Recently, there has been a lot of interest surrounding the United States Postal Service (USPS).
The Second Continental Congress, on July 26, 1775, provided for the appointment of a Postmaster General, and marked the formation of the Post Office Department, which was the forerunner to today’s postal service. Since then, the United States has had consistent, affordable mail service.
Even as competitors arise, the USPS remains. Of course, one of the reasons that there is a great deal of focus on the USPS is that operating expenses are on the rise, thanks in part to operating hours, as well as pension plan commitments and generous compensation for many employees.
The price of stamps has been rising for years, and we are set to see a one-cent increase on letters on January 27, 2013, bringing the cost to mail a one-ounce letter from 45 cents to 46 cents.
I remember when it cost 25 cents to mail a letter. That was when I first really started paying attention to postage rates, because I actually had a penpal! I remember when postage rose in 1991, and when it broke the 30-cent barrier in 1995, jumping from 29 cents for a letter to 32 cents per letter.
Since then, postage increases have become more common. Indeed, I wonder if it will become a common thing for the USPS to raise letter prices by one cent each year.
Inflation and the Rising Cost of Mailing a Letter
Interestingly, the fact that money is so much more prevalent than it was more more than 100 years ago means that it might actually be more affordable to mail letters now — even though, at face value, the cost seems higher. Inflation plays a large role, since there is more money in general to spread around. So prices rise.
First of all, in 1863, prices were charged by the half-ounce, rather than for an ounce.
It cost three cents to mail a letter that weighed one half-ounce.
The switch to considering an ounce a standard domestic letter took place in 1885, and the cost to mail such a letter was two cents — amounting to a decrease in cost at that time. Indeed, between July 1, 1885 and July 6, 1932, the price of stamps fluctuated between two cents and three cents.
The next increase, taking stamps up from three cents (1932) to four cent didn’t happen until 1958. Since then prices have risen every few years by one, two, or three cents, with the exception of the increase of four cents to 29 cents in 1991 from 25 cents in 1988.
An interesting chart from Wm. Robert Johnston offers a look at prices over time, since 1866, and includes what they would cost in 2012 money. The chart makes it fairly clear, though, that in today’s money we’re getting a pretty good deal. In 1869, for instance, the three cents charged for a first-class stamp would be like paying 51.4 cents today.
In relative terms, the most expensive time to buy a first-class stamp was in 1878 and 1879, when paying three cents for a stamp would be like paying 69.9 cents today. Can you imagine paying 70 cents to mail a letter today? While a stamp will likely cost that much at some point in the future, one can imagine that there will be more money (in terms of sheer volume) floating around as well.
Forever Stamps and Keeping Your Costs Down
One option that has been providing an interesting alternative is the “forever” stamp.
You buy stamps at the current price, and they are good indefinitely for letters mailed anywhere in the U.S. — no matter price increases later.
These stamps were first introduced in 2007. The idea is that if you want to avoid paying the higher price, you can purchase a large number of forever stamps now, and then use them until they run out.
Starting in 2013, the USPS will be introducing a forever stamp that is good globally. For $1.10, you can buy a stamp that is good no matter where you want to send your one-ounce letter. Of course, the price of that stamp is likely to rise over time, but the concept is the same. Buy now, and avoid the price increase later.
Eventually, though, when your stamps run out, you will be subject to the latest price increase. Thanks to online bill pay and automated finances, I use fewer stamps than ever. I could conceivably but 200 stamps now, for $90, and they would last me years.
[Note: Here is an interesting resource: http://about.usps.com/who-we-are/postal-history/rates-historical-statistics.htm]