Postage Rate Increase Continues Disturbing Trends
Burrus Update #03-08,
In mid-February, the Postal Service announced [PDF] the first postage-rate increase since enactment of the 2006 Postal Accountability and Enhancement Act, effective May 12. Prior to passage of the PAEA, the Postal Service was required to hold public hearings on proposed increases, and the Postal Rate Commission issued an opinion on USPS requests. The timeframe for completing the process was typically in excess of 10 months.
The current law permits the Postal Service to adjust the rate of every mail classification each year, up to the rate of inflation. In 2007, the Consumer Price Index was 2.9 percent, which accounts for the increase of one cent for first-class mail, and corresponding increases for other classes.
The first-class postage rate of 42 cents is the amount the Postal Service proposed in 2006. The APWU objected, and testified during public hearings that 42 cents was excessive. The Postal Service's revenue needs could be met by reducing the excessive discounts the USPS offers to businesses that engage in "worksharing," we asserted.
The Postal Rate Commission agreed with the APWU on the first-class single-piece rate in 2006, and approved an increase to only 41 cents.
There are some troubling aspects of the most recent rate case:
- Although the Postal Service price structure trims some of the excess, discounts for "workshare" mail continue to exceed the costs the Postal Service avoids when mailers perform some mail-sorting duties themselves. By the Postal Service's own calculations, workshare discounts for 3-digit and 5-digit automation letters and 3-digit automation cards exceed the costs avoided.
- The Postal Service calculations understate the excess. USPS uses a calculation method that was rejected by the Postal Regulatory Commission during the last rate case. The Postal Service should use methods and data that appropriately measure the costs it avoids when mailers engage in worksharing and then set prices accordingly.
Although "postal reform" and passage of the PAEA was promoted as the savior of the Postal Service, the trend of converting the USPS from a public institution that serves all the people to one that primarily serves the interests of commercial mailers continues unabated.
The elimination from the PRC of the position of the Consumer Advocate who had been ineffective at best means there is no voice for the individual mailer. The Commission has instituted a policy of asking an officer of the commission to relinquish his or her normal duties in order to represent the interests of the general public during a given proceeding and then return to his or her normal duties, and then asking another officer to represents the public in the next case. This policy hardly assures any different or better representation of the public than if officers wore their usual hats all the time.
Given the proliferation and complexity of commercial products and rates, and the well-represented interests of major mailers, it is too easy to give short shrift to citizens and small business owners who are still paying single-piece rates.
On the positive side, this rate increase was not accompanied by the usual bashing of postal workers and their wages. In past years, postage rate increases were blamed on the cost of employees. Now that the inflation rate is the qualifying factor under the law, perhaps we have moved beyond the scape-goating the employees.
William Burrus
President