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USPS proposes stamp hike, hires futurist to study stamps' fate

Faith Popcorn
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The financially strapped United States Postal Service proposed a 3-cent increase to 49 cents in first-class stamps, citing precarious financial woes, on Wednesday. To assess the future of stamps, the organization is also paying a futurist more than half a million dollars.

The Postal Service will pay Faith Popcorn's BrainReserve, which describes itself as a futurist marketing consultancy, $565,769 to provide "analysis and recommendation on the future of stamps," according to documents acquired by Federal Times, which provides news for federal managers.

The New York-based company was expected to make recommendations in October on ways to slow the decline in stamp usage.

Stamped mail, the most profitable business of the agency, accounts for 43 percent of its revenues. But stamp sales have continued to plummet as more Americans communicate electronically and pay bills online.

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The Postal Service expects a 40.5 percent drop in first-class mail from 84 billion pieces in 2009 to 50 billion pieces in 2020.

"As part of its ongoing innovation efforts, the Postal Service regularly seeks advice and counsel from mailing industry, marketing and innovation experts," said USPS spokeswoman Toni DeLancey in an email.

"This is an important activity that helps the organization anticipate changing mailing and shipping behaviors, as well as long-term changes to the evolving communication marketplace it serves," she said.

Should the US Postal Service be private?
Should the US Postal Service be private?

BrainReserve declined to comment on its contract.

The Postal Service is struggling financially under the pressure of massive payments into a mandatory fund for its future retirees' health care and as mail volumes tumble.

While $500,000 is a tiny fraction of the agency's finances, this deal comes at a time when the agency says it is losing $25 million daily.

Republican U.S. Representative Blake Farenthold of Texas, chairman of the subcommittee that oversees the Postal Service, said the mail carrier should be focusing on other priorities.

(Read more: Britain's Royal Mail to go private with IPO)

"While small in terms of the overall crisis USPS faces, this certainly seems like a poor use of its limited funds," he said in response to a question on the BrainReserve contract.

The Postal Service, which does not receive taxpayer funds, is under pressure to raise revenues or risk requiring a taxpayer bailout of nearly $50 billion by 2017. It lost $740 million in its third quarter that ended June 30, and $16 billion last year.

The agency was expected this week to seek an emergency rate increase on stamps beyond the annual rate of inflation.

DeLancey said BrainReserve has worked for several Fortune 500 companies including American Express and Citigroup.

—By Reuters With AP.