The 2006 and 2007 Postal Rate Hike Scams!

Page Last Revised: Friday, February 13, 2009 09:59 AM

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In January 2006 the rate for a first-class letter (up to one-ounce in weight) was increased by 2-cents, from 37 to 39 cents, while the rate for each additional ounce was raised 1-cent, from 23 to 24 cents. Any intelligent planning would have realized that both 1-cent and 2-cent “make-up” stamps would have to be available, so that customers could use their existing stock of 23-cent and 37-cent stamps.

But the Post Office made a fortune by not having 1-cent, 2-cent, 24-cent and/or 39-cent stamps available (depending on the location). Thus (unless we had some 1-cent stamps left over from the previous postal rate hike), we were forced to use two 37-cent stamps (a total of 74-cents) to mail a 39-cent letter! If we were fortunate enough to have some 23-cent stamps on hand, we could combine a 23-cent and 37-cent stamp (and only pay 60-cents for our “39-cent” letter), or two 23-cent stamps (and only pay 46-cents for our “39-cent” letter).

Similarly, if we needed postage for additional ounces, we were forced to use some combination of available stamps, and (again) vastly overpay our postage.

This situation continued for many weeks, with the Post Office reaping windfall profits from their (deliberately-created?) “shortage” of both the new stamps and/or 1-cent and/or 2-cent “make-up” stamps.

The Post Office “spin” was that they didn’t have sufficient notice of the new rates to print the new stamps in time, and that they couldn’t anticipate the demand in all locations. This is BUNK! They had several months to print the new stamps, and they had more than ample statistics of sales, in ALL their branch offices, to accurately predict the geographical demand.

The Post Office spokesmen also claimed that we could purchase all the necessary denominations via their “Stamps by Mail” program, or by Internet order. BUNK! “Stamps-by-Mail” orders are forwarded to and filled by the nearest branch office – the same one that didn’t have the stamps when you stood in line for an hour. Internet orders cost an additional $1 for handling (even though the Internet automation should reduce, not increase, handling costs). And a large percentage of USPS Internet orders mysteriously disappear, and are never executed, despite the consumer being charged $1 for the transaction.

Letters of complaint to my elected representatives were either ignored, or forwarded to Post Office spokespersons for a non-responsive, inaccurate, and disingenuous reply.


In May 2007, little more than a year later, we had another substantial postal rate increase:

The rate for a first-class letter (up to one-ounce in weight) was increased by 2-cents, from 39 to 41 cents, while the rate for each additional ounce was purportedly lowered 7-cents, from 24 to 17 cents. However, the lower rate for each additional ounce is deceptive, because the Post Office created three new classes for (what was previously known as) first-class mail:

* Letters that are 5-11.5 inches in length, 3.5-6.125 inches in height, and 0.007-0.025 inches in thickness, are 41-cents for the first ounce, and 17-cents for each additional ounce.
   
* Letters that are 11.5-15 inches in length, 6.125-12 inches in height, and 0.125-0.75 inches in thickness, are 80-cents for the first ounce, and 17-cents for each additional ounce, a 39-cent surcharge!
   
* Anything else is a "first class package", and costs $1.13 for the first ounce, and 17-cents for each additional ounce, a 72-cent surcharge.Additionally, envelopes that are "rigid" are considered "packages", even if they fit the other criteria for a "letter" or "flat", and are thus subject to the 72-cent surcharge!
   
* Note also that a letter that weighs more than 2 ounces will no longer qualify for the "first-class letter" rate, because it will be more than 0.25 inches think, and will be considered a "first class package", subjecting it to a 72-cent surcharge. Alternately, the letter could be mailed in a 9" x 12" envelope, and only be subject to a 39-cent surcharge. Of course the larger envelope will increase the weight of the letter, which may result in an additional 17-cent charge, for a total surcharge of 56-cents.

Thus, the much touted "7-cent decrease" for additional ounces is actually a large rate increase in many common instances, as shown in the following table:

Type of first-class mail Weight Old rate New Rate Difference
Standard #10 envelope with 1-5 sheets of 20# paper 0.2-1.0 0.39 0.41 +0.02
Standard #10 envelope with 6-11 sheets of 20# paper 1.2-2.0 0.63 0.58 -0.05
Standard #10 envelope with 12-17 sheets of 20# paper (1) 2.2-3.0 0.87 1.47 +0.60
Standard 9"x12" "flat" with 12 sheets of 20# paper (1) 2.6 0.87 1.14 +0.27
Standard 9"x12" "flat" with 17 sheets of 20# paper (1) 3.6 1.11 1.31 +0.20
CD or DVD in plastic case, and bubble-wrap envelope (1)" 3.9 1.11 1.64 +0.53

Many (perhaps) most people do not stock anything but the basic first-class postage stamps, and don't have time to go to the post office and stand in line for an hour to mail letters which (may) require additional postage. And most people don't have an accurate postal scale at home. Thus, they will (now) use a 41-cent stamp (rather than a 17-cent stamp) to pay for that additional ounce, even if they are not sure that postage for an additional ounce is needed. And thus the Post Office will continue to reap windfall profits.

