The Arithmetic of Permanence
The Postal Service has a peculiar problem for an agency that loses money nearly every year. It is paying more to get less work done. In a self-initiated audit released September 25, its Office of Inspector General found that compensation for the four main crafts rose by more than $1.3 billion from the start of fiscal 2024 through the second quarter of fiscal 2026, even as the agency shed more than 40 million workhours. Fewer hours, larger bill, and a spreadsheet that refuses to feel bad about it.
The explanation is a strategy rather than a scandal. Under the Delivering for America plan, launched in 2021, the Postal Service set out to convert pre-career employees into permanent career ones, and by the plan’s second edition the conversions had reached 190,000. Career employees cost more. The OIG puts the average at $34.32 per workhour in fiscal 2025, against $18.66 for pre-career staff. Between fiscal 2024 and 2025, pre-career hours fell by 37.4 million, saving $693 million, while career hours rose by 10.9 million, costing $374 million. The net saving was $319 million, which is what a good idea looks like after it meets a payroll office.
The auditors also benchmarked the Postal Service against two unnamed shipping competitors using their annual filings. Compensation and benefits at the Postal Service rose 8.6 percent from fiscal 2023 to 2025, more than twice the increase at either rival, and 85.1 percent of its staff were career employees, against roughly 52 to 54 percent at the other two. Compensation and benefits already exceed 60 percent of total expenses, and the agency has posted a net loss in every fiscal year since 2007 but one.
The Defense Rests, Mostly on the Contracts
Fairness demands the other side of the ledger, and the Postal Service has real points to make. In its written response, management did not dispute the basic finding, but said the report ignores inflation and never asks whether the strategy achieved its stated aim, which was cutting the cost of high pre-career turnover. Both objections have merit. The OIG itself cites 2.6 percent inflation for 2025, roughly the same as the 2.6 percent rise in compensation that fiscal year, and the report puts no dollar figure on turnover savings. Then there is the business itself. The Postal Service must deliver to every address under its universal service obligation, receives no tax dollars for operating expenses, and competes with companies free to decline unprofitable routes.
The operational finding stands on softer ground, and management pounced. The OIG compared the best and worst performing processing facilities and found that employee mix told it little; the cheapest facilities to run averaged 15.6 percent pre-career staff, against 11.3 percent at the costliest. The auditors concede their analysis was limited and that more may be necessary, yet still say cheaper labor could likely be used without hurting performance. Management calls that speculation without evidence, noting that mail type and automated equipment drive costs per piece. That is a fair hit. Correlation across a handful of facilities is a hint, not a verdict.
Two Signatures and a Postmaster General
Here the case grows harder to wave away. In March 2026 the postmaster general signaled a shift, saying workhour cuts must reach straight-time hours and not merely overtime, and that the workforce should lean toward pre-career employees. Headquarters management then told the OIG it has no formal plans to carry that out. The September 17 management response, e-signed the next morning by Joseph Bruce, vice president of human resources, and Elvin Mercado, chief retail and delivery officer, goes further and says reducing labor expenses by leveraging the pre-career workforce is not possible under the current contracts. The memo even concedes the pre-career pool will shrink over time, because workers convert to career status after two years and conversions generally outpace departures.
Put plainly, the direction the postmaster general described is one his executives certify cannot happen. Yet the OIG notes that mail handlers and postal support employees sat more than 7 percent below their negotiated pre-career caps in fiscal 2026. There is a reasonable answer to that, which is that headroom today is not headroom tomorrow, given the two-year conversion clock the Postal Service itself negotiated with three unions between 2019 and 2022. The OIG says it is not demanding renegotiation, only a strategy. Management offered none. On both recommendations, the target implementation date and the responsible official are listed as N/A.
The second recommendation is the more awkward one. It asks only that the agency assess whether its larger career workforce improved performance. Management disagreed “as written” and said such assessments already occur regularly. The OIG says none were provided despite requests. Meanwhile, retail and delivery operations do not track pre-career employee availability, and processing operations told the auditors they do not consider whether pre-career staff affect performance. Either the assessments exist and are shy, or they do not exist. The agency had a chance to show its homework and wrote N/A.
Who Pays for the Cheap Hours
The cheaper workforce the OIG has in mind is made of people. Pre-career employees have no permanent status, are not guaranteed hours or a set schedule, do not earn sick leave, and do not receive the cost-of-living adjustment career staff get. The OIG concedes that applicants in expensive cities cannot always afford the jobs. A union would describe automatic conversion after two years as a promise kept; the auditors describe it as a cost arriving on schedule. Both descriptions are accurate, which is the trouble with dilemmas.
The dilemma is real. The Postal Service cannot easily shrink a workforce it must keep deployed to every address in the country, has locked a permanent tier into its contracts, and has never demonstrated that the expensive tier performs better. The inspector general wants savings it has not proved are safe, while management wants credit for assessments it has not shown. Both recommendations now head into the audit resolution process, where the OIG says it will keep pressing.
The cheapest step is the obvious one. If the internal assessments exist, release them. If they show career staff deliver, the roughly $15.66 an hour premium is an investment, and the agency can say so. If they do not exist, the Postal Service has spent years paying for a theory it never tested, and answered its own inspector general with N/A.
