The Postal Rate Commission yesterday recommended raising the cost of a first-class stamp to 29 cents, a 15 percent increase that officials said is likely to go into effect Feb. 3.
The costlier stamp means that "Aunt Minnie" -- the U.S. Postal Service's name for the average household consumer -- would spend about $59 a year on postage, an increase of about $8.
After studying the Postal Service's request to increase rates, the five-member rate commission agreed with the Postal Service to raise first-, second- and third-class rates enough to bring in the $48 billion in revenue the service calculates it needs each year to break even.
But the rate commission re-cut the revenue pie that the Postal Service had proposed by deciding to reduce the service's proposed 30-cent first-class stamp by a penny and shift more of the cost to third-class mail, most of which is known to the public as "junk mail."
The U.S. Postal Board of Governors, which oversees Postal Service operations, is expected to approve the commission's recommendations when the board meets Jan. 22.
The commission also recommended creating a 27-cent stamp that consumers may use to mail specially coded business-reply envelopes sent out by utilities, credit card companies and other businesses. They proposed increasing rates for second-class mail, primarily magazines and small newspapers, an average of 22 percent and third-class, usually advertising materials ranging from catalogues to store promotions, an average of 25 percent.
Postmaster General Anthony M. Frank said he was pleased with the panel's overall decision, which he called "an endorsement of what we've been doing here in terms of productivity." But he disagreed with the decision to dump the 30-cent stamp. "We think the typical family will save $2 a year," he said. "Is that worth it? . . . I don't think it's a ringing victory for consumers."
If the Postal Board approves the recommendations, a new 29-cent "F" stamp bearing the image of a red tulip would go on sale Jan. 22. The service also has printed a "make-up" stamp whose value will be equal to the difference between the current 25-cent first-class stamp and the new rate.
Postal rates were last increased in 1988 when the cost of a first-class stamp went from 22 to 25 cents.
Consumer advocate Ralph Nader yesterday called the Postal Service "fat" and "inefficient." He criticized Congress for no longer having direct control over the service and said it is top-heavy with overpaid managers.
The Postal Service is in the midst of automating mail processing. It has spent $5.3 billion in the last decade on new equipment and plans to spend another $13 billion in the next five years. This year it recorded its first noticeable productivity gains from automation. As a result, its projected $1.6 billion deficit for 1990 ended up at $874 million.
But the service is facing some ominous trends that officials fear may pull it backwards. Mail volume, down in the last few years, is expected to plunge further because of the recession. Meanwhile, the service is in labor arbitration with its 660,000-member work force over a new contract. Labor costs make up about 83 percent of the service's costs and as such, any increases in this area could change the service's budget requirements.
Yesterday, Rate Commission Chairman George W. Haley recognized the Postal Service's achievements, saying, "the effects of improved performance slightly outweigh the negative developments."
Haley explained the commission's decision to make third-class mailers shoulder the burden of the increase as "an effort to restore an equitable balance" between the costs to "Aunt Minnie" and businesses. "There has been a trend toward increasing the burden on first class and lessening it on third class," said Haley. "We have tried to arrest that trend."
Gene A. Del Polito, executive director of the Third Class Mail Association, said the increase was unfair and would cause a 3 to 5 percent decrease in the volume of third-class mail. "There are many people in our industry who suspect that the rate commission has a poor appreciation of the purpose and value of third-class mail," he said.