How Junk Mail Is Helping To Prop Up The Postal Service

There’s no doubt the US Postal Service is struggling. It faces a multi-billion dollar deficit, and is considering closing thousands of post offices.  For years, the USPS has been complaining that email is eating into its market share.  And they’re probably right.  After all, how many letters, cards, and packages do you usually get in a week?  What you’re more likely seeing in your mailbox is exactly what I’m seeing: mountains of ads, address labels, and catalogs you never asked for, and don’t want.

All of this commercial detritus begs the question: How much is junk mail propping up the US Postal Service?

Justin Sullivan / Getty Images

You'd be surprised at how important junk mail is to the Postal Service.

“We don’t use the ‘J‘ word.”

That’s what Tom Rizzo told me when I called and asked him the question.  Rizzo’s the spokesman for the Postal Service’s Northern New England District, which serves Maine, New Hampshire, and Vermont.  “Standard Mail or Advertising Mail is an extremely important part of our mail mix these days, since stamped mail started declining in 1998.”

How important is it?  Rizzo pulled up some numbers for me.  “Total mail volume First-Class in 2010 was 78.2 billion pieces,” he said, while, “Standard Mail volume, [or] Advertising Mail, was 82.5 billion pieces.  That comes to 160.7 billion pieces, and that’s very close to what our volume was last year.”

Rupert Ganzer / Flickr

A world without junk mail might be less irritating in the short-term, but it could also mean a Postal Service in much worse shape

So saying ad mail is, “an extremely important part of our mail mix” is something of an understatement.  It’s more than half our mailif you don’t count things like express delivery, media mail, parcel service, and some of the USPS’ more esoteric delivery options.  (I unofficially call this mix “the regular mail,” because I don’t get packages, certified letters, and flat-rate boxes sent to me everyday.)

Seeing the sheer numbers for Standard vs. First-Class mail, you could be forgiven for believing that basically, Fingerhut’s all that’s keeping the Postal Service afloat.

Rizzo said it’s not like that.

“While Advertising Mail takes up a larger percentage of mail today, it takes on average three pieces of mail to make up the contribution of a single piece of First-Class mail.”

But in 2010, the Postal Service found it was actually closer to a 1:2 ratio, with First-Class Mail bringing in $34 billion while mail termed “Advertising” brought in $17.3 billion.

Whether it’s 1:2 or 1:3, ratios like that are the kinds of talking points that show up on an agency fact sheet.  They’re very, very hard to check.  Given the average Rizzo cited, it’s clear the people who send us letters inviting us to change our insurance pay significantly less than the woman sending her grandson a graduation card.  And this led to an interesting pair of conversations between Tom Rizzo and me, the highlights of which are presented here:

Q: “So what is the standard rate for Standard mail?”

A: “It’s less than the First-Class rate.  Those mailings are designed for mass mailings, so they’re more economical, and help drive the economy.  Advertising mail comes in all shapes, sizes and forms.”

Q: “So can you give me a range?”

A: “I want to stress once again…it’s very difficult to put a particular number on it because there are so many different categories of advertising mail.  I can say…the most economical way of doing ad mail, it can be done with as little as 14.2 cents apiece, but that requires the customer to do more.”

Q: “What would you get for 14.2 cents?”

A: “That could be an 8×10 sheet of paper folded in half.  Roughly comparable to First Class, one ounce size.”

Q: “So is that like the letters insurance companies send out?  And what’s the difference between what say, they would pay versus a catalog, like FingerHut or even L.L. Bean?”

A:  (Frustrated sigh) “I think somehow we’re not connecting.  There are very, very specific requirements on classes of mail, rates of mail…There are manuals on this stuff, so it’s just very, very difficult to answer in a manner that’s easy to reduce down to a sentence.  So I can’t give you a number.”

