The US Postal Service Increases Prices

The U.S. Postal Service on July 6, 2010 proposed an increase of 2-cent in the price of a 1st-class stamp, making it 46 cents. The price-increase proposal is subjected to the approval of The Postal Regulatory Commission (PRC). If the new price-hike proposal is approved; the new prices will be effective from January 2011.
This is one of the Postal Service’s desperate efforts to get out of a deep financial crisis. According to the next year’s projection, the agency’s budget deficit exceeds $7 billion. Revenue has not been up to the mark and the revenue from mail sent declined 12.7 percent during 2009. During economic recession, most of the businesses cut back on mailings expenses by turning to the web to deliver their messages.
Earlier this year, the U.S. Postal Service declared its downsizing policy and announced that the agency would reduce its workforce by eliminating 50,000 positions. The company also intended to slash overtime. However, it seems that the “trim down” policy saved billions of dollars for the agency but it still was not sufficient to bridge the massive budget gap.
Now the Postal Service is going to increase prices as a last resort. The proposal plan also includes the proposed increase in the rates on “packages, periodicals and special services,” CNN reports. The price hike is likely to earn around $3 billion in the fiscal year 2011, which is not enough to close even half of the budget gap.
The PRC’s members have been appointed the president and they can rule the proposal within 90 days. Postmaster General John E. Potter explained the whole situation by saying that, “There is no one single solution to the dire financial situation that the Postal Service faces. These proposed rate adjustments are moderate and part of a fair and balanced approach to insuring mail service for all Americans well into the future.”
This would be the sixth price hike in the price of first-class stamps since 2001, when they used to cost 34 cents.