Reforming the U.S. Postal Service: Background and Issues for Congress
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Reforming the U.S. Postal Service:
Background and Issues for Congress
Updated February 10, 2022
Congressional Research Service
https://crsreports.congress.gov
R44603
Reforming the U.S. Postal Service: Background and Issues for Congress
Summary
This report provides background information on the financial condition of the U.S. Postal Service
(USPS). It provides information on mail revenue, volume, and service performance. Additionally,
it covers select postal reform legislation introduced in Congress intended to address the USPS’s
financial and structural challenges.
In FY2021, the USPS marked its 15th consecutive year of financial losses with a net loss of $4.9
billion. This was an improvement over its FY2020 net loss of $9.2 billion. From FY2020 to
FY2021, USPS total revenue from the sale of postal products and services increased 5.3%, from
$73.2 billion to $77.1 billion. In addition, USPS received $10 billion in funding from the
Coronavirus Aid, Relief, and Economic Security Act (CARES Act, P.L. 116-136). This was
originally provided as borrowing authority, but pursuant to the Consolidated Appropriations Act,
2021 (P.L. 116-260), the funds do not need to be repaid.
In FY2021, USPS experienced growth in the package and shipping part of its business (known as
Competitive Products), while volume and revenue of many of its Market Dominant Products
(e.g., First Class single-piece mail) declined. As of September 30, 2021, the USPS holds $11
billion in debt, which is $4 billion under its statutory debt limit of $15 billion.
Between FY2007 and FY2016, the USPS struggled to fulfill its 10-year statutory obligation to
prefund health benefit liabilities for future postal retirees according to the schedule established by
the Postal Accountability and Enhancement Act. Since FY2007, the USPS has made $20.9 billion
in contributions into the fund, including $17.9 billion in prefunding payments and a transfer of
$2.958 billion into the fund from an existing escrow account. However, USPS defaulted on $33.9
billion of the prefunding payments. Since the prefunding payment schedule ended in FY2016, the
USPS has made no further payments to liquidate its remaining unfunded liability. The USPS has
requested reforms, such as those included in H.R. 3076, the Postal Service Reform Act of 2022
(passed by the House, February 8, 2022), which would integrate postal retiree healthcare options
with Medicare, thereby reducing costs.
Additional postal initiatives and reform options discussed in this report include (1) changes to
postal delivery standards, (2) consolidation of mail processing facilities, (3) reduction of hours at
retail post offices, (4) changes to postal delivery schedules, (5) procurement of a new postal fleet,
and (6) expansion of nonpostal products and services.
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Reforming the U.S. Postal Service: Background and Issues for Congress
Contents
Overview ......................................................................................................................................... 1
Governance and Oversight of the U.S. Postal Service .................................................................... 1
Postal Board of Governors ........................................................................................................ 1
Executive Leadership Team ...................................................................................................... 2
U.S. Postal Service Office of Inspector General ....................................................................... 2
Postal Regulatory Commission ................................................................................................. 3
Financial Condition of the U.S. Postal Service ............................................................................... 3
Financial Structure of the U.S. Postal Service .......................................................................... 3
What Happens When USPS Ends the Year with a Net Loss? ................................................... 4
Postal Revenue, Mail Volume, and Operating Expenses ................................................................. 8
Postal Revenue .......................................................................................................................... 9
Mail Volume ............................................................................................................................. 11
Long-Term Trends ................................................................................................................... 12
Operating Expenses ................................................................................................................. 14
Postal Retiree Health and Pension Benefits .................................................................................. 16
Retiree Health Prefunding Payments ...................................................................................... 17
Legislative Proposals .............................................................................................................. 18
Postal Delivery Standards.............................................................................................................. 19
Postal Processing and Delivery Network ................................................................................ 22
Six- to Five-Day Delivery Schedule ....................................................................................... 22
Post Office Closures and Reduction of Operating Hours ........................................................ 23
