A novel event occurred earlier this year. For the first time in almost a century, the United States Postal Service rolled back the price of a first class stamp. With such a rare thing happening, it makes sense that a lot of people might be confused or at the least uncertain about how much a first class stamp costs in 2016. Here’s the scoop on that and a bit of background on this strange change.
It all started in 2008, when the United States Postal Service (USPS) realized huge losses during the Great Recession. The post office made a request to Congress for a temporary postage surcharge allowing them to recover from at least a part of this devastating loss of revenue. Congress gave permission to the USPS to add a 4.3% postage surcharge until a $4.6 billion loss was recouped.
The effect on two of the most common pieces of mail was that the cost of a first class stamp – what is needed to send a basic letter or greeting card – rose to 49 cents, while the postage required to send a post card – whether it is a business advertisement or a tourist card back home while on vacation — rose to 35 cents. That was an increase of two cents per letter and a penny per post card.
The Last Rate Decrease
As I pointed out before, this is the first time in 97 years that the cost of a stamp went down. The last time was in 1919, but that itself was to correct what had happened for the first time ever – a postal price increase.
You might be surprised at the history of postage price changes. For many years, it did not rise at all. To the contrary, it was moving backward.
In 1863, the cost of the first class stamp required to post a standard piece of mail (one ounce or less) from anywhere in the continental USA (there was only the continental USA back then; no Alaska or Hawaii) to any address in the USA was six cents.
Invention and innovation led to greater efficiency in the operation of the post office branches, so much so the price of a first class stamp dropped to four cents in 1883. Then, in 1885, the cost of a stamp dropped again, this time going down to two cents.
It was not until 1917 that postage rates in the USA were increased. It was during the years of WWI that American troops were stationed abroad. The cost of a first class stamp went up, from two cents to three. The surcharge may have been needed to help the post office offset the expenses that came with processing all the mail going overseas and back between soldiers and their families. It might have been overtime for existing workers or hiring more workers to add additional shifts to process the increased volume of mail.
Whatever the reason for the post office needing additional funds in this period, the additional postage cost was rolled back after the war was over and the doughboys were home. That happened in 1919, when the cost of a stamp returned to two cents from three.
Of course, since then, it’s been increases all the way and no looking back. The first double-digit price hit us in 1974, when a standard stamp jumped from eight cents to ten. The next year, when surface mail was eliminated in favor of all domestic letters and post cards being handled by airmail, postage shot up to thirteen cents per stamp.
In 1981 there were two increases in the price of a stamp. In March, the price went from fifteen cents to eighteen, and in November it jumped up again just in time for Christmas cards to go out at twenty cents each. Postage crossed the 30-cent line in 1995, and the 40-cent barrier was breached in 2007.
And then, in 2016, we had the first postage roll-back since 1919.
Made the Forever Stamp a Loser (for a while)
Another first happened as a result of the first postage rate increase in nearly a hundred years. For the first time ever, the Forever stamp lost value.
One of the stinging impacts of this change is that for the first time since its launch, buying Forever stamps was a losing prospect. Usually, we buy Forever stamps by the sheet or roll, knowing that even when postage prices increase (as they ‘always’ do), the Forever stamp will cover it.
For example, if I bought a book of Forever stamps when they first came out in 2007, that book of twenty would have cost me $8.20. That means a single first class Forever stamp cost 41 cents.
Let’s say I used nineteen of those stamps and then the booklet got pushed down into the corner of the drawer behind a dozen envelopes. When I cleaned out that drawer in 2015, I could take that last forever stamp and put it on a birthday card to my dear aunt. With postage rates being 49 cents per first class stamp at the time, I made a gain of eight cents – almost 20% — on that Forever stamp.
Of course, if you bought a book or few of Forever stamps in 2015, you paid $9.80 for a book of twenty, or 49 cents each. As of April 10, 2016, you are losing money with each one you use. It is the first time anyone has lost money on Forever stamps.
You might wonder just how much is lost on each of those Forever stamps, and the price of a first class stamp in general.
Well, as of April 10, 2016, the price of a first class stamp is once again 47 cents. A book of twenty will cost you $9.40.
If you have 2014-2015 Forever stamps to use up, you will lose two cents per stamp, or about 4% of the stamp’s value.
Will It Happen Again?
The postal service has not recovered from the losses experienced as a result of the financial realities surrounding the delivery of our mail. While a profit was posted in the first quarter, that was with the help of seasonal mail (the fiscal year begins in October, so the first quarter is October-December) and the 4.3% surcharge being in effect.
In the second quarter, however, the USPS recorded huge losses, again, coming to about $2 billion. The third quarter (April through June) saw a loss of ‘only’ $1.57 billion.
In spite of securing sweet package shipping deals with vendors like Amazon, the USPS continues to suffer from steep declines in first class mail and periodicals. During the 2015 holiday season, the post office experienced a rise in operating revenue from package services but a continuing decrease in the number of letters and cards sent, including fewer holiday cards.
As the time left for the surcharge was waning, various postal personnel attempted to convince Congress to make the surcharge permanent, but to no avail. A federal court ruled the surcharge had to end at its appointed time.
The Next Increase
If you can afford it, you might want to stock up on some Forever stamps before the end of 2016. It will definitely not be a losing proposition this time.
While the USPS cannot keep the 4.3% surcharge permanently, there is a price increase already on the books for 2017 that returns the price of a first class stamp to its surcharge rate of 49 cents. This will not generate as much revenue for the postal service as the surcharge did, however, because it is only for the first class stamp. Additional ounce stamps for envelopes weighing more than one ounce will not be raised, nor will the price of a post card stamp. International letters will remain unchanged as well.
It may seem like the relief from the surcharge was short-lived, and that is true. Still, the post office can tout the 2017 price hike as the first actual increase in the price of postage since 2014, when the surcharge went into effect.
Are Stamps Forever?
How long will we need stamps? A lot of us already have little or no need for them. When is the last time you wrote a letter instead of sending an email? When did you most recently pay a bill with a check in an envelope? The answer is probably longer than a year ago, if you can remember at all when it was.
There is one mail-in convenience a lot of us have adopted somewhat recently. Even with the offer of early voting at the polls, there is something even better for those of us who hate lines of any kind – voting from our living rooms with an absentee ballot. Sure, we can take it to the election office and save the postage, but why do that when we can plop on three stamps and have it picked up at the door?
In spite of its financial insolvency, the postal service will be with us for a while. We may not use it often, but it will be there for us when we do. Since the next rate increase is in 2017, maybe we can help the USPS by being sure to send out Christmas and other holiday cards while the current rate of 47 cents still holds through the end of 2016, and do try to send a letter or card in the mail (in place of an email or e-card) to at least one friend or loved one per month throughout the year. It not only helps the postal service but will surely brighten their days – and yours, when they send one in return. Thanks for reading!