The U.S. Postal Service formalized its price increase on Friday, raising the cost of stamps from 68 cents to 73 cents.
Just five years ago, stamps were priced at 50 cents, making this latest increase a 36% rise. Stamp sales are crucial for funding the Postal Service since it doesn’t receive tax dollars for its operational expenses. This hike is projected to generate $44 billion in revenue by 2031.
In November of last year, the Postal Service reported an annual loss of $6.5 billion, with the volume of first-class mail at its lowest point since 1968.
Last August, the Government Accountability Office noted on its Watchblog that Postal Service revenues “haven’t covered its expenses and debt for more than 15 years. And its expenses are growing faster than its revenues, in part due to continuing declines in volume for First-Class Mail — its most profitable product. USPS has been able to continue operating in this situation by increasing its debt and unfunded liabilities.”
Nearly 75% of the Postal Service’s operating costs are allocated to employee compensation, and almost 80% of its employees are members of the American Postal Workers Union.
The agency is also looking to raise the price of its parcel service by 25% but has not yet gained approval. This service faces competition from companies like FedEx and UPS, among others.
