Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, March 6, 1990 TAG: 9003061981
SECTION: NATIONAL/INTERNATIONAL PAGE: A1 EDITION: METRO
SOURCE: The Washington Post
DATELINE: WASHINGTON LENGTH: Medium
Mailing costs for magazines, advertisements and packages also would increase under the proposal, with the average cost of all postage going up 19 percent, postal officials said.
The rate request, designed to generate an estimated $7 billion a year in additional revenue, must be approved by the Postal Rate Commission, which has 10 months to decide.
Postal costs will have risen 46 percent faster than the rate of inflation between April 3, 1988, the date of the last increase, and next January, if the increase is approved, according to Postal Service figures.
Postmaster General Anthony M. Frank said the rate increase is essential. "I think that most fair people realize that postal costs go up and that rates must go up to cover them," he said.
But he conceded that "We can never again have a rate increase of this percentage higher than inflation and see the Postal Service remain the same. . . . It is too much, too soon." He said that in recent months there have been reductions in labor costs and improvements in productivity that mean the next rate increase request will be smaller and later.
Frank said escalating health insurance costs, congressionally mandated contributions to the federal Treasury to reduce the federal deficit, overly optimistic estimates of labor savings in 1988 from the introduction of new technology, and failing to request a 26-cent first-class stamp three years ago contributed to the size of the increase.
He also said the Postal Service reached a settlement with its unions in the 1987 contract that "in retrospect, could have been rethought."
"Two years of waste and mismanagement" is the cause, said Gene A. Del Polito, executive director of the Third Class Mail Association, which represents advertising mailers.
"The 46-percent inflation difference is almost totally a result of their inability to capture the productivity savings they thought they would get through the introduction of technology," said Hal Orenstein, senior financial analyst for the Postal Rate Commission.
Although most business mailers said they expect periodic modest postal increases, consumer advocate Ralph Nader said, "We demand that the Postal Service not increase rates. We plan to unmask the arrogant indifference to public opinion of the iron triangle - the Postal Service, the unions and the mailers."
However, Vincent R. Sombrotto, president of the National Association of Letter Carriers, defended the higher rates, saying that over the last 20 years, inflation has exceeded the increase in postage costs, even if today's request is approved.
"U.S. postage remains the best postal buy in the world," said Sombrotto. West Germans pay 59.9 cents for a first-class letter and Japanese pay 42.8 cents, he said.
When the rates were raised in 1988, the cost of a first-class stamp went from 22 to 25 cents, a 14 percent increase over three years, compared with the current request - 20 percent over roughly three years.
The largest percentage increase in the last two decades came in 1975 when the rates went up from 10 to 13 cents, a 30 percent increase.
The increase request is likely to touch off one of the most intense battles in recent history as "classes" of mail users - first-class mailers, magazine publishers, and advertising mailers - argue before the Postal Rate Commission over who should bear what part of the increase.
Del Polito said that third-class, or advertising mail, volume was down 2.6 percent last year after growing at an annual rate of as much as 10.5 percent during the 1980s.
Overall, the number of letters, magazines, catalogs and packages handled by the post office last year went up only 0.4 percent after years of heavy growth.
by CNB