%, nonprofit letters will go up 4%. The reverse happens for Marketing Mail flats: commercial flats increase 8.5% on average, and nonprofit flats less than 4 oz will increase a well-above-average 12.2% and flats over 4 oz by a whopping 30%+.
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 typically do not have the same array of options.
What is the ideal policy?
Ideal 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 only be a severe shock to the system of any kind of mailer, and particularly so considering how stretched many nonprofits have been coping with the demands of the pandemic.
Image Credit: Alliance of Nonprofit Mailers
The situation can only get worse if the status quo persists. USPS will enjoy this new add-on authority for another3-4 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.
The Bottom Line
TNPA strongly believes a long-term solution to endlessly skyrocketing postal rates can only be found by way of 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.
Who are the key players?
IN THE U.S. SENATE
- Senator Gary Peters (D-MI), Chair of the Homeland Security and Governmental Affairs Committee (HSGAC)
- Senator Rob Portman (R-OH), Ranking Republican on the Homeland Security and Governmental Affairs Committee
- Senator Tom Carper (D-DE)
- Senator Susan Collins (R-ME)
- + 20 additional co-sponsors to the proposed postal reform bill of 2021
IN THE U.S. HOUSE OF REPRESENTATIVES
- Congresswoman Carolyn Maloney (D-NY), Chair of the Oversight & Reform Committee (the House committee with postal jurisdiction)
- Congressman James Comer (R-KY), Ranking Republican of the Oversight & Reform Committee
- Congressman Gerry Connolly (D-VA), chair of the subcommittee with postal jurisdiction.
- Congresswoman Virginia Foxx (R-NC), a senior member of the Oversight & Reform Committee
To understand the various Classes of USPS mail and more, check out USPS’s Business Mail 101
Congress just delivered major postal reform legislation, so why is the US Postal Service ignoring it? by Kevin Yoder, Former Congressman and Executive Director of Keep US Posted (July 2022)
The New “Improved” Risky USPS Business Strategy, by Stephen Kearney of the Alliance of Nonprofit Mailers (May 2022)
Plan for the next USPS Price Change: July 2022 by Carolyn Angelini (Sept 2021)
Need to Know: Changes to First Class Mail Standard, by Carolyn Angelini (Sept 2021)
My (Virtual) Day on the Hill, by Sandra Miao (June 2021)
Increasing Mail Costs on the Horizon (April 2021)
Legislative Round-Up (Jan 2021)
US Postal Service Rate Increases, A Tool to Understand the Impact on Your Nonprofit of the January 2021 Increases
A Perfect Storm for USPS (Sept 2020)