USPS Proposes Stamp Price of 78 Cents Amid Financial Woes

Rising Costs Signal Deeper Postal Service Challenges

The United States Postal Service announced a proposal this week to increase the price of a first-class forever stamp from 73 cents to 78 cents, effective July 13. This 5-cent hike, subject to approval by the Postal Regulatory Commission, marks yet another step in a series of rate increases aimed at stabilizing the agency’s finances. With operating revenue of $79.5 billion in fiscal year 2024, the USPS still posted a staggering $9.5 billion net loss, underscoring the urgency of these adjustments.

The proposed increase follows a pattern of frequent rate hikes, with stamp prices rising 56 percent since 2019, when they stood at 50 cents. Last year, the price jumped from 68 cents to 73 cents in July, reflecting a broader strategy under the agency’s 10-year Delivering for America plan. That initiative, launched in 2021, seeks to modernize infrastructure, enhance service reliability, and eliminate chronic budget deficits that have plagued the USPS for over a decade.

A History of Financial Strain

The USPS has faced mounting financial difficulties, exacerbated by a decline in first-class mail volume, which dropped to 46 billion pieces in fiscal year 2023—the lowest since 1968. Notably, mail volume peaked at 104 billion pieces in 2001.

Despite generating $24.5 billion from first-class mail in 2023, or 31 percent of total revenue, the agency struggles to offset operational costs. Unlike many government entities, the USPS receives no taxpayer funding for its day-to-day operations, relying solely on revenue from postage, products, and services. The 2021 restructuring plan initially aimed to erase $160 billion in projected losses by 2031, but current estimates still forecast $80 billion in deficits over that period.

Former Postmaster General Louis DeJoy, who resigned in March after nearly five years, had warned that ‘uncomfortable’ rate hikes were inevitable. He argued that a decade of flawed pricing models left the USPS unable to keep pace with inflation and rising expenses. His successor, Deputy Postmaster General Doug Tulino, now interim postmaster general, faces the same daunting task of balancing the books.

Details of the Proposed Rate Changes

The latest proposal extends beyond stamps, with a 7.4 percent average increase across mailing services. Domestic postcards would rise from 56 cents to 62 cents, while international postcards and letters would climb from $1.65 to $1.70. Metered letters and other mail products face similar upticks. However, the USPS plans to lower postal insurance costs by 12 percent, offering a small concession amid the broader price surge.

The agency justifies these changes as critical to its long-term survival. ‘As changes in the mailing and shipping marketplace continue, these price adjustments are needed to achieve the financial stability sought by the organization’s Delivering for America 10-year plan,’ the USPS stated. Officials also note that, despite the increases, U.S. postage rates remain among the lowest globally, a point of pride for an agency fighting to stay competitive.

Broader Implications for Mail Users

For everyday Americans, the stamp price hike means higher costs for sending letters, paying bills, and shipping small packages. Since 2019, the cost of a forever stamp has jumped from 50 cents to a proposed 78 cents—a 56 percent increase that outpaces general inflation. Small businesses, which often rely on USPS for affordable shipping, may feel the pinch most acutely, especially as e-commerce giants like Amazon and FedEx dominate larger parcel markets.

USPS avoided a January rate hike this year, breaking from its recent twice-yearly pattern. However, the July 13 adjustment, if approved, will mark the fifth significant increase in six years. This relentless upward trend has sparked concerns about declining mail volume, which fell 6.1 percent in 2023 alone, as customers turn to digital alternatives like email and online bill pay.

Structural Reforms and Future Outlook

Beyond rate hikes, the USPS has pursued operational changes to shore up its finances. In February, new service standards were adopted, projected to save $36 billion over 10 years by streamlining delivery processes. Proposals to eliminate evening mail pickups in rural areas could save an additional $2.8 billion to $3.3 billion annually, though they’ve drawn criticism from states like Wyoming, where officials argue it undermines election integrity and rural connectivity.

The agency’s leadership remains optimistic, emphasizing that price adjustments are a necessary bridge to self-sufficiency. With mail volume at historic lows and costs rising, the USPS stands at a crossroads, balancing its legacy as a public service with the harsh realities of a shifting marketplace.

USPS Annual Mail Volume Since 1926

An Act of February 28, 1925 authorized the Postmaster General to account annually for revenues and costs associated with different types of mail, making annual estimates of mail volume have been available since then.

Number of Pieces in Billions. Source: USPS

Source: USPS.com