A penny for your thoughts . . . Postal increase: First-class mail will cost 33 cents, but customers still get a good deal.

January 09, 1999

CONSIDER this: Postal rates haven't increased in four years. And when the price of mailing a letter increases a penny tomorrow, it will be the smallest rate hike in the history of the U.S. Postal Service.

Prices will rise an average of 2.9 percent -- the second straight time the agency has kept increases below inflation. Put another way, the real cost of a first-class stamp has dipped 7 percent since 1995.

Still, no price increase wins the Postal Service friends. This is the agency folks love to hate.

Yet this massive, quasi-governmental organization does a surprisingly good job for a relatively low price. This year, more than 200 million pieces of mail will be handled by local post offices. That's double the volume in 1971, when the agency was established.

The agency's next-day delivery rate in Baltimore was 94 percent last fall, slightly better than the nationwide average.

The cost of mailing a letter, meanwhile, remains far below comparable prices in nearly all other industrial nations.

Some legislators -- and postal competitors -- complain that this $1.6 billion revenue increase isn't needed. After all, the Postal Service finished the past four years with massive profits.

But the extra revenue from the added penny on first-class mail is earmarked for paying off accumulated debt and investing in automated and robotic technology. The Postal Service must modernize to survive in today's world of electronic mail, faxes and private delivery services.

Even with fat surpluses in recent years, the Postal Service remains $4 billion short of the break-even point for its 27 years of existence.

Anyone who has visited a post office branch recently has noticed small but striking differences. A friendlier attitude. More promotional displays. And more effort aimed at winning customers.

Still, the Postal Service has significant handicaps. More than 80 cents of every dollar goes toward labor costs. The huge agency is heavily bureaucratic. Trying to make the Postal Service more responsive to the changing marketplace can be agonizingly slow.

A successful U.S. Postal Service is in everyone's interest. A public mail carrier, offering quick delivery at reasonable prices, is a national treasure. Even if it costs an extra penny a letter every four years or so.

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