THE NEW RATE case is one of the most illogical I’ve ever seen. Proposing the largest hikes for those who participate in worksharing discounts, it asks for relatively minimal increases for those who expect the USPS to do all of the work.
In addition, the USPS has once again requested increases for Standard A mail that are twice the percentage of those suggested for first class. This may have made sense when first class letters were sent mostly by Aunt Minnie, but today first class is just another category of business mail.
However, Aunt Minnie still has political strength. Since the USPS only wanted about $2.5 billion in additional revenue, it would have looked bad to ask for two pennies for the first class stamp. The result is that the bulk of the new revenue will come from Standard A.
The USPS insists the increases are cost-based. But are they? The debate has raged for years over its in-office costing system. Is it reflective of the work, hence the cost being incurred? The bottom line is that the USPS has very significant contract wage costs kicking in next year and the remaining unions will try to reach that “golden wage” standard. In light of this, it is believable that the USPS would implement increases for automation that are double those for nonautomated mail (which will require ever more of that expensive union labor).
All this probably means the next rate case will be sooner than we’d like. Why didn’t the USPS bite the bullet and file for a 4% hike for everyone, struggle for a year, and let the cost of the emerging union wages fuel a subsequent rate case?
Since Standard A is the only class with the potential to generate significant revenue growth, we can only shake our heads and wonder at the greater increase for automation versus carrier route and the actual decrease on pound-rated flat mail.
At a time of increasing competition, these proposals signal the USPS is interested mostly in large-size mailings. This, of course, is contrary to the current DM model of targeted, more frequent mailings. Nor does the increase for the destination entry discounts keep pace with the hikes in the presort rates. You can still save money, but once again, the more worksharing you do, the higher your proposed percentage of increase.
The USPS is provoking the movement of large volumes of automated mail back into the manual processing stream.
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