CONSIDER A CORPORATION whose volume is stagnating; whose labor costs rose 63 per cent between 1971 and 1976, while productivity improved only 1.3 per cent; whose major new processing system may bring no return at all; whose research and development budget is minuscule and whose competition is growing. Any analyst would call that a corporation in big trouble. That is just what a study commission has concluded about the U.S. Postal Service.
True, Postmaster General Benjamin F. Bailar has announced a $5-million surplus for the last 12 months, including a $45.5-million gain since last October. This may let rate increases be deferred until next spring. Mr. Bailer and the commission agree, though, that by 1979 first-class postage will have to rise at least to 14 cents even if deliveries are cut from six to five days per week, other services modified and public subsidies increased somewhat. A first-class stamp could cost 22 cents by 1985.
Why is the postal system in decline? Years of bad management and failure to match private services have caused parcel-post volumes to drop every year since 1959. Recent third-class rate increases have driven many companies to distribute their advertising in other ways. Now electronic communications systems are cutting into the 80 per cent of first-class mail that is business mail, and especially the 60 per cent that involes transfers of money - bills, checks, bank statements and the like.
The study commision concluded that, if the postal corporation continues business as usual, its future is "bleak." It will wind up as an insufferably expensive network for distributing a declining volume of publications, goods, greeting cards and the personal letters that now make up only 3 per cent of first-class mail.
Perhaps the worst course would be to dismantle the postal corporation and give Congress, again, a larger voice in postal management. The best course is to make service even more businesslike. It needs to do what any private firm in the same circumstances would do: innovate.
Mr. Bailar is already trying to persuade new subdivisions to accept curb service or neighborhood postal boxes instead of door-to-door delivery. The commission, while far too cautious, does recommend experiments with electronic mail systems, including joint ventures with private contractors. That will require some changes in the ticklish area of postal labor policies. It also raises large questions about the future structure and regulation of electronic communications, a subject already opened by AT&T's attempt to gain a statutory monopoly in the field. Congress has barely begun to address these problems. Unless the postal corporation can innovate and adapt, even good day-to-day management will not save it from the dismal spiral of soaring costs and cuts in services.