US Postal Service Cuts 50 Million Work Hours, Closes Facilities to Save Billions of Dollars

The agency has been facing considerable losses over the past years, and is currently working with DOGE to improve efficiency.

U.S. Postal Service mail carrier Lizette Portugal finishes loading her truck amid the COVID-19 pandemic in El Paso, Texas, on April 30, 2020. Paul Ratje/AFP via Getty Images

The United States Postal Service (USPS) said Thursday it has saved billions of dollars annually by cutting 50 million work hours, closing unnecessary facilities, and increasing plant productivity.

The changes translate to $2.5 billion in annual savings, the agency said in a March 20 statement.

Reductions are part of USPS’ Delivering for America 10-year plan which seeks to implement several changes to boost the agency’s financial and operational efficiency.

On March 13, Postmaster General Louis DeJoy said that USPS had terminated 30,000 workers since fiscal year 2021. Another 10,000 workers are expected to be laid off within a month, he added.

In addition to work-hour savings, Delivering for America has resulted in “$2.2 billion in annual transportation cost reductions by streamlining networks and optimizing air and surface options.”

USPS reported an increase in revenue by $3.5 billion annually by “adapting product offerings” as First-Class Mail volume has dropped

USPS also announced implementing “refinements to service standards” which it claims will save the agency a minimum of $36 billion over the next decade through reductions in real estate, transportation, and mail and packaging costs.

Even though service enhancements are not expected to cause delays in the current First-Class Mail delivery time, changes in regional transportation schedules may extend service expectations by one day for mail collected at certain post offices locations. Overall, delivery speeds for both mail and packages are expected to improve, USPS said.

The agency plans on implementing service enhancements in two phases, with the first set to begin on April 1 and the second on July 1.

Last month, DeJoy said that the USPS has long been burdened by rules that failed to account for changes in mail volume and mix. This has resulted in “costly and ineffective” operations.

“For decades—and most specifically during the last three years—Congress has actively resisted operational solutions and meaningful change.”

USPS’ new cost reduction plan comes after the agency reported a net loss of $9.5 billion for fiscal year 2024, which was $3 billion more compared to 2023. The higher losses happened despite revenues rising slightly from $78.18 billion to $79.53 billion.

In April last year, a group of senators criticized USPS for raising postage rates.

Price hikes had “disastrous effects” in 2023, with mail volume falling by 11 billion pieces and the agency suffering $6.5 billion in losses, the senators wrote in a letter.

“Instead of connecting the two issues, USPS blamed inflation, despite mail prices nearly doubling inflation in that time period,” said the letter. Last year, USPS raised postal rates two times.

Working With DOGE

Last week, DeJoy informed congressional lawmakers that USPS has signed an agreement with the Department of Government Efficiency (DOGE) and the General Services Administration (GSA) to work together on several issues.

DOGE and GSA are set to assist the postal agency in “identifying and achieving further efficiencies,” DeJoy said via letter. The focus shall be on reviewing the “mismanagement of our self-funded retirement assets and the actuarial miscalculations of our retirement obligations.”

The effort will look into the “mismanagement of our Workers’ Compensation Program” which resulted in $400 million in excessive annual charges compared to practices in the private industry.

GSA and DOGE intend to probe “burdensome regulatory requirements restricting normal business practice” at USPS which has cost the postal service more than $50 billion in damages, DeJoy wrote.

The American Postal Workers Union criticized USPS’ decision to work with DOGE, saying in a March 14 statement that there was “no legitimate role” for DOGE in the postal agency or any other federal agency.

“Our collective bargaining agreement is between the APWU and the Postal Service. Any effort by DOGE, or any other entity, to weaken our union rights or target our contractual protections and working conditions, will be met with immediate and sustained resistance by postal workers,” the union said.

Meanwhile, the National Association of Letter Carriers took a more open approach on the matter.

“Our understanding of the agreement between USPS and DOGE is that it does not grant” access to personal information of workers, association president Brian Renfroe said in a statement.

Several of the matters that DOGE could assist USPS with are issues that National Association of Letter Carriers has been actively looking at for many years, he said.

“These include USPS’s misallocated pension liabilities, which have cost the agency tens of billions of dollars, and a new investment strategy for USPS’s three retirement funds, which are currently held in Treasury bonds, missing out on hundreds of millions in annual returns.”

Earlier this month, DOGE-head Elon Musk suggested privatizing USPS, arguing that “logically, we should privatize anything that can reasonably be privatized.”

National Association of Letter Carriers opposed the privatization idea. “A friendly reminder on behalf of every American who depends on USPS (including 51.5 million rural addresses): It’s called universal service, not ‘as much as possible’ service,” the group wrote in a post on social media platform X. “And we’ll #FightLikeHell to protect it.”

President Donald Trump had also previously suggested privatization of USPS. Last month, he raised the possibility of merging the postal service with the Commerce Department, an idea that was opposed by Democratic lawmakers.