December 2, 2019 (RISC-WP-20-001)

  • The Postal Service is a labor-intensive organization, with labor accounting for 76 percent of costs.
  • As letter volume declines, managing labor costs will become critical to the Postal Service’s financial health.

The Postal Service continues to face financial challenges due to declines in letter mail volume. As declines persist, strategic cost control is one of the key factors that must be addressed. And clearly, labor costs will be a critical area, as it is the greatest component of postal costs — accounting for $57 billion or 76 percent of total costs in fiscal year 2018. As a result, we wanted to gain a clearer understanding of the sources of these significant costs and how they have changed in recent years.

The OIG found that over the past 10 years, the Postal Service was able to cut its inflation-adjusted labor costs by 14 percent in response to a 17 percent decline in mail volume. While overall labor costs are falling, there are still a few areas of concern, including upward pressure on rural carrier costs due to the increase in rural delivery points and steady increase of the use of overtime over the past ten years.

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Comments (5)

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  • anon

    A significant reduction in USPS labor costs could be attained by changing Residential delivery to a three days per week schedule. (Mon/Wed/Fri or Tues/Thurs/Sat) delivery schedule. Scheduled deliveries of Priority mail and Last Mile could remain unchanged until further study. The content of residential mail has changed over the past twenty years. All important, time sensitive mail is delivered electronically thus USPS is called" Snail Mail". A significant and growing segment of households do not retrieve mail daily This change would reduce a large amount of non- premises related expense, Savings would come from personnel compensation, benefits,and overtime expense as well as vehicle fuel,maintenance,and replacement cost. Other benefits would be a reduction of Personal Injury and Property Damage expense from vehicle accidents. In addition a major fuel emission environmental impact decrease would result. Staff reductions would obviously be subject to existing Labor agreements. The related savings could fund the mitigation of negative impact on employees through early retirement programs and redeployment support services. Push back should be expected from related labor unions and members of congress who are supported by those unions. USPS exists to serve the public interest, not to create jobs.

    Dec 05, 2019
  • anon

    raise the stamp to 99 cents. what can you buy with 55 cents these days? even a can of soda or a candy bar cost almost a dollar !

    Dec 04, 2019
  • anon

    How much was paid in pay for performance Bonuses?

    Dec 03, 2019
  • anon

    An important consideration is that although first class letter mail is dropping off, first class parcel and package volume is increasing. Parcel and package processing is more labor intensive and requires more handling than letter mail. So that should have been factored in when making some of the severe staffing cuts. The result of that miscalculation is what is leading to the heavy increase in the use of expensive overtime and the increasing expense of contractual grievance payments that occur when supervisors have to work to move or process the mail

    Dec 03, 2019
  • anon

    Current services of the USPS is mostly based on the weight of mail and not the delivery of mail. The only service that is by delivery is Express Mail. Amazon, FedEx, UPS and all the other delivery services know that the service of delivery is what the customer wants and is willing to pay more for that service. Until the USPS can grasp that concept and change the present antiquated process of delivering mail they will only continue to fail.

    Dec 02, 2019


  • Jennifer Bradley, Jeffrey Colvin, and Viola Stovall contributed to this report

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