Postal Updates

By Bill McAllister, Washington Correspondent

Selling stamps at post offices much more costly than retail sales

January 07, 2017 12:00 PM

  • A 2003 report of the President’s Commission on the United States Postal Service succinctly explains why so many postmasters are willing to challenge the powerful postal union that has vowed to fight efforts to divert counter sales.

By Bill McAllister, Washington Correspondent

If you have wondered why so many postmasters general have fought to sell more stamps in retail chains, you need look no further than a 2003 report of the President’s Commission on the United States Postal Service.

In the report is a table titled “The Cost to the Postal Service of Selling Stamps.”

It succinctly explains why so many postmasters general are willing to challenge the powerful postal union that has vowed to fight efforts to divert counter sales.

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According to the table, stamps sold at post office counters accounted for 80 percent of stamp sales at a cost to the Postal Service of 7¢ per dollar sold.

Stamps sold at supermarkets, drugstores and other large retailers represented just 7 percent of sales, but the cost to the USPS was just under 2¢ per dollar, $0.016 to be exact.

Stamp sales via bank automatic teller machines totaled 1 percent of sales at the same cost of $0.016.

The commission, created by President George W. Bush, found the cost differential significant.

The alternatives to post office sales “offer an equivalent standard of service at substantially less cost,” the commission said in its report to the president.

It liked the alternatives and hailed the planned introduction of 2,500 self-service kiosks in post offices as another way to make stamp sales cheaper.

Years before the 2008 recession caused a sharp erosion of first-class mail, the Bush commission saw trouble ahead for the USPS.

It warned in 2003 that the USPS “faces significant challenges to its fiscal health due to an outdated business model and a rapidly changing postal landscape.”

The financial problems facing the federally run postal system have only intensified, as it has plunged deeply into debt. It has been unable to make a $5.5 billion annual payment to the Treasury required by a 2006 law that was supposed to resolve the Postal Service’s problem.

When one considers ways for the Postal Service to save money, that sales chart speaks volumes. It explains why postmasters general dating back to Anthony M. Frank have tried to get large retailers into the postal business.

But the big American Postal Workers Union, which represents the clerks who man those counters, will have none of that.

“This is a direct assault on our jobs and on public postal services,” said APWU President Mark Dimondstein when he heard rumblings that Staples was beginning a pilot project to offer postal services in 80 stores in four states in 2012.

The union launched a national boycott of Staples stores and filed unfair labor charges against the USPS.

Led by its legendary leader Moe Biller, the APWU killed Frank’s plan to have Sears stores sell stamps in 1989.

It duplicated that fear on Jan. 5, killing a Staples plan pushed by former Postmaster General Patrick R. Donahoe.

Although the numbers in the chart probably have changed since 2003, the public still likes to buy stamps at postal counters — even though it remains far more costly than sales via retailers and ATMs.

The crux of the problem may be that unionized postal workers are extremely well-paid. The USPS used to say in its annual reports what the average pay of its union members was. But it stopped those disclosures several years ago, without explanation.

And no postmaster general has dared to mount a public campaign over the size of postal paychecks. In bargaining with postal unions, they have, however, managed to get reduced pay rates for some new employees.

In his farewell address in 2015, Donahoe did criticize both mailers and unions for failing to support the Postal Service’s cost-cutting efforts.

“We didn’t get much support from our unions for the mailing industry because it threatened the status quo,” he told the National Press Club. Mailers, he said, want cheaper rates, and the unions “view the future of the organization mostly through the lens of preserving jobs and benefits as they currently exist.”

Buy forever stamps before Jan. 22

The 49¢ first-class stamp returns to the nation’s post offices Jan. 22.

So do a number of other price changes that are well-known to the mailing industry, but perhaps unknown to the general public,

The reason: neither the United States Postal Service nor the Postal Regulatory Commission, which approved the higher prices on Nov. 15, 2016, issued a news release announcing the changes.

The USPS did issue an “industry alert” advising commercial mailers of the coming changes.

When asked why the Postal Service did not issue a news release on the upcoming changes, postal spokeswoman Katina Fields told Linn’s: “I can’t speak for the PRC, but it has been our practice over the past few years to only send out a release when we file with the PRC our proposed annual price changes.”

That refers to an Oct. 12 USPS news release noting that the USPS was asking for permission to return first-class letter prices to 49¢ from the 2¢ reduction to 47¢ ordered by the PRC as part of an emergency rate increase.

Gail Z. Adams, a spokeswoman for the PRC, told Linn’s: “There’s no particular reason a press release was not issued. I sent out a tweet about it and it was posted on our [PRC] homepage for a little while.”

The Postal Service did not seek changes in the current 34¢ postcard rate, rates for international letters and postcards, and the additional-ounce rate for first-class letters.

Linn’s was alerted to details of the pending increase by a Jan. 6 newsletter from Stephen Kearney, executive director of the Alliance of Nonprofit Mailers.

Kearney, the former head of the USPS stamp program, urged his members to buy stocks of the 47¢ forever stamp.

“So, if you plan to use Forever stamp, buy as many as your budget allows before Jan. 22!” he wrote.

“They are good for the prevailing first class rate as long as the USPS is delivering, which will be for a long time.”

Kearney also noted that users of customized computer-generated stamps can get an even bigger price break.

“Now there will be a hugh price incentive” to use these stamps, he said.

The USPS is cutting the prices of metered and computer-generated stamps to 46¢ from the current 46.5¢. That will give mailers a 3¢ discount from the new first-class rate, he said.

The discount, Kearney said, is a product of the USPS’s determination to get the first-class stamp price back to 49¢ where it was before the USPS was ordered to reduce its first-class price to 47¢.

Kearney urged his members considering use of the computer-generated stamps to move quickly.

“At meetings, postal officials have warned that the 3 cents per piece bonanza to be enjoyed by users of metered and custom postage will not last forever,” he said.

Some mailers would like to use a combination of several stamps on their solicitations, but the USPS “has not been offering the right combination of stamps in large rolls to add up to 47 cents, or 49 cents,” Kearney said.

“Even if they add up, they can cover up the response address because of the number of stamps you need to use,” he said.

The Postal Service has agreed to look at the issue, he said.

The Alliance also has urged the USPS to consider creating rolls of low denomination stamps “that are printed together in rows that add up the first class rate and can be applied with automation.”

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This story was revised Jan. 9, 2017.