Dwight D. Eisenhower photo

Special Message to the Congress on Postal Pay and Rates

January 11, 1955

To the Congress of the United States:

The Post Office Department, in its daily operations, affects the entire life of the Republic from the family home to the great industry. A vast business-type enterprise within Government, the Post Office Department, consequently, requires a continuing vigilance that its methods, practices and policies assure the most efficient possible service to the public. The measures recommended in this message are designed to that end.

Last August 23 in announcing my disapproval of H.R. 7774, "An Act to Increase the Rates of Compensation of Classified, Postal and Other Employees of the Government, and for Other Purposes", I expressed a purpose to continue to encourage the enactment of legislation to correct obvious distortions in the pay scales of the postal service and to provide for a more proper and effective relationship between pay and work performed.

I also pointed out the necessity of adequate postage rates in order to check a deficit in the operation of the Post Office Department which, since World War II, has reached the staggering total of more than four billions of dollars.

An increase in the average wage of Postal employees along with correction of the serious inequities in the salary structure is an essential step in bringing the wage scale into line with nongovernmental standards and in furthering the progressive personnel program to which the Administration is committed. The increase must be accompanied by a salary plan which will place the wages for postal service positions in proper relationship to each other so that inequities will be eliminated, incentive for advancement offered and the principle of higher pay for more difficult and responsible work followed.

In order to accomplish these objectives, the Postmaster General will submit to the Congress a new postal salary plan along with a five percent increase in basic salary rates. This plan will include reasonably detailed descriptions of the series of key positions to which the great majority of postal employees are assigned. A rate range for each of these positions will be recommended, and together this series of rate ranges will make up a related, uniform and equitable salary schedule.

The Congress will be asked to include the key position descriptions and their appropriate salary ranges in the legislation, thus assigning specific wage rates to the bulk of the positions common to all offices of the Postal Service.

The Post Office Department should then be granted the authority to allocate the remaining positions, held by the relatively few employees whose work is not covered by a key position, to the proper level in the salary schedule on the basis of a comparison of the duties and responsibilities of these positions with the duties and responsibilities of the key positions.

In the allocation of the positions other than the key positions to the proper salary level an appeal procedure will be provided. Further, to insure that the salary plan will not work to the disadvantage of any employee, the legislation proposed will incorporate a guarantee against reduction of salary so long as the employee occupies the same or a position comparable to that which he held at the time of the installation of the plan.

This legislation would eliminate the inequities inherent in the present inflexible system which requires assignment of all employees to a limited number of job titles, in many cases having no relation to the work actually performed. The present practice of paying salaries to some employees on the basis of the number of cubic feet in the area they supervise, or solely in relation to the number of employees under their direction, would be replaced by a system requiring that salaries be based on the actual duties and responsibilities of the position.

Under this plan, postmasters of the nation would receive salaries commensurate with the volume of work and the level of the responsibility of their offices rather than solely on the basis of cash receipts which presently govern their compensation. This practice results in discrimination against those holding offices where incoming mail represents most of the business volume.

The total cost of wage adjustments in the Postal Service is estimated at $129,000,000 a year. I recommend adoption of legislation incorporating these proposals.

The 83rd Congress authorized appropriations to be made for the furnishing of uniforms or the payment of an annual allowance to employees, including those of the Post Office Department, required by law or regulation to wear a prescribed uniform while on official duty. This measure, when Congress makes funds available, will benefit Post Office employees by an estimated $13,500,000 a year.

I am recommending in another special message today a health insurance plan to round out the federal personnel benefits program enacted by the 83rd Congress. This program already has provided group life insurance, unemployment compensation, elimination of restrictions on permanent promotions and reinstatements, adjustment of the statutory limit on the number of career employees, elimination of arbitrary restrictions on accumulation of annual leave, and a liberalized incentive awards system.

I wish to reaffirm my position that sound fiscal management requires consideration of revenues as well as costs. To this end, I am requesting that Congress also consider legislation to adjust postal rates to provide needed revenue.

The combined postal deficits of the 156 years of our history as a nation, up to 1945, are far less than the losses sustained in the last nine years. The anomaly of this situation is that the period which has witnessed this record-breaking deficit in the operations of the postal service has also been a decade of unprecedented national prosperity. Employment, production and use of the mails have been at an all time high and yet postal deficits have occurred year after year. Clearly it is time to reaffirm the need for sound fiscal management of the Post Office Department and to develop a positive program towards this end.

In fiscal 1954 the Post Office Department received revenues of $2,268,000,000 for services performed at a cost of $2,667,000,000, thus leaving a deficit of $399,00,000 in its operation. The services performed by the Post Office Department are of measurable value to the recipients. When the rates of postal services fail to provide sufficient revenues to meet the total cost of the service, the difference must be made up by general tax revenues.

A practice of this kind is neither equitable nor reasonable; it is neither good business nor good government. Even if a case could be made for regarding the postal patron and the taxpayer as one and the same, prudence and good sense would compel us to face the fact that it is far more efficient to collect the necessary revenues in direct exchange for services at the post office window than by the more costly methods of general taxation.

The Post Office is constantly working to reduce the deficit by improving the efficiency of its operations. During the last two years substantial progress has been made in organization, mail handling, transportation, mechanization, record keeping, and accounting methods. The Postmaster General has also taken the initiative in increasing rates and fees within his jurisdiction.

