US Postal Service plans productivity leap

The price of a stamp goes up in a week, but that event only hints at fundamental -- and possibly disruptive -- changes in the US Postal Service over the next 10 years.

Americans can expect even higher costs for mailing a letter or post card, along with the indirect cost of increased rates to businesses, as the federal postal subsidy continues to be whittled away. That trend is likely to accelerate under the Reagan administration.

At the same time, mail delivery -- a mammoth operation that has seen significant gains in productivity through mechanization over the past decade -- will be affected even more by automation, advanced electronics, and computer technology.

"In the coming year," Postmaster General William Bolger said recently, "the Postal Service must grapple with some very serious issues that will collectively set the tone and quality of the nation's mail system for at least the next decade."

The immediate issue, as exemplified by the March 22 rate increase, is stabilizing postal rates so that increases need occur only every three years or so. Noting that until now there had been just one increase over a five-year period, Mr. Bolger says the US "has finally entered a period of rate stability."

The Postal Service had asked for a boost in first-class rates to 20 cents, pointing out that this still was less than the rise in inflation since the price was set at 15 cents in 1978.

Robert Hardesty, chairman of the Postal Service's board of governors, complains that the decision of the independent Postal Rate Commission to hold the increase to 18 cents will "jeopardize the long-term stability of the Postal Service for the illusory short-term benefit of lower postal rates."

This only means, he adds, that inevitable further increases will have to be imposed sooner than otherwise might be the case.

"We may need to file later this year for another rate increase," Postmaster General Bolger told a congressional committee hearing March 12.

Postal Service officials point with pride to impressive gains in postal efficiency in the 10 years since massive reorganization launched the Postal Service toward financial independence.

Although the volume of mail rose from 85 billion pieces in 1970 to more than 106 billion last year, the number of postal employees dropped from 741,000 to 667,000. That resulted in a gross productivity gain of 34 percent, and put the US well ahead of Japan, Canada, and the Western European countries in terms of number of pieces of mail handled per employee.

At the same time, only in Canada, which has a federal postal subsidy level several times higher than in the US, does a first- class letter cost less to send.

Since reorganization, the federal subsidy has dropped from 25 percent of the service's budget to about 5 percent. The Reagan administration, as stated in recent budget documents, "believes that the costs of mail service should be borne by users, not taxpayers."

This means inevitable rate increases, postal officials acknowledge, but it also should accelerate modernization trends. Because employee pay and benefits account for 85 percent of its cost, the Postal Service intends to move as quickly as possible in further reducing the payroll.

There is talk of what would be illegal work stoppages this summer by postal employees who earn an average of $22,000 in pay and benefits and do not want to give up their cost-of-living pay adjustments. Their three-year contract expires later this year.

In the next decade, both postal employees and the nature of Postal Service itself will be significantly changed by E-COM, Intelpost, and EMSS: electronic computer originated mail, international electronic message service, and electronic message service system.

Using the latest technology, including satellites, the Postal Service will be bouncing mail around the world faster than a letter carrier can dodge a snarling dog.

In a recent report to Postmaster Bolger, the General Accounting Office (GAO) predicts that increased use of electronic mail will result in cutbacks of another 200,000 postal employees over the next 20 years.

Bolger, calling the GAO figures "guesstimates at best," notes that the agency has failed to account for the possibility that electronic transmission might vastly increase the volume of mail handled. Nonetheless, there is little doubt that automation, as Bolger told the Computer and Communications Industry Association this week, will "be the foundation of our system for at least the next two decades."

Scheduled for a bigger role is the Postal Service's "presort" program, which reduces a company's mail cost 3 cents per piece under the new rates. And the new nine- digit ZIP code is allowing use of an optical scanner the output of which is five times greater than a human. Both these programs are directed principally at business users, who account for 84 percent of mail volume.

Presorted mail jumped 41 percent last year, and "Express Mail," another service popular with businesses, rose 43 percent. In 1980, parcel post volume increased for the first time in 14 years -- another indication that the Postal Service may be stemming the tide toward the "alternate [private] delivery services" favored by many corporations.

It is unclear whether the automation goals set by Postmaster Bolger will significantly affect bulk second-class mailers such as magazines. Those who have tried private carriers have met with mixed success.

"That is not going to be feasible in many, many parts of the country," says Chapin Carpenter, senior vice-president of the Magazine Publishers Association Inc. Mr. Carpenter "absolutely agrees" with Mr. Bolger on the need to stabilize postal rates and adds, "We're not complaining about paying our proper share of costs."

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