Justin Sullivan / Getty Images

Besides letter carriers, mail sorters, and clerks, the USPS employs people who deal specifically with junk mail

After another futile (and most likely annoying) attempt to get some sort of number from him beyond the 14.2 cents figure, Rizzo told me that the USPS actually employs a number of bulk mail specialists.  And they’re probably the only people who could answer my specific questions.  That’s right: There are people who navigate the labyrinthine regulations on what Publisher’s Clearinghouse pays for postage versus the nuns who send crucifixes along with their donation letters.

So I decided to take a look for myself.  After all, Standard Mail rates are public information.

And I quickly found out that Rizzo’s got a point: They’re pretty much incomprehensible to a layperson.  If you go here, you can actually see USPS rates for a variety of mailings, including Standard, or Ad Mail.  And if you print the document, it’s 103 pages of pure arcana.  Carrier routes vs. Automation.  Saturation vs. Basic.  AADC vs. Mixed AADC.  Three-Digit vs. Five-Digit.  Non-Profit vs. Commercial.  Letters vs. Large Envelopes vs. Parcels.

You’d probably have better luck translating hieroglyphics without the benefit of the Rosetta Stone.

So what’s the takeaway from all of this?

  • You’re not imagining things.  You probably are getting much more junk mail than anything else.
  • That mail could make up better than half your neighborhood mailman’s (or woman’s) bag on a given day.
  • The sheer abundance of this mail helps keep letter carriers and bulk mail specialists working.
  • The size of the bulk mailings, and the number of companies that send them, make junk mail an important part of Postal Service revenue.
  • But it’s so cheap overall that it still doesn’t contribute as much to the USPS as First-Class mail.  And that’s despite the continuously declining popularity of sending stamped envelopes through the mail.

Then, of course, Rizzo reminds me, there’s the business angle, “Mail is about the most economical way of advertising.  You can get it in more hands at less cost than virtually any other form of advertising…That’s one of the big advantages of hard copy mail, that people have it in their hands and have to evaluate it…Many people delete spam [from their email inboxes] before they even look at it.”

In other words, junk mail’s better for business than spam, because at least you have to take the trouble to throw it away.  And if you actually make a guilty donation to the non-profit summer camp that sent you address labels, or decide that the latest commemorative plate from the Bradford Exchange is a sound investment after all, then Standard mail–and the Postal Service–has done its job.

You can find other numbers related to the state of the USPS across the country–and in New Hampshire–in my previous post here.

*”More” Rizzo said, could mean any number of things, but generally, the more sorting a customer does for the ad mail before it hits the Post Office, the less they pay. 

Ed. Note: In a previous version of the story we quoted Rizzo as saying “that would be an 8×10…” instead of “that could be an 8×10…”  We also originally noted 14.2 cents was equivalent to “First-Class first ounce,” rather than “First-Class one ounce size.”  We regret the errors.

Comments

  • Hazel

    Through September 27th, my partner and I have received a total of forty-eight pieces of junk mail this year. (Forgive me for using the “j” word, Mr. Rizzo, but a rose by any other name….). Through yesterday, there have been 225 mail delivery days in 2011, so we have received, on average, just slightly over 1.25 pieces of junk mail (see previous patenthetical) per week.

    • Amanda Loder

      Hi Hazel! Thanks for checking out StateImpact! The way you break it down, it suddenly doesn’t feel like *quite* so much. Maybe I should check my mail more often! Seriously though, that’s some impressive stat keeping. For all that I was covering this, I never thought to actually count my *own* mail.

    • Anonymous

      You are extraordinarily lucky. We’ve had at least that many just September, and more likely more than that. I think we toss at least five a day. These include unsolicited credit card or car insurance offers, catalogs from companies we’ve never done business with, (I particularly like the catalogs for “big and tall” or “plus size” clothing though neither of us are remotely close to needing this stuff), etc.

      Conservatively, I’ll bet that we add at least two pounds of paper to our recycling dumpster every week.

