The previous year was difficult for the U.S. Postal Service (USPS). America’s mail carrier reported in November that it lost $6.5 billion in 2023, adding to the more than $100 billion in net losses accrued over the past fifteen years. Losses continue despite the agency entering its third year of a 10-year, $40 billion “restructuring plan” championed by Postmaster General Louis DeJoy. The USPS has also benefited from repeated bailouts over the past few years, including $10 billion in COVID-related aid and approximately $60 billion in debt forgiveness. But, all the taxpayer dollars in the world cannot undo years of poor management and misdirected spending priorities. Repeated taxpayer infusions can’t even prevent the sIow and sorry slide in on-time deliveries, which (according to recent reporting) continued in the last three months of 2023. In 2024, the struggling agency must embrace fiscal responsibility and steer clear of bailouts and buck-passing.
The USPS continues to struggle with staying under or within budget for basic operations. On November 30, the agency’s Inspector General (IG) reported that the agency was significantly overpaying for air transportation. The report found, “The Postal Service did not accurately plan air weight capacity on the [IG reviewed] specific lanes for the aviation supplier…Specifically, six of nine operating periods (about 67 percent) within our scope had actual mail weight that was less than the minimum [REDACTED] percent of planned air weight capacity for mail sent to the aviation supplier.” For the one aviation partnership under review, this lapse resulted in more than $25 million in losses for the USPS. These figures only provide a small glimpse into total air mail losses. The USPS spends about $3.5 billion annually for air transportation services, and the IG report only focused on $400 million-worth of deliveries. Extrapolating IG-reported figures to all air mail (rather than just one supplier), capacity miscalculations likely cost the agency hundreds of millions of dollars per year.
Unfortunately, under-stuffed cargo hauls are not the USPS’ only fiscal foible. In the ramp-up to successive holiday seasons, the USPS under-hired inexpensive holiday help and instead prioritized expensive full-time hires. According to a report by Government Executive senior correspondent Eric Katz, the USPS, “is planning to hire just 10,000 temporary employees during the current holiday season as part of a new approach that management has acknowledged comes with some risks…[t]he seasonal hiring marks a 64% reduction from the employees brought on in 2022…’peak season’…” Meanwhile, the agency has converted 150,000 part-time employees to full-time since 2021.
The approach by the USPS is incredibly expensive. Full-time conversions put plenty of pressure on postal finances because career employees earn roughly double what corresponding non-career employees make. This compensation gap is no small issue, given that labor costs are about three-quarters of USPS’ expenses. Recent “reform” legislation may have shifted retiree health costs to Medicare (administered by another struggling federal agency), but this fiscal hot potato is unlikely to make much of a difference. About 90 percent of postal labor costs lie in the (non-retiree) “compensation and benefits” bucket, and employees’ unions know how to keep the funds flowing. Unions such as the National Postal Mail Handlers Union and the American Postal Workers Union confidently enter into negotiations with the Postal Service with the knowledge that, according to federal law, intractable impasses between unions and the service will automatically force the agency into a binding arbitration process.
That means a mediator is certain to grant at least some concessions to the union, a process the American Postal Workers Union admits is friendlier to them than private-sector union-management standoffs. In short, the Postal Service is creating a pipeline where “seasonal” employees are placed in permanent and higher-compensated positions, costing the agency a pretty penny. This conversion-to-concession pipeline makes it far more difficult for the agency to shrink its network when demand falls, putting the service at a distinct disadvantage to private-sector competitors.
The USPS can get back on its feet and provide a reasonably priced service to consumers by re-evaluating its hiring and transportation policies. Sensible reforms would go a far longer way toward shoring up the agency than bailouts and repeated excuse-making by postal leadership. America’s mail carrier must deliver for consumers and taxpayers in 2024.
