Complete Story
01/05/2018
Reasonable postal increases could hit a wall
An abrupt end to a decade of inflation-capped postage increases looms ahead for community newspapers in 2018 if the Postal Regulatory Commission proceeds with a new rate-setting system that could add to newspapers’ postage costs from as much as 60 percent to 75 percent over five years.
Instead of rates adjusted each year, usually in January, by an inflation benchmark, the PRC is considering using the inflation cap as a rate floor, upon which multiple percentages of additional U.S. Postal Service revenue could be stacked.
National Newspaper Association President Susan Rowell called the proposal “devastating” and vowed NNA would oppose it.
In December, the PRC concluded a year-long examination of the rate-setting mechanism in the 2006 Postal Accountability and Enhancement Act, which NNA had been instrumental in passing. PAEA permitted the U.S. Postal Service to increase rates each year for each mail class or product only by the level of inflation tracked by the Department of Labor’s Consumer Price Index for all Urban Consumers. Since the law went into effect in 2007, community newspapers have seen relatively small increases each January, usually 2 percent to 3 percent.
But while rates were capped, USPS expenses continued to grow. Its labor contracts are renewed triennially and have included both inflation-based increases and stepped-up wage levels. Congress depleted USPS funds by requiring payments each year of more than $5 billion into a federal fund intended to support future retirees’ health benefits. And mail volumes have shrunk, shedding more than 60 billion pieces in the decade, while the country adds a little more than 1 million delivery points a year. Standard Mail, which is less profitable to USPS than First-Class Mail, crossed over to become the largest mail class in 2009. Package delivery, which is also less profitable, is growing, but is not providing sufficient revenue to cover much of the USPS overhead costs, which traditionally have been supported by First-Class Mail.
