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E-Mail Cuts Into Stamp Business Computers, More Telephone Time Blamed For Drop In Postage Spending

Sun., July 20, 1997

The typical American household is spending less on stamps, and the personal computer is a major reason, according to an academic study.

Last week a Stanford University professor came to Washington to argue that postage stamp sales to the average household are in steep decline and are much more vulnerable to price increases than many postal executives would like to admit.

Economics professor Frank A. Wolak told an audience at the Postal Rate Commission that, despite stamp price increases, the typical household spent $54.35 on postage in 1994, down from a high of $74.26 in 1989.

Although the typical stamp price increases during that period were only a few cents, Wolak said his research suggests that even small prices are driving people away from the nation’s post offices.

As a percentage of the Postal Service’s revenue, Wolak figured sales to households have dropped to 10.6 percent from a peak of 19 percent between 1987 and 1994. Even so, the total remained about a $5 billion-a-year market for the U.S. Postal Service, he said.

Wolak said the rise of personal computers and online services has made e-mail a more attractive alternative to postage.

A rise in discounted first-class postage, available to business mailers, pushed the number of first-class letters upward, obscuring a decline in the number of single first-class letters being placed in the mail by individuals, he said.

Wolak correlated the shift away from letters with an increase in personal computer ownership, higher telephone bills and growth of online services. Assuming those services continue to grow, postage used by the typical household will continue to decline, he predicted.

Wolak said postal officials have reviewed but not argued with his analysis. Indeed, a postal publication cited the professor’s arguments several months ago in an article noting that they reinforced Postmaster General Marvin T. Runyon’s arguments against raising stamp prices.

The agency recently proposed a 1-cent increase in the price of a stamp.

But it also suggested creation of special bill-paying envelopes that would cost 30 cents each, a step designed to stop the erosion of bill-paying to electronics, an increasing worry at postal headquarters.


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