      • Witchazelwood

        A little over three years ago, I committed to waging an unrelenting, unremitting war on junk mail. Countless emails, telephone calls, letters, and 53 filed PS 1500 forms later, the flood has slowed to the trickle as stated in the post to which you replied. My partner and I also took steps to block the credit bureaus from selling our information, so no more offers for insurance or credit cards. (Well, there’s been one exception. Earlier this year, a national bank just knew my partner wanted another credit card. It took filing a PS 1500 form as well as two follow ups, but the bank snapped to attention after the second violation when notified it had been assigned a docket number in federal court.)

        As of yesterday (October 3rd) we haven’t received a piece of junk mail since September 17th.

        • Anonymous

          You’ve inspired me. Thanks.

  • http://pulse.yahoo.com/_4MDHP7TTH7QA55VO4MFXMJGSAI Richard

    The United States Postal Service operates solely on funds derived from the sales of products and services, receiving zero taxpayer dollars.

    Its financial problems are the direct result of an unfair provision in the Postal Accountability and Enhancement Act of 2006, which mandates that the Postal Service fully fund 75 years of future retiree healthcare costs (even for future employees not yet born) in over 10 years. No other government agency or public company in America, including UPS or FedEx, is required to pre-fund future retiree health benefits.

    From 2007 through 2010, net operating losses for that same period were $20.2 billion. The entire amount is due to the massively unrealistic and unaffordable payments to pre-fund those future retiree health benefits which $20.9 billion have been made in the past four years. Thus, without the unique burden imposed by the pre-funding requirement, everything else equal, the Postal Service would have enjoyed a cumulative profit of $700 million during those years. And such profit would undoubtedly have been even greater had the most severe economic downturn since the Great Depression not dragged down economic activity and depress mail volume with it.

    The sensible solution is for the Office of Personnel Management to acknowledge what two independent, well respected private sector actuarial firms, The Hay Group and The Segal Company, have found: that the Postal Service has overfunded its civil service retirement contributions by between $50 billion and $75 billion over the past 40 years. If the Postal Service were allowed to transfer these funds to the future retiree health benefit fund, which currently has more than $42 billion in it, the Postal Service would have fully funded all its future liabilities— currently estimated to be $92 billion over the next 75 years and have more than enough left over to pay off the Postal Service’s debt. A bill before Congress (HR1351) adddresses this issue.

    Eliminating Saturday delivery is not only unnecessary, but would be a grave error that would hurt the Postal Service in the long-run. The proposal to eliminate Saturday delivery reflects Postal management’s view that it must react to financial challenges with relentless cost-cutting. But no service business achieves success by a single-minded focus on cost. Of course, constraining costs is important and the Postal Service should continue to explore ways to further automate or streamline its operations, so as to maintain productivity growth. But it should not engage in cost-cutting that eliminates valuable services to its customers.

    To achieve success as a consumer-oriented business, the Postal Service too should focus on making its products and services more available to its customers, not less. Dropping Saturday delivery would create a hole in the Postal Service’s current operations that would make customers have to wait a day longer, or more, to get their mail. It would also, for example, force customers who work during the week and who are not home to accept packages have to spend part of Saturday waiting in the pick-up line at the post office. It would inevitably cause customers to look to alternatives.

    Eliminating Saturday delivery would also do harm to the Postal Service in less tangible, but no less significant ways. The Postal Service correctly describes letter carriers as “excellent ambassadors in promoting the agency’s image,”, yet eliminating Saturday delivery would mean that many customers who work during the week would no longer have the chance to see and speak to their letter carrier.

    Reducing the frequency of service would also send a signal to customers that their needs and preferences no longer matter to the Postal Service. It would reinforce the negative stereotype of the Postal Service as an inefficient government entity rather than a vital service oriented enterprise. Such a negative stereotype would not only dampen the public’s demand for postal services but would erode its support for the Postal Service as an institution.

    Saturday delivery provides the Postal Service a competitive advantage over its package-delivery rivals. Rather than eliminating Saturday delivery, the Postal Service should be touting it. But the Postal Service has to a large extent failed to exploit this advantage. Most businesses with a competitive advantage use advertising to remind individuals of the benefits of their service. Yet the Postal Service does little advertising to explain the advantages of Saturday delivery to its customers.

