Why Another New Postage Rate?

Postage Rate Hike

Another new postage rate hike is getting ready to take effect on Monday. What is going on? Postage rates have doubled in less than 20 years. What are all of the factors that are causing all of these new postage rates? I hope that you will be able to understand some of the reasons after you read this article.

Gas Prices

Part of every postage rate hike has been based on increased fuel costs. The price of oil and gasoline are both down from one year ago, but they are above the costs at the time of the last postage rate hike and nearly double what they were in 1988 when postage rates were only 22 cents for the first ounce. Each fluctuation in the price of gas puts an even greater burden on the postal services budget.

Wages

In the same time frame as the price of oil has gone up, so have the wages for all postal workers. The new postage rate needs to cover that. Those wages have been increased to meed the rate of inflation and have been increased by an average of 3% per year. Those wage are good for the employees, but are difficult to take without increases in postage rates.

Health Care Costs

The new postage rates are, in part, is to cover the increasing costs of healthcare for current and retired employees. Healthcare costs continue to be half of every employees wage package. Healthcare for the retired population has jumped beyond control and reason and is causing some companies to fold. The new postage rates have to cover these costs as well.

Postage rate hikes are not always a way to make a profit. The postal service is actually supposed to be non-profit. The ever increasing costs of living and breaking even put a burden postage rates. Since postage is the only product that the postal service sells, postage rate hikes are impossible to avoid. The only things that can be done are to manage costs and project future income and losses to hopefully only raise the postage rates when it is absolutely necessary.

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