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Paul Waldman’s Feb. 19 column, “USPS is raising rates again. It’s still a global bargain,” made sense as far as it went. Postage is not a large burden on most households because most of us do not spend much on it. The U.S. Postal Service can offer postage rates lower than much of the world with economies of scale because it is the world’s largest postal system. Increased volume helps a large network operation with high fixed costs keep average costs down.
As Mr. Waldman noted, users of USPS provide most of the funding. But the lion’s share of USPS revenue comes from businesses and nonprofit organizations. They spend thousands or millions a year on postage. They respond to how much postage goes up and how quickly, not what a stamp costs in other countries.
The amount and speed of postage increases since 2019 are staggering: The price of a stamp has increased 32 percent since 2019. The problem is that many of the businesses and organizations that fund USPS cannot afford these increases and are forced to cut volume.
The greatest risk now is a downward spiral as more losses beget larger rate increases and economies of scale diminish. So far in fiscal 2023, mail volume is down 6.5 percent, and USPS revenue is down 0.4 percent despite the large rate hikes. Volume loss is accelerating; it reached 10.6 percent in February. USPS has about $20 billion in operating cash and could easily “bank” its rate authority to be used later, thereby mitigating the downward spiral.
Stephen Kearney, Greenbelt
The writer, a former U.S. Postal Service vice president, is executive director of the Alliance of Nonprofit Mailers.
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