A Matter of Letters


On May 14th the U.S. Postal Service instituted its latest batch of rate hikes. As everyone knows, the P.O. has never exactly been a profitable endeavor, although in fiscal year 2006 it managed to eke out a 1.2% gross profit. After an adjustment for retirement costs, however, the gain becomes a loss of 2.8%. Its balance sheet is pathetic, with a “current ratio” of negative 5.6 (current assets $2.0 billion; current liabilities $11.6 billion). This would indicate a company with dreadfully serious problems in meeting its short-term obligations. The stock of such a company on the NYSE would probably be good for use as wallpaper, or as a component in the making of a papier-mâché bust of Ben Bernanke.

It makes one wonder why the government continues to keep this deficient monopoly going. Perhaps the reason is that it gainfully employs 696,000 voters, all of whom are beholden to the government for their incomes. The average starting pay for Post Office jobs is currently being advertised as $20.00/hour. “Postal Jobs Offer Full Federal Benefits, Paid Training, Vacations. No Experience Necessary!” Not bad, eh?

But I digress… let’s get back to the rate hikes. Mailing a one-ounce first-class letter now costs 41 cents, a 5% increase, perhaps not so unbearable – while additional ounces have been reduced to 17 cents per ounce – sweet! There’s a rub, however. Large envelopes, or “flats,” now cost 80 cents for the first ounce. First-class packages now cost $1.13 for the first ounce. The latter two represent increases of 105% and 190%, respectively, which seem to fly in the face of official pronouncements that inflation is under control.

To make matters worse:

  • A regular letter over 3.5 ounces is considered a flat and must use that rate schedule
  • Letters that meet one or more of the “nonmachinable characteristics in DMM 101.1.2” are subject to a $0.17 “nonmachinable surcharge”
  • Flats that are “rigid, nonrectangular, or not uniformly thick” pay parcel rates
  • If a package is more than 13 ounces, you must use the Priority Mail rates and not the first-class rates
  • For “keys and identification devices,” add $0.70 (Don’t ask me.)
  • There are several different Parcel Post rates – Local and Intra-BMC, Inter-BMC, and Parcel Select (although I can’t seem to find definitions for these terms)

It’s all here, in twenty confusing pages.

My immediate thought was “I think I’ll start using another company,” but of course I realized pretty quickly (despite my incipient creeping senility) that there is no other company to use, at least not for first-class mail. So I, and everyone else, will just have to continue to patronize the postal monopoly granted by the government to itself, and wonder how much better things would be if mail delivery were provided by the free marketplace. Perhaps we might see competition, innovation, better service, and rate reductions instead of increases.

May 18, 2007

Andrew S. Fischer has worked in various fields.

Andrew S. Fischer