This week is Postmaster General David Steiner’s first week on the job. He certainly has his work cut out for him. America’s mail carrier has lost more than $3 billion so far in fiscal 2025, $9.5 billion in fiscal 2024, and more than $100 billion over the past 15 years.
Unfortunately, Steiner has already started off on the wrong foot by hiking first-class mail, or letter, prices from 73 cents to 78 cents. Steiner should ditch these senseless rate hikes and instead focus on cutting costs to get postal deficits under control. It’s time for a new approach from the new postmaster general.
The Postal Service has cycled through plenty of postmasters general. Some have largely stood for the status quo, while others, such as Louis DeJoy, have had bolder reform agendas. But one thing that unites almost all of these postal CEOs is nonsensical price hikes.
In the past five years, America’s mail carrier has raised prices seven times, from 55 cents to 78 cents. And for all the financial pain foisted on customers, there’s little evidence that these first-class rate hikes raise revenue instead of simply driving business away.
According to a 2024 analysis by the nonprofit group Keep US Posted, the agency’s models used to determine how much to hike prices fail to take consumer preferences and demand into account. As the study notes, the USPS has “instituted biannual rate increases that are allowed to exceed the historical [consumer price index] cap. Under the current process, the USPS proposes new rate increases before the impact of prior increases can be fully realized.” The group estimates that agency miscalculations of consumers’ price sensitivity cost the USPS roughly $2 billion per year in volume losses.
In other words, the USPS can actually increase revenue by halting price hikes on first-class mail.
There’s also plenty that Steiner can do on the spending side to get the agency on firmer fiscal footing. For example, the USPS can save a significant sum on labor and maintenance costs by outsourcing “window” operations, such as stamp sales and package hand-offs, to private retailers.
The USPS has about 2,500 “alternative retail access points” in which private retailers take the lead on postal operations. The inspector general notes, though, that “these locations have declined by nearly 20 percent in recent years” and closures have been especially significant recently, possibly because of the Department of Government Efficiency.
The USPS can save money by reversing course and expanding retail contracts, but it needs to tweak its current model. According to the inspector general, most of these locations are paid fixed sums to provide services, and payouts aren’t closely monitored to ensure that the locations are serving consumers. Instead, the USPS should switch to a commission-based model to make sure that taxpayer dollars aren’t being wasted on seldom-used locations.
There are plenty of other ways the USPS can turn around its fiscal fortunes. The USPS delivers mail Monday through Saturday, along with Sundays for some packages. However, some have argued for switching to a five-day delivery system to decrease costs and improve worker morale. Agency leadership suggested this idea, with some wiggle room for weekend package deliveries, in its “Five-Year Business Plan” in 2013 and concluded that it would save $1.9 billion per year. That’s $2.6 billion after adjusting for inflation, which is about one-third of the average USPS annual loss over the past couple of years.
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In 2015, the inspector general surveyed consumers on whether six days of delivery was worth it at various stamp price points. The watchdog found that a large majority of consumers favored five-day delivery at any price point over 50 cents. Now that the price of a first-class stamp is 78 cents and rapidly rising, it’s reasonable to think consumers prefer five days of delivery over six. While this idea would likely need lawmakers’ sign-off, it’s worth considering.
Steiner has just started one of the world’s most difficult jobs. If he succeeds in turning around America’s mail carrier, hundreds of millions of taxpayers and consumers will be immensely grateful. It’s time for the USPS to start delivering again.
Ross Marchand is a senior fellow at the Taxpayers Protection Alliance.