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Rate Proposal Would Hijack Postal Service
Burrus Update #07-06, May 22, 2006
On May 3, 2006, the Postal Service announced its intent to increase postage rates in 2007. This public announcement focused on the 3-cent increase in price of a First-Class stamp, to 42 cents, and the introduction of a new “forever” stamp. (The forever stamp is aimed at ending the bureaucratic bumbling that accompanies rate increases when management fails to provide a sufficient quantity of 2- or 3-cent supplemental stamps to satisfy public requests.) News editorials have followed, expressing the views of analysts who track rate increases and consistently predict the imminent demise of hard-copy communications.
These public announcements and the analyses that followed all missed the most important story. That story is not the three-cent increase; how frequently rate increases have occurred; or the impact of computerization, e-mail, and cell phones on hard-copy communications. The real story is that this rate increase will begin the final chapter of transforming the United States Postal Service from a government service designed to foster communications among all the people into a tax-free entity intended to serve first and foremost as an extension of corporate advertising mailers.
The recent rate-request filing is intended to complete the transformation, begun in 1976, to redefine “uniform rates.” Along the way, the original concept of the U.S. Postal Service was abandoned. The concept was simple: With every user paying the same rate, the average rate would be affordable and communications would flourish.
Prior to 1976, all users of the mail within the respective classes paid the same amount. The First-Class rate was 13 cents, and the rate for Third-Class class mail (now known as standard mail) was 7.9 cents. No matter the economic circumstances of the individual consumer or commercial mailer, the rate was uniform, and the 200-year-old guiding philosophy of “uniform rates for universal service” was maintained.
Since 1975 the first-class rate has increased to 39 cents, a 200-percent increase, but the rates for large first-class business mailers have increased only 125 percent during the same period of time. Under the proposed rates, first-class stamps would go to 42 cents, a 223 percent increase since 1975, while the business mailers rate would increase only 140 percent.
The standard rates for large “automation mailers” have increased approximately 153 percent, and the amount is even less if they drop-ship their mail. Saturation mailers can mail for as little as 12.7 cents per piece, an increase of only 61 percent since 1975.
The rates introduced in 1976 were designed to influence the behavior of mailers. By giving them an incentive to affix printed zip codes, it was expected that the mail-processing operation would become more efficient. That rate structure was intended to bridge the gap as the Postal Service converted from manual and mechanical mail processing to a fully automated system.
As time went on, and postal automation was more fully deployed, the original justification was no longer valid, so the rationalization morphed into “worksharing” A new theory was developed that sought to justify rates that reimbursed large mailers for mail “preparation.”
APWU was long the lone voice of concern over whether a government monopoly was being hijacked by the corporate community, to facilitate commercial communications at the expense of all others. Now, after 30 years, postal management has initiated the final assault on uniform rates through this proposal to assign to each corporate mailing the actual cost of the service, known as “bottom-up pricing.”
An example is a corporate mailing introduced into the mail stream on skids at a Bulk Mail Center . Separated by delivery sequence, this mailing would avoid the Postal Service transportation, retail, collection, and processing network. The bottom-up cost of mailing would include only those costs incurred (delivery), plus a proportional cost of support for the network (institutional cost). The rationale is that services that are avoided should not be included.
But those very services that are conspicuously avoided by the large mailers remain intact for individual citizens and small businesses that do not have the capacity to bar-code or transport large quantities of mail to destinating facilities. Absent the contribution of corporate mailers, the cost of single-piece mailings by individual citizens writing letters or paying bills will, over time, increase significantly. Rates for business mail will decline; rates for individual pieces will increase, and uniform rates will become a relic of the past.
This bottom-up pricing scheme has long been a dream of the large mailers. Consistent with historic form, postal management has succumbed. It is now only a matter of time before the gap between the rates for individual citizens and corporate interest widens even more.
For you or me, the cost of sending a letter from a rural community to a location thousands of miles away will cost $2, while the corporate mailer’s cost of sending the same letter to and from the same addresses will be only a fraction of what we pay. Future rate increases will completely separate the impact on the average citizen from the effect on corporate mailers
This will signal the end of the greeting-card industry, as the expense of expressing cheer will be beyond the means of ordinary citizens. Can you imagine spending as much for postage as for a birthday card itself? Can you imagine paying $2 in postage for everyone on your holiday list? Casual communications will also disappear for the 28 percent of Americans who do not have access to the Internet, and the 60 percent of those over 70 years of age who are not “wired.”
APWU will once again raise objections to any rate-request scheme that favors large mailers at the expense of individual citizens. We intend to inform the American public that their government service — originally designed to serve “the people” — has been hijacked by corporate interests.
Unless the public, too, raises objections, the corporate interests will be the only ones who can afford postal services.
William Burrus
President
