Technology has afforded us the ability to connect with nearly anyone, anytime—and free of charge. But there’s just something nostalgic and tactile about receiving a letter or postcard via snail mail, whether it be a wedding invitation or postcard from a loved one far away.
But many also have a love-hate relationship with the United States Postal Service. Mail gets lost, undelivered—or even returned sometimes with a valid postmark and address. Indeed, “the Postal Service’s ability to provide acceptable service is an ongoing concern across the United States,” according to the Office of Inspector General for the United States Postal Service.
Yet, USPS announced Tuesday a proposed 8% price hike for stamps, bringing the cost of a first-class mail forever stamp to $0.73. It’s just another sign of the unfavorable leadership of Postmaster General Louis DeJoy, who was appointed by former President Donald Trump. DeJoy was a major Republican Party donor and Trump fundraiser—and was also the first postmaster general in two decades without prior USPS experience.
Under DeJoy, the USPS has been bleeding money. In the first quarter of fiscal 2024 alone, USPS reported a $2.1 billion net loss, more than double its $1 billion net loss during the same time period last year.
“Under DeJoy, USPS has not adequately been controlling labor costs, while quality of service has been going down and prices going up,” said Robert D. Atkinson, president of the Information Technology and Innovation Foundation, a think tank that specializes in productivity and innovation issues. “This is not sustainable, and the more prices go up the more volumes go down, until USPS hits a death spiral.”
But DeJoy, who was previously under investigation by the FBI in connection with past political fundraising, says he has a 10-year plan to revive the postal service. He’s been in his role since June 2020, and plans to serve his entire appointment. Plus, President Joe Biden doesn’t have the power to remove him from his post, despite how badly the agency is struggling.
“Get used to me,” DeJoy said in February 2021. The postmaster general is appointed by the Board of Governors of the Postal Service—and can only be dismissed by this group, not the president. However, the governors are appointed by the president, and in 2022, 83 public interest groups led by The Save The Post Office Coalition sent a letter to Biden urging him to nominate Postal Board of Governors candidates who would hold DeJoy accountable for his “destructive leadership and advocate strongly for the expansion of USPS services.”
“The president’s nominees should provide a diversity of life experience to more accurately represent both the postal workforce and the nation overall—not just another rich white man like Louis DeJoy,” Porter McConnell, co-founder of The Save the Post Office Coalition, said in a statement.
Why the USPS keeps upping its prices
This is the second time in six months that USPS has requested to raise service prices, most recently hiking shipping service rates 5.4% in November 2023.
“Pricing changes in the mailing and shipping marketplace continue, [and] these price adjustments are needed to achieve the financial stability sought by the organization’s Delivering for America 10-year plan,” a USPS spokesperson tells Fortune. “The Postal Service prices remain among the most affordable in the world.”
While it all may be—at surface level—part of DeJoy’s master plan to remedy poor service across the country, the entity likely won’t be able to continue to raise prices indefinitely, experts say.
“USPS is raising prices because it consistently loses money on its business and subsidizing the USPS with general tax dollars is unpopular—and unnecessary,” Stephen Henn, adjunct professor of economics and finance at Sacred Heart University, tells Fortune. Plus, USPS can’t be as profitable as FedEx or UPS because the cost to mail letters and packages still is comparatively much cheaper than using a for-profit option.
Some of the factors that contribute to dissatisfaction among USPS users—and overall decreased productivity—include reduced mail volumes, increased operating costs, and a “rapid shift” toward digital communications, Robert Khachatryan, CEO of Freight Right Global Logistics tells Fortune.
According to DeJoy’s 10-year plan, he hopes to modernize operations and enhance competitiveness in the shipping and mailing industry while mail volumes decline, Khachatryan says. But it also seeks to add funding to address ongoing USPS service challenges across the country. Nearly every U.S. state is below target levels for on-time service, according to Office of Inspector General for the United States Postal Service data.
“The push for price increases partly stems from the ongoing challenge of maintaining acceptable service levels,” Khachatryan says. “The Office of the Inspector General’s reports highlight service as a persistent concern, suggesting that additional revenue from higher prices could be directed towards improving operational efficiencies and customer service.”
Plus, USPS has requirements that for-profit businesses like FedEx and UPS do not. USPS has to deliver first-class mail to every address in the U.S. at the same rate, despite distance.
“Sending Grandma a holiday card costs the same whether sent from Maine to New York or Maine to Hawaii,” Henn says. “For-profit companies can charge based on the cost of delivering from Maine to New York or Hawaii.”
Despite the challenges of competing with for-profit organizations, DeJoy remains confident that he can rescue the ailing agency in the years to come.
“I grow more confident in our ability to deliver to the nation a Postal Service whose best days are in the future,” DeJoy told the USPS Board of Governors in February. “We are in a race to a finish line that changes our financial and service trajectory before we run out of cash and require other means of funding.”
But other experts don’t have as rosy of an outlook for the agency, which technically operates independently from the executive branch of the U.S. federal government.
“The Postal Regulatory Commission needs to stop being so passive and start holding USPS accountable to cut costs and boost efficiencies,” Atkinson says. “Congress may well have to intervene as well, because the current trend is not sustainable.”
