The United States Postal Service announced on Thursday that it is requesting a 4-cent increase in the price of a first-class stamp amid massive budget shortfalls and falling mail volume. If this story sounds familiar, that’s because it is.
The Postal Service has raised stamp prices seven times in the past five years as its moribund business model continues to fail. Because that business model is mandated by Congress, it has little choice but to trundle on, even though it’s long been apparent the system is fundamentally broken.
It has lost money every year since 2007. It lost $9 billion in 2025, which was actually a $500 million improvement over 2024.
Chris Edwards of the Cato Institute ran the numbers, and they aren’t pretty: Between 2000 and 2025, first-class mail volume fell 59 percent, and the total volume of all mail dropped 48 percent. In the same timespan, annual post office visits by customers declined by 54 percent, but the total number of post office locations reduced only 8 percent.
The number of employees fell 31 percent, yet employee compensation costs rose 34 percent.
Massive growth in package shipping means total revenue was up 29 percent, but packages only accounted for 40 percent of revenue last year. (Amazon, founded by Post owner Jeff Bezos, is the Postal Service’s biggest customer.)
Under federal law, USPS is required to deliver first-class mail at reasonable prices. Despite the recent stamp price hikes, it has held the line on prices reasonably well since the Post Office Department was reorganized into the Postal Service in 1971.
The inflation-adjusted price today of sending a letter is roughly the same as it was in the late 1970s. It’s also much lower than in most other rich countries.
Another part of its mandate is to serve the entire population. That means, even as volume declines, a growing population means the number of places needing service keeps rising. The number of delivery points rose by 25 percent between 2000 and 2025, and the number of vehicles in the postal fleet rose by roughly the same amount.
The result of all this is an entity performing a job in a way that no longer makes sense. The Postal Service’s primary purpose today, measured by the number of items, is delivering garbage. Fifty-two percent of the mail pieces delivered in 2025 were “marketing mail,” better known as junk.
Call this “rotten federalism”: The Postal Service, backed by the federal government, delivers trash that local governments must then figure out how to dispose of.
Almost all Social Security checks are now electronically deposited, and retirees haven’t even been able to sign up for physical checks since 2013. Bills and tax returns are mostly paid electronically. The technological transition would speed up if mail began to be priced at a market rate.
The Postal Service’s financial situation is only going to get worse. In addition to hiking stamp prices, it is suspending contributions to its pension plan, which is already underfunded. Unfunded liabilities plus debt combine to more than 200 percent of annual USPS revenue.
Privatization of postal services has succeeded in other rich countries. Charging a market rate for most customers, cutting delivery days and subsidizing delivery of actual mail to rural locations would be a lot more sensible than the status quo.
There’s no reason for the federal government to continue facilitating the delivery of junk mail, which should disappear, and packages, which are already delivered by the private sector. But Congress has to act to make that happen. Until then, the Postal Service will continue raising stamp prices while it digs a deeper hole.
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