Small Business Mailers – Including Newspapers – Would be Harmed as USPS’s Strategy Shifts Toward Packages
Today, the United States Postal Service (USPS) filed proposed postage increases that are, in some cases, seven times the rate of inflation. This increase will have detrimental effects on small businesses, including small-market and rural newspapers that cannot afford the increased costs, particularly as they strive to recover from the economic impact of COVID-19. The average increase for market-dominant mail, including First Class, Periodicals and Marketing Mail, is 6.9 percent. Periodical mail, which is used by local newspapers across the country, will see a rate increase of more than 8 percent on average.
These new rates – on top of rates increased earlier in the year – will push mail out of the system and, in some cases, may put companies out of business. The proposed rate increases come at a time when the U.S. Postal Service has so far earned nearly $2 billion more in 2021 revenue than predicted and after receiving a $10 billion grant from Congress at the end of last year.
The new rates come on the heels of a decision by the Postal Regulatory Commission (PRC) on November 30, 2020, that overturned a Congressionally mandated inflationary price cap for mail products that USPS has a monopoly on delivering: First Class, Periodicals, and Marketing Mail. This change, which was based on USPS’s financial standing in 2017, allowed the Postal Service to raise rates that exceed the Consumer Price Index (CPI). Previous rate increases, which were in line with the CPI, were more reasonable and predictable, averaging roughly 2 percent per year over the last 14 years.
News Media Alliance President and CEO David Chavern stated, “These excessive rates not only threaten publishers and newspapers throughout the country, but they are being introduced at one of the worst times for small businesses that are struggling to recover from the economic impact of the COVID-19 pandemic. The Alliance is deeply concerned that these rates will force small market, rural and minority-owned newspapers to cut back on distribution, leaving their communities less well-informed. We urge Congress to hit the pause button until a more up-to-date evaluation can be done on the need for and potential impact of these extreme rate increases.”
Members of the News Media Alliance staff have contributed to this post.