A new report finds that all postal customers would be financially worse off from privatization, but rural and suburban households would pay the most.
A new report by the Institute for Policy Studies (IPS) has highlighted the likely impact of postal privatization on the cost of package deliveries.
The report, “Who Would Pay the Biggest Price for Postal Privatization?”, explains how adopting a private sector pricing model would affect delivery. It concludes that privatization would raise delivery costs for everyone, regardless of their location. However, the increases would fall disproportionately on approximately 102 million people living in rural and suburban neighborhoods.
In February, as the Trump Administration floated plans to take over the independent USPS and privatize it, The US Mail Is Not For Sale uncovered a report by banking giant, Wells Fargo, which provides a blueprint for a corporate sell off of our public Postal Service.
The Wells Fargo report’s authors describe raising package prices before selling off the package side of the business to private corporations.
The USPS operates under a universal service mandate, to provide an affordable delivery service to all. Domestic letters and flat-rate packages go for a single rate, no matter how far the U.S. address. When a consumer mails packages not in flat rate boxes, USPS delivery charges are based on weight and distance.
Like the USPS, private package companies charge more for longer distances and higher weights, but they also add an array of surcharges that can leave their customers paying many times more for delivery based on nothing more than their ZIP code. The IPS calculated which communities pay more for delivery by cataloging the ZIP codes that incur these surcharges from private carriers, UPS and FedEx.
To maximize a profit for shareholders, a private delivery service would likely demand a weakened service obligation or abolish it all together.
If surcharges were applied to USPS customers in these areas, they would apply to around 102 million people – almost a third of the population. While the location of some of these ZIP codes is unsurprising, such as Hawaii or rural Alaska, many are just a few miles from urban centers.
Around 19 million people live in suburban areas that would likely see new surcharges or price hikes. These areas include Laveen, AZ (8 miles to Phoenix), Magna, UT (12 miles to Salt Lake City), Whites Creek, TN (8 miles to Nashville), Del Valle, TX (6 miles to Austin), Melbourne, KY (8 miles to Cincinnati), and East Carondelet, IL (7 miles to St. Louis).
The report also notes that, unlike for-profit carriers, the USPS offers a free pickup service for packages of less than 70 pounds. The cost of a similar service from FedEx in rural areas is $4 on weekdays and $16 on Saturdays. UPS charges $21.30 at all times.
On top of those increased rates, the fact that rural Post Offices make up 57 percent of the total but serve just 16 percent of the population means that “…rural communities would also likely face the shuttering of many of these rural post offices and the related loss of postal jobs that pay decent wages with benefits.”
With many small town pharmacies closed, rural communities also rely on the Postal Service for prescriptions at a higher level than the rest of the population. Eighty-four percent of veterans receive prescriptions through the mail. It is estimated that 20 percent of people over 40 with chronic conditions receive their prescriptions through the mail. For all of these groups, delayed or more expensive mail could be life-threatening.
With impacts on bill paying and vote-by-mail, both of which are disproportionately used by rural and suburban postal customers, the Institute for Policy Studies report makes clear that we would all pay the price for a corporate takeover of the Post Office. But rural and suburban residents would pay the most.