    We live in an era where service companies are increasing days and hours of operation to appeal to their customers. The Postal Service should take the same approach. For example, the Postal Service should consider having a network of post offices in key locations that are open more hours, and even on Sundays, and should maintain at least one 24/7 post office in every big city.

    Yet the Postal Service has been going in the opposite direction, apparently ignoring the desires of its customers. For example, while the Postal Service increased the number of collection boxes in the 1990s, it began eliminating them in the following decade. It eliminated 24,000 such “blue boxes” in 2009 alone. Individual customers cannot help but notice these changes and see that the Postal Service is making it more difficult for them to use the postal system.

    Reducing the frequency of mail delivery would mark yet another retreat by the Postal Service from the consumer market. Unfortunately, it would give customers yet another reason to abandon the mail and to seek out alternatives.

  • Trolon

    The notion that one must examine junk mail before it is pitched and therefore junk mail is better at getting and a marketing message out than email is ridiculous. I never open the vast majority of mail I receive because it is obviously junk. Occasionally I will get cleverly disguised junk mail that I pitch after a glance without reading anything in it. I never examine catalogs because they are all on-line and I shop on line. I’d equalize mail cost. It should cost the same for me to mail an ounce as it does for anyone else. And, like in NZ and other countries I’ve visited, I’d like to be able to opt out of junk mail all together. In another 20 years we might not need the USPO at all.

  • Ron

    “While Advertising Mail takes up a larger percentage of mail today, it takes on average three pieces of mail to make up the contribution of a single piece of First-Class mail.”

    But in 2010, the Postal Service found it was actually closer to a 1:2 ratio, with First-Class Mail bringing in $34 billion while mail termed “Advertising” brought in $17.3 billion.

    Have mailing rate increases for advertising kept up with increases for first class mail?

    If not, that is the first place that should be looked at to increase postal service revenues. Then cut the unrealistic rate of pension contributions that Congress has mandated, and there might be a chance of keeping all of these living wage jobs in the middle of a recession. Of course for some, sabotaging the economy for political gain appears to be the objective and more layoffs would suit them just fine.

    • Plebus

      I think the problem here is that there the bulk advertising mail isn’t paying for itself.

      The mail delivery prices essentially work on an averaging model. That is why I can pay 44 cents and it can be delivered from my home to Alaska for the same price as it costs to deliver to my neighbor. When the averaging model isn’t working properly then the prices for mail have to either rise to cover the shortfall or they can fall to account for a surplus (although they never seem to fall in practice).

      There are two features to the averaging model that make it work: averaging costs and averaging revenues. If the averaging system isn’t working properly then what you get is shortfalls in revenue. Thus it seems to me that the averaged costs have risen (either because people are sending mail further distances or because the logistics costs aren’t being managed well–or because the revenues aren’t being managed properly.

      The other probable cause is that the pricing structure isn’t tied to incentives which help lower postage costs. For instance if I know it costs me $300.00 to send a given amount of advertising to my customers via FexEx (who track their costs closely) and I know that I can deliver this same through the USPS for $200.00 (because they offer a fixed-rate and FedEx does not) then I’m likely to use USPS even though the USPS will lose money.

      Perhaps rather than shutting down the USPS offices they might consider entering the modern age and determining how much it does cost to transport a given piece of mail from one distance to another and charge the customers appropriately (instead of using this antiquated fixed-pricing cost-averaging model). That way the USPS NEVER loses money.

    • Amanda Loder

      Hi Ron! First of all, thanks for checking out StateImpact New Hampshire! Your question really got my attention, because that was something I spoke with Tom Rizzo about, and like a lot of the numbers to do with Standard Mail, they’re on the opaque side.

