Postal Service to Tell Plan for 30-Cent Stamp

The U.S. Postal Service, losing nearly $4 million a day, will announce today a plan to increase the cost of mailing a first-class letter from 25 to 30 cents early next year.

Mailing costs for magazines, advertisements and packages also would increase under the proposal, with the average cost of all postage going up 19%, postal officials said.

The rate request, designed to generate an estimated $7 billion a year in additional revenue, must be approved by the Postal Rate Commission, which has 10 months to decide.

Postal costs will have risen 46% faster than the rate of inflation between April 3, 1988, the date of the last increase, and next January, if the increase is approved, according to Postal Service figures.

Postmaster General Anthony M. Frank said the rate increase is essential. “I think that most fair people realize that postal costs go up and that rates must go up to cover them,” he said.

Frank said escalating health insurance costs, congressionally mandated contributions to the U.S. Treasury to reduce the federal deficit, overly optimistic estimates of labor savings in 1988 from the introduction of new technology and failing to request a 26-cent first-class stamp three years ago contributed to the increase.

He said also that the Postal Service reached a settlement with its unions in the last 1987 contract that “in retrospect, could have been rethought.”

“Two years of waste and mismanagement” is the cause, said Gene A. Del Polito, executive director of the Third Class Mail Assn., which represents advertising mailers.

“The 46% inflation difference is almost totally a result of their inability to capture the productivity savings they thought they would get through the introduction of technology,” said Hal Orenstein, senior financial analyst for the Postal Rate Commission.

Vincent R. Sombrotto, president of the National Assn. of Letter Carriers, defended the higher rates, saying that over the last 20 years, inflation has exceeded the increase in postage costs.