Postage Rate Increase Intended to Address Budget Shortfalls

The U.S. Postal Service's announcement of a proposed rate increase of 2 cents per first-class letter sparked a flood of complaints. But without a drastic measure, data from the USPS website show the agency is on track to lose millions. Though USPS has worked to shrink its budget shortfalls they currently project a deficit of nearly $7 billion for the next fiscal year, and hope that the proposed rate increase will raise $2.3 billion in the first nine months of 2011 toward closing that gap.

Data from the USPS website shows that 2006 was the last year that the USPS posted a profit. Last year, the USPS lost over $3.7 billion dollars. Perhaps more alarming for the postal service is the accelerating drop in pieces of mail they handle annually. In 2006, this figure reached its peak, with over 213 billion pieces of mail handled. That figure dipped by nearly one billion in 2007 and then dropped again by nearly ten billion in 2008, to 203 billion. The biggest drop yet occurred from 2008 to 2009, when pieces of mail handled dropped a staggering 26 billion, to about 177 billion pieces handled.

One way that the USPS has worked to overcome budget shortfalls has been to cut employees: since peaking in 1999 at 797,795 employees, that number has dropped steadily every year, to the current level of 623,128. Over 21,000 were cut between 2007 and 2008, and over 40,000 were cut between 2008 and 2009.

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