Postal odd-couple

April 20, 1994

What's going on here? Why is the largest group of business postal users linking arms with the postmaster general in support of a 3-cent increase in first-class mail? Why would businesses that stand to see their postal costs rise 10 or 15 percent cheer the decision to approve this higher rate?

And why is the postmaster patting himself on the back for this 32-cent proposal?

Because the situation could be a lot worse. The requested increase (it still must be adopted by the independent Postal Rate Commission) is about half what the Postal Service really needs. It is running a $1.7 billion deficit and is supposed to be self-supporting. The percentage increase would be the smallest in over 25 years -- less than the cumulative inflation rate since the last postal hike in 1991.

Postmaster General Marvin T. Runyon has made good on his pledge to slash bureaucratic fat, eliminate 30,000 management jobs and accelerate the use of automated equipment. This enabled him to stretch the average time between postal rate hikes by about a year.

By recommending a modest rate increase -- the cost to the average consumer is expected to be $8 or $9 a year -- Mr. Runyon accomplishes two things: He keeps the heat on subordinates to find new ways to cut operating costs, and he buys a few more years to make the Postal Service's vast investment in automation pay off.

He's got another big hurdle, too. The Domestic Mail Classification Schedule is badly out of date. This document sets payment rates for mail. It is an incredibly complex system (there are 64 different rates for Third Class mail alone, and a 900-page manual of regulations). It penalizes businesses that participate in the automation program.

Effective use of automation is crucial in the labor-intensive Postal Service. Otherwise, the price of stamps will rise at a faster pace and businesses will shift to communications links such as fax machines, computer connections and other innovations along the information superhighway.

The first-class rate of 32 cents probably won't take effect until next March -- if the Postal Rate Commission approves. The panel ought to attach strings to ensure that Mr. Runyon overhauls the classification schedule, slims down the agency some more and produces big savings from automation. Far more work has to be done to slow the 20-year cycle of postal rate increases.

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