Are All Mailers Paying Their Fair Share of Postage?

Recently you may have seen suggestions that some business mailers are not paying all the postage that they should be paying—that the government is giving away “subsidies” to some “big” mailers.

To understand why some mailers pay less for postage, and the work they do to receive reduced postage rates, the Mailers Council has prepared the following FAQ on reduced postage paid by business mailers. It also explains how business mailers that send millions of pieces of mail annually help keep the price of postage low for every American, whether sending a letter, greeting card or bill payment.

Q. Why do some mailers pay less than $.37 to mail a letter?

A. The Postal Service offers reduced postage when mailers send as few as several hundred or as many as several million pieces of mail, and when they do much of the sortation work that otherwise would be performed by the Postal Service. The work mailers perform nearly always saves the Postal Service more than the reduced postage rates mailers receive. Mailers that pay less must follow complex, strict rules, spend hours of their time and typically invest millions of dollars of their money preparing mail before they qualify for reduced postage.

Q. Did the price of a stamp go up recently because some mailers pay less than $.37 to mail a letter?

A. No. The price of postage went up because the Postal Service’s expenses are rising, while the number of letters and other types of mail are decreasing. There are a number of reasons why expenses are going up. They include higher costs for labor and fuel. Mail is decreasing in part because of the recession, but also because of increases in the price of postage. When postage goes up, large volume mailers reduce the number of letters and catalogues they send by mail.

As a result of these trends, it costs the Postal Service more to deliver to every address in the country. Remember that whether the Postal Service delivers two or 20 letters to a home or business, the Postal Service must pay the salaries of the employees who deliver the mail, the cost of operating the trucks they drive and the fuel they use every day. And when you visit a post office, the Postal Service pays its employees the same salary whether you buy a single stamp or an entire roll of them.

Q. Is reduced postage good for everyone who uses the post office or just something that benefits an individual mailer?

A. It helps everyone who uses the Postal Service. The opportunity for reduced postage encourages businesses to use the mail, rather than alternative delivery methods, and instead of advertising their product or service in a newspaper ad, TV or radio commercial. Most mail is business-related mail, and pays the overwhelming majority of overhead costs—including buildings, vehicles and employee salaries and benefits. Without business mail, individual Americans would pay a lot more for a stamp to send a letter, card or bill payment.

Q. Exactly what do mailers do in exchange for lower postage?

A. Mailers that earn reduced postage do much of the sorting and delivery work for the Postal Service, so it takes the Postal Service less time and costs less money to process and deliver this type of mail. Mailers may be required to print a special barcode on each letter, sort and put them in specially marked trays, then deliver the trays to special mail processing facilities. Mailers also must periodically update their address lists to ensure that the addresses are as accurate as possible.

If the Postal Service did the work now performed by mailers, it would have to spend millions of dollars to sort and process this mail. Instead, the current system lets the Postal Service avoid these extra costs:

• facility space where the mail would be preprocessed;
• equipment and supplies needed for billions of pieces of mail;
• trucks to pick up letters, magazines and parcels that mailers now must deliver to postal facilities;
• expensive machinery used to sort and print a barcode on the mail, and the added costs of maintaining and repairing that equipment;
• salaries and benefits of thousands of additional employees to sort the letters; and,
• over $1 billion in forwarding costs because mailers put the correct, new address of the recipient on the envelope.

As one example, consider what would happen at the loading docks behind most post offices every afternoon, when most mail is delivered. Those loading docks would be a lot busier if the 20,000 mailers who use companies to presort their mail in exchange for reduced postage were all trying to get to the window or the loading dock at the same time. You would also have mailers bringing mail in every possible type of container from cardboard boxes to grocery bags.

Q. Is there a connection between reduced postage for some mailers and the Postal Service's financial troubles?

A. No. Mail sent by business mailers helps keep postage down for all mailers because it spreads the Postal Service’s overhead costs over millions of additional pieces of mail—and helps reduce the cost of a single stamp for every American.

Q. What would happen if the Postal Service eliminated these opportunities for reduced postage?

A. Many mailers would stop using the mail as often as they now do, resulting in the loss of millions of dollars in revenue. Others would simply dump sacks of mail at the loading dock door, forcing the Postal Service to spend millions of dollars more on mail processing, performing the work now done by mailers. As a result, the price of postage would immediately go up—a lot. The Postal Service also would have to consider cutting service, perhaps eliminating six-day delivery and closing some post offices.

Q. How much mail is sent by businesses, and how much is sent by individual Americans?

A. Most Americans don’t send personal letters any more, and haven’t for many years. Today 94% of all mail involves a business transaction of some type—most of it is business to business or business to customers; some is sent by customers to businesses. Only 6% of all mail is sent from one person to another.

Q. Is the reduced postage paid by some mailers connected in any way to the possibility of post office closings or predictions?

A. No. Business mailers contribute billions of dollars to the Postal Service’s bottom line, which helps cover the cost of delivering mail six days a week at a uniform price and operating the thousands of money-losing post offices.

©1999-2004 Mailers Council http://www.mailers.org