Surprise: the USPS Lost Money in Q1 2026

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The United States Postal Service (USPS) may have a “.com” web address, but don’t be fooled—it is no business. If America’s mail carrier didn’t have the perpetual support of U.S. taxpayers, it would have been out of business a long time ago. The USPS has lost about $100 billion over the past fifteen years, including $9 billion in fiscal year (FY) 2025 and $9.5 billion in FY 2024.

Thus far in 2026, the USPS has failed to turn the page on these significant net losses. On February 5, the agency reporteda $1.3 billion loss for the first quarter of FY 2026, compared to a modest net gain of $144 million in the same quarter last year. This is a particularly bad sign because Q1 is supposed to be the “good quarter” because of holiday deliveries.

As Postmaster General David Steiner rolls out ambitious initiatives such as last-mile bidding, it’s time for USPS leadership (with the help of Congress) to reevaluate its priorities and get costs under control. Taxpayers and consumers deserve a leaner and more accountable USPS.

There is no sugarcoating Q1 2026 for the USPS: costs went up and revenue went down. The agency reports that the $1.3 billion loss is “attributed to an increase in workers’ compensation expense of $634 million, operating revenue decrease of $264 million, an increase in retiree health benefits expense of $175 million, higher other operating expenses of $169 million, and higher transportation expenses of $43 million.” 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 cost 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.”

One key reason why this gap exists is 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.

That’s not to say the USPS is powerless to lower workers’ compensation costs. As Dennus Bishop, Special Agent in Charge of the Central Area Field Office of the USPS OIG, noted during a recent fraud case, “the majority of postal employees who collect compensation benefits have legitimate claims due to on-the-job injuries. However, a certain percentage abuse the system and cost the Postal Service millions of dollars in fraudulent claims and enforcement costs.” Especially in the wake of the massive Minnesota fraud scandal, it’s up to the USPS and OIG to closely monitor this fraud and keep taxpayer funds away from criminals.

Getting the USPS back on firmer fiscal footing is an all-hands-on-deck job. The USPS needs to stop buying $80,000 trucks. The IG needs to do a better job monitoring for waste and fraud. Congress needs to reform rigid laws like FECA that make it difficult for the agency to lower costs. Until these things (and plenty more) happen, the Postal Service and taxpayers will be stuck with billion-dollar quarterly losses.