As a result of these measures there has been a recent reversal of the postwar trend of ever increasing postal deficits. These are the operating deficits for each of the last five years:

Fiscal Operating
Year Deficit

1950 $589,500,000
1951 $551,500,000
1952 $727,000,000
1953 $618,800,000
1954 $399,100,000

The large deficits in the postwar years are, in part, a direct consequence of the same inflationary increases in costs which all business operations have faced. Private business has increased prices of goods and services to offset increased costs of production. The Post Office operates in the same economic climate as private business. It must meet rising costs in very much the same way.

Since 1945, the largest part of the increase in postal expenditures is accounted for by salary increases legislated by Congress as follows:

Annual Increase in Cost to
Date Public Law Post Office Department

July 1, 1945 134 $178,767,000
July 1, 1945 106 786,000
Jan. 1, 1946 381 $190,631,000
July 1, 1946 390 684,000
Nov. 1, 1949 428, 500 $112,489,000
Nov. 1, 1949 429 278,000
July 1, 1951 204 $248,600,000
July 8, 1951 201 1,100,000

These wage adjustments, combined with an expansion in the number of postal employees necessary to handle the greater volume of mail, have resulted in an increase in total salary costs from $858,000,000 in 1945 to $2,002,000,000 in the last fiscal year.

The increases in wages and other costs since the end of World War II have affected all classes of mail. It is desirable that the rates governing each class of mail be advanced in fair proportion. The Committees of Congress responsible for postal rate legislation will, of course, want to consider carefully the specific rates for each class of mail. The Postmaster General will soon submit to Congress, in addition to his views on increases in postal pay, detailed recommendations for raising postal rates to more reasonable levels. I wish to emphasize at this time a few of the major considerations which seem to me important in raising rates.

1. First-class mail has always provided by far the greater part of postal revenues. In 1933 the revenue contribution of first-class mail was more than 55 percent of total Post Office revenues. In the last fiscal year first-class mail provided only 40 percent of such revenues although the proportion of first class volume to the total volume was only three percentage points lower than in the earlier year. The failure of this type mail to maintain its revenue contribution is a major factor in the present postal deficit. There is, therefore, an urgent need to increase the rate of postage of first-class mail.

Postal rates are payments made by users of the mails for services received. The rate established for each service should reflect the value of that service in terms of speed, priority of handling, and the privileges incorporated in each class of mail. If these factors are taken into consideration in rate-making, the revenue contribution of first-class mail is clearly inadequate.

The privacy, security and swift dispatch of letter mail; the priority of service at all times, in all places; and the intrinsic value of such mail are factors which are pertinent to postal ratemaking in addition to the cost factor.

But the present 3 cent rate for first-class letter mail has not been increased in almost a quarter of a century. During this period the costs of all goods and services have almost doubled. I am convinced that the American people will understand, appreciate, respect and support Congressional action to provide for a long-overdue rate increase on letter mail which will go far towards balancing the postal budget.

2. The revenues derived from second-class mail are clearly inadequate. These rates which apply to newspapers and magazines should be increased until such matter makes a fair and reasonable contribution to postal revenues. The Postmaster General will recommend a two-step increase in second-class rates which will enable publishers to adjust more readily to the proposed rate changes.

3. Third-class mail consists largely of advertising matter. In fiscal year 1954 the revenue contribution of such mail fell substantially below the cost of providing this service and was a major factor contributing to the postal deficit. The rates of postage on such matter should be increased so that the users of this class of mail pay a proportionately fair share of postal revenues.

In view of the recurring fiscal problems of the Post Office Department, and of the heavy burden which postal deficits continue to impose on the Federal treasury, I strongly recommend to Congress the formal adoption of a policy which will ensure that in the future the Post Office Department will be essentially self-supporting.

Certain services which are performed by the Post Office, such as those for the blind, are a part of general welfare services. The cost of such services should not be borne by users of the mails. Expenditures for them, and for services performed for the Government, should be identified and met by direct appropriation.

If the Post Office is successfully to meet the challenge of the future its prices must be sufficiently flexible to reflect changes in costs and the developing needs of a dynamic economy. It is my belief that an independent Commission entrusted with the authority to establish and maintain fair and equitable postal rates can best provide this needed flexibility.

There are also other advantages. Such a Commission, guided by policies laid down by the Congress, would have the time and facilities to make thorough analytical studies before prescribing rate changes. A Commission well versed in the economics of modern pricing practices can continuously appraise and reappraise the soundness of the postal rate structure. Legislation to secure these ends should be enacted by Congress.

With these views in mind I recommend to Congress the adoption of a temporary increase in postal rates as an interim measure, and the establishment and activation within the interim period of a permanent Commission to prescribe future rate adjustments under broad policy guidance of Congress.

Let me reiterate--the financial problems of the postal service result, in large measure, from lack of a positive program leading towards a well-defined fiscal goal. I am, therefore, recommending to Congress the following five-point program for the Post Office Department:

1. Approval of the new salary plan and a 5 percent increase in basic salary rates.

2. Adoption by Congress of the policy that henceforth the Post Office Department shall be self-supporting.

3. Separation of those postal costs to be paid by the patron from those costs which should be paid by general taxation.

4. Establishment by Congress of a permanent Commission authorized to prescribe postal rate adjustments under policy guidance of Congress.

5. Enactment by Congress of an interim rate bill which will, pending activation of the Rate Commission, provide immediate revenue to meet proposed pay increases and reduce the postal deficit.

Approval of this program will be in the public interest for it will further assure efficient service by the Post Office Department.

DWIGHT D. EISENHOWER

Note: The President's message on a health program for Federal personnel appears as Item 25

Dwight D. Eisenhower, Special Message to the Congress on Postal Pay and Rates Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/234224

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