      Here’s what I know: In April of this year, the USPS did, in fact, raise prices on some services. In its press release issued last winter in advance of the rate hike, the Postal Service stressed most retail customers wouldn’t notice. That’s because the one ounce, First-Class rate remained the same, at $0.44. The rate for additional weight for First-Class did go up to $0.20, and postcards went up to $0.29. There were also some changes in rates to Mexico and Canada. Mr. Rizzo also confirmed that during this latest price change Standard Mail rates also went up. But as I noted in the article, it’s really, really tough to get concrete figures on Ad Mail, since it’s such a complex subset of the USPS’ work. The press release noted that “The 1.7 percent average increase is at or below the rate of inflation as measured by the Consumer Price Index–although actual percentage price increases for various products and services vary.” Whether the varying types of bulk mailings saw an increase on the high side, the low side, or closer to the average is tough to determine. But there was an increase.

      It’s a little bit easier looking back at 2009, which was the last increase in mail rates before the one this spring.

      As Tom Rizzo told me regarding Standard Mail rates, “Historically, when our shipping prices go up, they usually go up slower than other shipping companies…in 2009, prices increased an average of 5 percent, and other shipping companies had prices go up between 5.9 percent and 6.9 percent. and one important reason for that is that unlike those companies, the Postal Service doesn’t impose surcharges for fuel, or residential delivery or for Saturday delivery.”

      I’m afraid that given the obscurity of the topic, I don’t have much more detailed information. But I hope this helps. And thanks again for stopping by!

  • Rutgersdevil

    There have been many articles appearing on the NPR web site lately that were below the quality one would expect but this might be the worst. The PO”s spokeman refused to give shallow, 5-second sound bite answers to the interviewer because it would not accurately describe the situation but the shallow interviewer refused to acknowledge that possibility.

  • Greg Neal

    As a business owner, this makes no sense to me. We (tax payers) are propping up a federal program that survives mainly by delivering junk mail to our homes, which the vast majority of Americans toss out within seconds of taking it from the mail box. Why do tax payers agree to pay for something that is overwhelmingly not wanted??!! OK, yes, we do want our mail, even bills, although more and more people are opting for online bill pay along with other activites which reduce mail even further.
    It does not seem likely that UPS and Fed-Ex will get into the business of daily deliveries of advetisements to our homes, so the USPS has a monopoly on this segment.
    Bottom line is there are at least two main reasons for this problem. 1. Technology, which the USPS has no control over, and 2. this is a Federal service that has become too fat from a steady diet of corporate junk food (junk mail) and it needs to trim down and/or find a new business model.
    It seems to me that the USPS has become more an advertising business as opposed to a mail delivery service. After all, who do they really compete with? other forms of advertising that do not require postage, that’s who!!
    So, along with taxing everything else that is bad in society such as alcohol, cigarettes, and so on, why don’t they raise the rates on junk mail, instead of our mail?
    In the end, logic will still determine that this is an outdated business model for our Govt. and they must change. I for one would be very happy to pay more for a postage stamp if it meant that I would not get all that crap in my mail every day. Yes, that would cost lots of jobs, which are currently supported by junk mail. this is certainly not popular right now, but when is it ever? I guess a little more trash is a small price to pay for support an obese and out of date business.

    • http://twitter.com/snookasnoo Idon’t Know

      In other words you didn’t read the article. US taxpayers are not paying for anything. The Post Office is self sustaining and has been for some time. it has to be by law in fact.

  • Anonymous

    Netflix is doing a pretty good job keeping the post office afloat, too. That is, until everything is on demand, and it sure enough will come to that.

  • Ant

    I have to be very honest that each month I get 6 pieces of mail which I need to have information on which are in regards to bills since these companies do not allow me to get this information online. If I gotten all of this mail on one day the remaining days of the month I would get advertisements, refinance offers and other junk which means nothing to me.

  • Plebus

    It seems to me that first class mail essentially pays for itself while bulk mail does not. Advertising mail pays 14 cents whereas first-class pays 44 cents. Yet the two essentially require the same amount of handling.

