“Erin go broke” as lawmakers demand answers on postal failures

No pot of gold without postal reform.

Photo by Quentin Rey on Unsplash

Despite its many price hikes and taxpayer subsidies, the United States Postal Service (USPS) is constantly on the verge of running out of money. And now, postal leadership is headed to Capitol Hill to demand even more of Americans’ hard-earned dollars. USA Today’s Trevor Hughes reports, “Congress is holding a March 17 oversight hearing on the Postal Service, and postal officials are expected to ask officials to let them borrow billions of dollars to keep operating in 2027, along with protecting their power to raise rates.” The truth is that giving America’s mail carrier a blank check simply sets the stage for more reckless spending. Lawmakers, who will surely be wearing green in honor of St. Patrick’s Day, need to hold the USPS accountable, not rubber-stamp reckless agency policies that give away taxpayers’ green.

Taxpayers have been down this road before. In 2022, Congress passed the Postal Service Reform Act (PSRA), which gave—directly and indirectly—the USPS more than $100 billion in taxpayer money. The Government Accountability Office notes that PSRA “significantly reduced USPS’s unfunded liability for retiree health benefits by integrating these benefits with Medicare, thereby transferring some retiree health costs to Medicare.” Of course, switching liabilities doesn’t eliminate those liabilities, it just moves them—the ultimate shell game, with taxpayer money. Additionally, the legislation “repealed a requirement for USPS to prepay future retiree health benefits and canceled past due prefunding payments for those benefits.” One might assume that this gargantuan bailout would have put the USPS on a firmer fiscal path. While the USPS posted a net gain in 2022, the agency has lost an astounding $25 billion since then. The problem is that PSRA did nothing to address the reasons why America’s mail carrier burns through so much cash.

It certainly doesn’t help that the USPS is spending around $80,000 for new mail trucks. Reason assistant editor Jack Nicastro recently noted, “The Postal Service agreed to pay Oshkosh $77,692 per [electric truck] and $54,584 per [truck] in March 2023. To put these numbers in context, FedEx’s fleet of Mercedes-Benz Sprinter vans is considerably cheaper, costing $50,830 for the baseline 2026 Sprinter and $61,180 for the 2026 eSprinter.” The USPS—and taxpayers by extension—pay this enormous tab despite knowing “cheaper alternatives exist. 21,000 of the Postal Service’s new fleet are commercial off-the-shelf vans like the Ford E-Transit (whose 2026 model starts at $54,855).”

However, the largest contributor to soaring USPS expenses is labor costs. For example, the USPS spends about $1.5 billion annually in workers’ compensation costs, including cash payments to injured workers and administrative fees. From 2022 to 2024, workers’ compensation costs per workhour increased by 26 percent, even as private sector costs for comparable industries declined by 7 percent. According to a 2023 Office of Inspector General (OIG) analysis, “workers’ compensation cost per workhour was between 31 percent and 41 percent higher than private industry.”

Lawmakers can use the March 17 oversight hearing to examine ways to reduce this gap. They can start by reexamining the Federal Employees’ Compensation Act (FECA), which makes it difficult for the agency to copy its private-sector counterparts in reducing workers’ compensation spending. For example, companies and even state governments limit maximum weekly payouts, settle claims through lump-sum payments, and require use of in-network physicians. However, the USPS is bound by the system established by FECA and cannot implement any of these changes to limit costs.

The USPS does have some ability to limit compensation costs on its own. For example, it can hire more “pre-career” workers—who do not receive the same level of benefits as career employees—and rely more on temporary hires for the holidays. But it cannot keep implementing the same policies and expect taxpayers to repeatedly come to the rescue. It’s time to deliver real reforms to America’s mail carrier.