Postal Rate Hike Would Hurt Small Business
Over the last few years, the U.S. Postal Service has talked about how much they appreciate and help small business. Of course, a glaring problem with such rhetoric has been rate hikes recently imposed by the Postal Service, with more apparently on the way.
Consider the fact that the cost of a first-class stamp went from 25 cents in 1990, for example, to 37 cents now. That last rate hike came in 2002, when the price for a stamp went from 34 cents to 37 cents. Inflation from 1990 to 2002 registered 27 percent (as measured by the GDP price deflator). Meanwhile, the price of a stamp rose by a whopping 48 percent over that same period. That’s almost twice the rate of inflation.
News reports last week said that the Postal Service will be seeking another big price hike next year, which would go into effect in 2006. The Wall Street Journal reported that the price of a first-class stamp could increase to “at least 41 cents.”
And guess who gets hit hard when these price increases are imposed? It is consumers, obviously, but also small businesses. As SBE Council has highlighted before, the Presidential Commission on the U.S. Postal Service noted last year: “As individual households rely more and more on the Internet for a wider array of their communications, the nation’s Postal Service – by default – is becoming primarily a medium for the transmission of business correspondence. All tallied, bill presentment and payment, commercial correspondence and advertising combine to generate 93% of total U.S. First-Class Mail volume today.”
So much for helping small business.
Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council
