The USPS Mail Scam Game

A week ago, early in the morning, I mailed from the local Cedar City post office, not at an out of the way collection box, some routine paperwork to the accounting office at Macmillan, using first class mail. Yesterday, I got an email from the recipient saying that it had just arrived – six days from Cedar City to New York. It cost fifty cents. If I’d sent it by UPS next day it likely would have cost me close to forty dollars; two-day UPS would have been $26.

But historically, should a simple letter cost fifty cents? In 1958, sixty years ago, first class postage was three cents. If postage had increased only as much as the inflation rate, then first class mail should only cost twenty-six cents, roughly half what it does now.

We don’t get that much first class mail, and most of that consists of bills. What we do get is lots and lots of letters from non-profits asking for money, a number of periodicals to which we’ve subscribed, and over the course of a year, close to a ton of catalogues [and this is no exaggeration because weekly, I cart them to the local recycling bin], most of which comes from companies from which we’ve never ordered anything and never will.

From reading the Postal Service rate schedule and from researching direct mail costs, it appears that each of those one pound [or less] catalogues has a mailing cost of between eighty cents and a dollar fifty.

Theoretically, the Postal Services is supposed to allocate costs of providing services according to the base cost of each class of service under a “common charge” system. Except, in practice, it’s not done that way, and it hasn’t been done that way for at least forty years. How do I know? Because some forty-five years ago, I was a Congressional staffer working for a Congressman on the Appropriations Committee, and even back then the “common charges” were undertariffed and the postal rates for bulk mail, commercial mail [such as catalogues] were essentially based on the marginal costs… and Post Office officials testified that such pricing worked, and I could never get an answer that wasn’t trumped-up gobbledy-gook.

The same thing is happening today. The Postal Service recently entered into a contract with Amazon where the charges for delivering each package roughly average two dollars, half of what other large retailers pay. The lower charges to Amazon were based at least in part on the idea that serving Amazon costs less because Amazon’s shipping was so organized that the effort by the USPS was less.

The problem with this argument is that is doesn’t take into account the heavier load on the USPS infrastructure. It’s marginal cost pricing again, without enough revenue added to support the infrastructure. Charging Amazon on the basis of an accurate proportional common charge basis would add $1.50 on average to delivery changes, which would still be $.50 less per package than for other large retail shippers.

The same system also applies to catalogues. Now, the mail order retailers claim that any significant increase in their bulk advertising rate mail would be prohibitively expensive. I don’t buy it. It wasn’t true forty-five years ago, and it isn’t true now. When companies can afford to design, print, and send us literally tons of unread, unused catalogues year after year, with only minimal increases in their rates [in most years, it’s been 1-2 percent a year; this year was a “whopping” 5.9%], that claim rings rather hollow, but obviously the lobbying campaigns by retailers, manufacturers, and non-profit organizations outweigh any practicality.

Much as I think that there are worthwhile non-profits and charities out there, we’re also inundated by the tireless appeals of both the worthy and the not-so-worthy, sent at roughly a quarter of the cost of a first class letter, and most of those we’ve also never contributed to.

Is it any wonder that the Postal Service continues to lose money?

7 thoughts on “The USPS Mail Scam Game”

  1. Tim says:

    In my part of the UK I have noted a different trend.

    I no longer get any catalogues nor charity appeals though the latter mostly stopped recently after the introduction of regulation which essentially banned cold-distribution (you have to opt in). My mail box has never been so empty !

    Amazon use local distributers mostly and not the Royal Mail and are also increasingly introducing pickup and drop-off points (local shops) which are open until late so you do not have to stay in. Things are actually getting better! Well to me in rural Suffolk.

  2. R. Hamilton says:

    Some of the postal deals with Amazon as well as UPS, FedEx, and perhaps other major shippers involve an arrangement where the shipper provides bulk delivery (presumably sorted) to the destination post office, which then performs the last leg. Certainly there is some cost in that (esp. labor, and some other too); but the arrangement wouldn’t happen if it weren’t cheaper than the various shippers doing more final delivery themselves…at least for the shippers. Does that mean the Post Office is undercharging? I don’t know, although I suspect that even if stamps cost me more than they should, I also get a benefit, insofar as e.g. Amazon Prime (or other deliveries) don’t end up costing me as much as they otherwise would. In other words, I suspect it’s the ultimate consumer and recipient that ends up bearing ALL the costs either way.

  3. I don’t normally doubt your take on things, but it was my understanding that the Amazon deal is because there really is less impact on USPS infrastructure; and that a major problem is the unusual requirements regarding health care. Are you suggesting that is a smokescreen by upper management?

    My source is articles like this: https://www.npr.org/2018/04/04/599579232/fact-check-is-the-post-office-losing-money-by-delivering-packages-for-amazon

    Their comments about the decline of first-class shipping have my rolling my eyes though — how did they not account for that?

    1. Less impact doesn’t mean no impact, especially given the volume created by Amazon. Also, the Amazon deal is just a symptom of a much larger problem, where the cost structure is rationalized to benefit certain users at the expense of others, and sometimes the U.S. taxpayer.

  4. Matt says:

    I must admit I never expected to come here and read a debate about the post office.

  5. Coastal says:

    You can significantly cut down on unwanted catalogs. https://www.consumer.ftc.gov/articles/0262-stopping-unsolicited-mail-phone-calls-and-email

    Consumers can register at the Direct Marketing Association’s (DMA) consumer website: http://www.DMAchoice.org for a processing fee of $2 for a period of ten years. Registering online is the fastest way to see results. DMAchoice offers consumers a simple, step-by-step process that enables them to decide what mail they do and do not want.

    In addition, DMAchoice online offers registration for DMA’s eMail Preference Service (reduce your unsolicited commercial email);

    As to the Amazon question, our mailman drives the same route 6 days a week, whether or not he has anything to deliver to us. As he usually has junk mail to deliver, I’m not sure delivering a package with the junk mail significantly increases costs. Our local mail office seems very happy to have the increased business. USPS has been closing branches in our state, so I assume the local, very nice, postal employees welcome increased work.

  6. Coastal says:

    I tried to comment, but it was lost.

    At any rate, you can cut down on unsolicited junk mail. More details here: https://www.consumer.ftc.gov/articles/0262-stopping-unsolicited-mail-phone-calls-and-email

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