In 2007 (unlike 2006) the Post Office actually had a fairly decent supply of the new 41-cent stamps and the two-cent "make up" stamps, but AS A MATTER OF STATED POLICY did not have any 17-cent "additional ounce" stamps for several weeks following the effective date of the rate hike. Thus, customers were FORCED to use a new 41-cent (or an old 39-cent, or an old 24-cent) stamp in place of the new 17-cent stamp, giving the Post Office another (temporary) increase in the "additional ounce" postage rate (rather than the advertised decrease). Of course, one could use a combination of a 2-cent, 5-cent, and 10-cent stamp to make up the 17-cents, assuming the local Post Office had these stamps available. But how many postal customers are able to do all the (now) necessary arithmetic, and how many are financially able to stock all the different combinations of stamps which are now needed?

The same problem exists in respect to the 39-cent surcharge for large-envelopes (flats). Since the Post Office stopped producing (and destroyed all their old) 39-cent stamps, the only way to not over-pay the surcharge is a combination of two 17-cent and one 5-cent stamps. Again, how many Postal Customers are able to do the arithmetic and/or obtain the necessary combination of stamps, and how many will simply use a 41-cent stamp instead of a 39-cent stamp whenever the latter is required? Of course, eventually the Post Office will have available 80-cent stamps (to pay for the first ounce of a large-envelope/flat), but who can afford to stock them for the occasional need? It's bad enough to have to stock 39-cent stamps (or an equivalent combination), and to have to do all this complicated arithmetic in order to mail a letter.

The same problem exists in respect to the 72-cent surcharge for "first class packages". What combination of stamps will make up 72-cents? One possibility is four 17-cent stamps and one 4-cent stamp. There are other possibilities, but they require even more stamps, and more denominations. It now takes a computer to figure out what the correct postage amount is, and a mathematical wizard to figure out the correct and optimum combination of stamps.

At least we were able to use up our existing stock of 24-cent (the old rate for additional ounces) stamps, by using them in combination with the new 17-cent stamp to make 41-cents (the new first-class postage rate)! But this meant we had to purchase a significant dollar amount of 17-cent stamps in order to be able to use up our stock of 24-cent stamps, thus increasing and accelerating Post Office revenues once again. And, I'll bet that many customers simply used their stock of 24-cent stamps in lieu of the new 17-cent stamp, to pay for additional ounces!

Before the 2006 rate change, a customer only needed to stock two denominations of postage stamps. The first-class stamp and the additional postage stamp (which coincided with the post card rate). After the 2006 rate change, those who send post cards also needed a third denomination. But now we need 41-cent stamps, 17-cent stamps, 10-cent stamps, 5-cent stamps, and 4-cent stamps -- until the next rate hike, when things are certain to be made more complicated as well as more expensive -- and we get stuck with a huge supply of unusable stamps.

It is expensive for the individual to have to stock such a wide variety of stamps, and lucrative for the Post Office to sell all these extra stamps long before they are used for postage.

Obviously the Post Office is counting on people overpaying the required postage, rather than stocking five different denominations of stamps, and doing all the necessary arithmetic to determine how much postage and what combination of stamps are required. In fact, this (overpayment) is precisely what Post Office personnel have recommended when they are unable to provide the needed denominations at the local Post Office.

I find it difficult to believe all of this is a huge oversight, that no one in the Post Office planning department anticipated all these problems for postal customers. It seems far more credible that the confusion (and resultant windfall profit for the Post Office) was by design.

Why, when a rate change occurs, doesn't the Post Office insure there is an adequate supply of all the necessary new denominations and "make-up" stamps? Why don't they simplify matters by allowing customers to return their stock of old denomination stamps in exchange for new ones! Such an approach would be extremely simple, and less time-consuming than trying to juggle the old and new denominations. [This is what the Post Office does with their unsold stamps. Why not for their customers as well?] But, of course, the Post Office wouldn’t make any windfall profits if they acted logically, efficiently, and with consideration for their customers.

The new 41-cent "forever" stamps have been touted as being usable for (the first ounce of) first-class postage "forever", despite any and all future rate hikes. This may seem a good solution. But (unlike being able to exchange old denomination for new stamps) it will create more problems than it solves. Firstly, people may stockpile the stamps to try to profit from the next rate hike, and there may even emerge a secondary (speculative) market in the new stamps. But the more stockpiling, the larger the next rate increase will have to be to make up for the (estimated) value of any old stamps still in circulation!

Plus, we will have a mix of old and new denominations; some of which are “forever stamps”, and some of which are not. More confusion! More shortages of the correct denominations. More windfall profits for the Post Office as customers overpay by using too much postage.

And finally, the unnecessary confusion will require more trips to the Post Office, more Post Office personnel, and/or longer lines at Post Office counters. This will increase everyone’s cost, but the Post Office will insist on yet another rate hike to cover the costs of the inefficiencies they introduced with the previous one!

It’s time for Congress to correct this situation! The Post Office obviously will not police itself. (Why should it? It has a constitutional monopoly to mishandle the post.)

Unfortunately, to date, my letters of complaint to my elected representatives have either been ignored or forwarded to Post Office spokespersons for a non-responsive, inaccurate, and disingenuous reply.