Forever Stamp
The “Forever Stamp”
The United States Postal Service is currently contemplating the idea of a “forever stamp”. A forever stamp can basically be thought of in the same way as a rent-controlled apartment in New York City – the price will always remains the same, regardless of the state of the local market. If a consumer buys a forever stamp at the price of 39 cents, then the consumer will theoretically be able to use the forever stamp five years from now when the cost of postage will be much higher. According to USA Today, more than two dozen countries, including France and Finland, have used this type of stamp. The USPS is tentatively considering releasing the forever stamp in the spring of 2007. This would coincide with the USPS’s next projected rate increase, expected to take place in May of 2007, when the price of first class postage will jump from its current rate of 39 cents to 42 cents.
The forever stamp is expected to contain its share of advantages for consumers and the USPS alike. Consumers that purchase the forever stamps will no longer have to waste their time buying 2-cent stamps at the post office every time there is a price increase in the future. The forever stamp would also raise revenue for the postal service at a time when the USPS would not hurt from a financial shot in the arm.
The USPS is currently contending with fluctuating fuel prices, as well as the rising costs of health insurance. According to the Washington Post, when the price of gas goes up by 1 cent, this will cost the Postal Service $8 million per year. On the healthcare front, the USPS employs roughly 700,000 people and spends about $6.6 billion insuring all of them. Unlike other government agencies, the USPS’s $69 billion annual budget is funded strictly by operating revenue, as opposed to taxes. The USPS must also put about $3 billion worth of revenue into a congressionally mandated escrow fund. All of these factors contribute to the necessity of increasing postage rates.
The USPS has raised the cost of postage 13 times since 1974, most recently in January of last year. Many experts predict that price increases may become an annual affair – as they are in many other industries. This may make forever stamps that much more attractive in the future. However, like most big ideas, the devil is in the details.
Among the fine points that the USPS must work out, is whether or not there will be an unlimited number of forever stamps available for purchase, or if the USPS will release them in limited quantities. Both options have pros and cons. If the USPS decides to limit the amount of available forever stamps, then they will run the risk of forgoing additional revenue that may be available at the beginning of the promotion. On the other hand, if there are an unlimited amount of forever stamps, why would anyone by a regular first-class stamp again?
Fortunately, the USPS still has a lot of time to work out the forever stamp idea. The proposal is still in its embryonic stages and there is a long way to go. At the very least, it is encouraging to see the USPS considering new and innovative ideas to remain profitable and to continue providing outstanding service through the next century.