    If we got rid of bulk adverting mail we would eliminate more than half the mail and get a higher revenue per letter. Essentially you would get a higher profit margin per letter. There would be fewer mail personnel but it would be operating more efficiently. It seems that the cost of bulk advertising mail is too low for the amount of work that is performed.

    I’d be happy for someone to point out the flaw in my logic and discuss.

    • Joseph

      You are mistaken when you say “the two essentially require the same amount of handling.” Bulk mailers pay permit fees and have to prepare their mail, pre-sorted, in ways that side-step USPS processing. The ultimate form is a tray of letters handed straight from a mailer to a carrier, already sorted to follow the route. Same amount of handling, no. Bulk mail is far less of a workload for the USPS than the stamped envelope with a hand-scrawled address that a sorting machine can’t read.

  • Bernorio

    Is there anything more wasteful to the environment than junk mail!? Nobody wants it, yet it is forced down our throats. The average American gets half a garage full of junk mail every year. When I notified the local USPS that I do not want to get this junk, the answer was: ‘These companies pay a lot of money to have it delivered to your mail box.’ I see – so how if I invite you to a movie that I know you will hate, but since I am paying for it you are forced to see it? I had been able to keep my PO Box relatively free of junk mail for years, until lately. Somehow my name was bastardized and ended up on a list. I am now my own female version and get flooded on a weekly basis with big, fat unwanted catalogs trying to sell me products directed towards the female consumer. All I can do is call these companies one by one and ask to be removed. As everybody knows who has attempted that, it is not a bullet proof solution. So we have the damage to the environment and on top of it our waste of time. And on top of it it is politically incorrect to cal it by its name??!!!

  • Foster

    I find increasingly that with many of the articles I read on NPR, they barely scratch the surface of an issue. How can this topic be addressed without mentioning the ecological impact of such a practice?

  • I Am Bob Marley

    Off the top of my head, I’d say that at least 50% – 60% of mail delivered to my mailbox is junkmail. But if junkmail helps the USPS pay for itself, then I really can’t complain.

    It doesn’t cost me anything to glance at it, and toss it into the garbage when I walk into my house.

    We all have to watch ads on TV, and read them on buses and bill boards. We even have to deal with pop-up and banner ads on our beloved internet.

    The USPS is a great deal for American citizens, it would be a shame to source it out, or lose it all together.

  • FirstClassMale

    @ Richard “The United States Postal Service operates solely on funds derived from the sales of products and services, receiving zero taxpayer dollars.”

    Are you smoking dope? The postal service has been getting a bail out for the last 10 years. In the last 15 years they have not produced a profit. ANY OTHER business would have been bankrupt fifty years ago.

    Pretty easy to maintain a “business” when Congress funds your operations with tens of millions of dollars anually.

    Google it. There are records showing how much taxpayer dollars the USPS gets from Congress and blows every year.

  • Anthony

    I live close enough to the post office I can take my junk mail, cross out my address, write “REFUSED MAIL” on it, and drop it in the mailbox. It’s their junk, let them dispose of it.

  • John

    Solution: substitute a recycle bin for your mail box. USPS: “Delivering trash right to your garbage can!”

  • Gary

    Yet another example of morons running the business. Experts who know little or nothing, one hundred plus pages to explain mail rates. Quite apparent that Washington and th ballless
    jerks in congress have a big hand in the USPS. Cut delivery down to three or four days,
    close thusands of small post offices, and increase the price of ‘JUNK MAIL’
    As long as the govefrnent has almost absolute control over this group, the only meaningful
    improvements in postal service will come at a miuch higher cost to the citizenry. and junk
    rates will probably be even furthr reduced. Give us Harry Truman and a Congress and President with balls.

  • Fake

    The USPS have prostituted themselves to spammers.

    They should be shut down and the directors sued.

    They are bad for the environment.

    They burn imported terrorist funding fuels.

    They are involved in accidents.

    They should get a bill for all the time they waste.

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