DMA Statement on Postal Service Rate Hike Request

Washington, DC, July 26, 2010 — The Direct Marketing Association (DMA) and the DMA Nonprofit Federation (DMANF) today asked the Postal Regulatory Commission (PRC) to dismiss the United States Postal Service’s (USPS) request to increase postal rates by ten times the rate permissible by law. The petition was filed by the Affordable Mail Alliance, of which the Direct Marketing Association and the DMA Nonprofit Federation are supporting members. The Affordable Mail Alliance’s members are commercial and nonprofit organizations. Commercial mail accounts for 85 percent of the Postal Service’s revenues.

The Postal Service seeks to raise prices by an average of 5.6 percent — more than ten times the current rate of inflation — claiming as “exigent” circumstances the recession of 2008-2009 and electronic diversion of First-class mail. This action by USPS comes just three years after Congress passed the Postal Accountability and Enhancement Act (PAEA) of 2006, which was supposed to prevent rate increases that exceed the rate of inflation. USPS claims that there are “exigent circumstances” that necessitate an increase, and that one of those circumstances is the shift of mail to the Internet.

The motion filed by the Affordable Mail Alliance asserts that “the Postal Service’s most fundamental problem is not the Internet, or the recession, but a lack of effective cost control.”

“Businesses across the country have had to make difficult decisions due to the recent recession - tightening their belts, increasing productivity and in some cases, cutting their workforces as their revenue fell by 20 percent or more,” said Jerry Cerasale, DMA’s senior vice president of government affairs. “Because of this highly efficient management, many of those same businesses – including UPS and FedEx – have managed to return to profitability within a quarter or two. The Postal Service has not taken the same difficult steps. Instead, its unit costs rose by six percent in 2009 as prices fell across the economy. The Service has a lot more work to do to bring their costs under control before turning to its customers for yet another rate increase.”

In the motion, the Alliance holds that “raising prices above the Consumer Price Index (CPI) in this case would nullify the single most important safeguard for mailers and the public in PAEA. If the increases are approved, the central regulatory constraint of PAEA will be dead.”

Cerasale also said, “The things that Congress envisioned as ‘exigent circumstances’ were events like September 11^th, Katrina, or the anthrax crisis. Mail shifting to the Internet and the economic downturn just don’t rise to the same level as those other events.”

The Affordable Mail Alliance includes charities, large and small businesses, American household names and the customers who use the Post Office every day – customers that will suffer if USPS successfully raises rates again.

For more information or to speak with a representative from the Affordable Mail Alliance, please visit www.affordablemailalliance.org.

About Direct Marketing Association (DMA)

The Direct Marketing Association (www.the-dma.org) is the leading global trade association of businesses and nonprofit organizations using and supporting multichannel direct marketing tools and techniques. DMA advocates standards for responsible marketing, promotes relevance as the key to reaching consumers with desirable offers, and provides cutting-edge research, education, and networking opportunities to improve results throughout the end-to-end direct marketing process. Founded in 1917, DMA today represents companies from dozens of vertical industries in the US and 48 other nations, including nearly half of the Fortune 100 companies, as well as nonprofit organizations.

In 2009, marketers – commercial and nonprofit – spent $149.3 billion on direct marketing, which accounted for 54.3% of all ad expenditures in the United States. Measured against total US sales, these advertising expenditures generated approximately $1.783 trillion in incremental sales. In 2009, direct marketing accounted for 8.3% of total US gross domestic product. Also in 2009, there were 1.4 million direct marketing employees in the US. Their collective sales efforts directly supported 8.4 million other jobs, accounting for a total of 9.9 million US jobs.

The Power of Direct: Relevance. Responsibility. Results.

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