Please, Mr. Postman: 41 Cent Stamp Helps Clutter Your MailboxMay 12, 2007
Most Americans will likely shrug their shoulders when stamp prices jump from 39 to 41 cents this week [May 14]. After all, we already have the consumer-friendly “Forever Stamp.” And what’s 41 cents when many of us could easily spend three or four bucks on a lukewarm cup of foamy coffee?
But 41 cents may not seem like such a bargain for postal consumers when they learn that each first-class stamp subsidizes the delivery of junk mail, periodicals, priority mail and most other classes of mail.
The latest financial statements from the Postal Service, for fiscal year 2006, contains some startling figures, particularly regarding a statistic it calls “cost coverage,” that ought to make anyone who stands in lines at post offices take notice.
Cost coverage is simply the amount of revenue taken in from a particular product divided by the costs attributed to processing and delivering that product. First-class letter mail — the mail we use for wedding invitations, bill paying, and that old relic, the handwritten letter — had a cost coverage of about 157 percent. So in this case, for every $100 attributed to first-class mail’s costs, consumers provided $157 of revenue. Does that sound like a good deal to you?
Package services barely broke even before contributing to the Postal Service’s vast institutional overhead, with cost coverage of only 106 percent. Periodicals were the largest drain on the system. With a cost coverage of 86%, the fees paid by mailers to send magazines and other periodicals were actually less than even the attributable costs required to deliver them.
Standard mail, or more affectionately, junk mail, had a coverage figure of 150 percent. That means that a portion of the 41 cents we’re about to drop on a first-class stamp will help pay for the delivery of junk mail that we may not want in the first place, not to mention subsidizing periodicals and other postal products.
The loyal public servants who run the Post Office also recently announced that they will expand the familiar priority and express classes of mail into the international market. Although they describe it as a simplification for consumers, expansions into the international market are actually troubling.
Historically, Postal management keeps the finances of international mail shrouded in secrecy. Although cost coverage figures are available for international mail (it trails First Class substantially), postal management has kept most data for these products on a strict “need to know” basis.
In any event, given the tremendous costs associated with international delivery, it’s important to wonder whether this expansion will be yet another venture subsidized by we consumers of the Postal Service’s first-class mail monopoly.
International mail is just one example of the Postal Service’s frustratingly cloudy financial reports. Many who follow government closely have expressed dismay with the fact that the USPS only attributes 56 percent of its costs to specific expenses, while the rest are termed as general “overhead.” It’s no wonder that prices continue to rise when over 40 percent of the Postal Service’s expenses are not attributed to anything in particular.
Despite the row over unattributed costs, which even USPS Board of Governors Chairman James Miller III acknowledges as a source of “widespread dissatisfaction,” the USPS has pressed ahead with such dubious marketing ploys as sports sponsorship and the Star Wars campaign where it painted mailboxes to look like the character R2D2.
Granted, such campaigns may be entertaining, but they are no way for the Postal Service to gain a hold on the runaway costs that necessitate rate hikes. And USPS has been less than forthcoming with the specific costs associated with its sponsorships and promotions, declaring them “proprietary.”
So this week, when you open your mailbox to find yet another round of junk mail, consider the possibility that your letter from Grandma with the new 41-cent stamp affixed to it may have helped deliver a new stack of credit card applications and advertising.
Don Soifer is executive director of the Consumer Postal Council in Arlington, Va.