Background
The U.S. Postal Service categorizes staff-level employees into two primary groups: career and pre-career. Career employees are considered permanent and are entitled to a full range of benefits, while pre-career employees do not have permanent status or receive full employee benefits. Since fiscal year (FY) 2021, the Postal Service has pursued a strategy to increase the number of career employees by converting pre-career employees to career status. From the beginning of FY 2024 through quarter 2 of FY 2026, the compensation and benefit expenses for the Postal Service workforce have increased by 5.9 percent, while the number of total employees decreased by 3,000.
What We Did
Our objective was to assess the financial and service-related impacts of the Postal Service’s employee composition. The audit focused on labor expenses of staff-level employees and operational performance. We conducted interviews with Postal Service Headquarters management in human resources, labor relations, retail and delivery operations, and processing and distribution operations to gain an understanding of the workforce composition of the organization and service-related impacts.
What We Found
While there are numerous major cost centers in the Postal Service’s network, compensation and benefits is the largest. The Postal Service’s drive to hire more career employees contributed to increased compensation expenses despite a reduction in workhours. Specifically, compensation expenses have increased by 3.5 percent since the beginning of FY 2024 through quarter 2 of FY 2026 despite the reduction of over 40 million (3.7 percent) workhours. One opportunity to reduce these costs is to adjust the workforce composition mix. In addition, despite the Postal Service increasing the number of career employees to improve performance, we found that it does not measure the effects of relying more on a career workforce when assessing operational performance and productivity.
Recommendations and Management’s Comments
We made two recommendations to address the issues identified, and Postal Service management disagreed with both recommendations. We will pursue the two disagreed recommendations through the audit resolution process. Management’s comments and our evaluation are at the end of each finding and recommendation.
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