Legislative Reforms ................................................................................................................ 25
Postal Workforce ........................................................................................................................... 25
Size and Cost of the Postal Workforce .................................................................................... 26
Use of Non-Career Postal Employees ..................................................................................... 27
Impact of Workforce Initiatives on Costs................................................................................ 29
Further Postal Reform Issues for Congress ................................................................................... 30
Postal Fleet .............................................................................................................................. 30
Nonpostal Products and Services ............................................................................................ 31
Postal Banking ........................................................................................................................ 32
Figures
Figure 1. USPS Liquidity and Unrestricted Cash, FY2006-FY2021 .............................................. 8
Figure 2. USPS Revenue, by Mail Category, FY2020-FY2021 .................................................... 10
Figure 3. USPS Products’ Contribution to FY2021 Volume and Revenue..................................... 11
Figure 4. Market Dominant and Competitive Mail Volume, FY2020-FY2021 ............................ 12
Figure 5. Market Dominant Revenue and Volume, FY2007-FY2021 ........................................... 13
Figure 6. Competitive Revenue and Volume, FY2007-FY2021 ................................................... 13
Figure 7. Total USPS Mail Volume and Revenue, FY2005-FY2021 ............................................ 14
Figure 8. USPS Retail Postal Facilities ......................................................................................... 25
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Reforming the U.S. Postal Service: Background and Issues for Congress
Tables
Table 1. USPS Cash on Hand and Total Debt, FY2010-FY2020 .................................................... 6
Table 2. USPS Liquidity and Unrestricted Cash, FY2006-FY2021 ................................................ 7
Table 3. USPS Operating Expenses, FY2020-FY2021 ................................................................. 15
Table 4. USPS Payments for Retiree Health and Pension Benefits, FY2017-FY2021 ................. 17
Table 5. Payments to Postal Service Retiree Health Benefit Fund, FY2007-FY2016 .................. 18
Table 6. USPS Delivery Standards ................................................................................................ 20
Table 7. USPS FY2021 Service Performance Targets and Percent On-Time................................ 21
Table 8. Total USPS Retail Postal Facilities, FY2010-FY2021 .................................................... 24
Table 9. Total Number of Separated USPS Career Employees, FY2007-FY2018 ........................ 27
Contacts
Author Information........................................................................................................................ 34
Acknowledgments ......................................................................................................................... 34
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Reforming the U.S. Postal Service: Background and Issues for Congress
Overview
Prior to enactment of the Postal Reorganization Act of 1970 (PRA),1 mail delivery in the United
States was the responsibility of the U.S. Post Office Department, a Cabinet-level department in
the executive branch funded through annual appropriations.2 The PRA established the USPS as an
independent agency of the executive branch, self-funded by revenue from the sale of postal
products and services. PRA reform efforts were driven largely by the view that the Post Office
Department was ill-equipped to meet the demands of the growing U.S. population and the
changing economy.3 Mail volume had risen sharply and the Post Office Department lacked the
institutional flexibility to respond quickly to market changes.4
In recent years, the U.S. Postal Service (USPS or Postal Service) has experienced sharp declines
in total mail volume, due almost entirely to reductions in First-Class and Marketing Mail volume.
Between 2008 and 2020, total mail volume decreased from 202.7 billion to 129.2 billion pieces,
or a drop of 73.5 billion pieces.5 During the same period, however, shipping and package volume
more than doubled, from 3.3 billion pieces in 2008 to 7.3 billion pieces in 2020.6 While package
mail represents a small portion of total mail volumes, it requires larger facilities, specialized
equipment, and more manual work compared to the largely automated process of sorting letter
mail. Market changes and global economic conditions have contributed to the Postal Service’s
financial challenges and affected its efforts to control expenses, expand revenue, and manage
operational issues.7
Governance and Oversight of the U.S. Postal Service
Postal Board of Governors
USPS is under the direction of the Board of Governors of the U.S. Postal Service (hereinafter, the
Board), which USPS describes as “comparable to a board of directors of a private corporation.”8
Created by the PRA in 1970, the Board consists of the Postmaster General, the Deputy Postmaster
General, and nine Governors, appointed by the President with the advice and consent of the
Senate.9
Under the Postal Accountability and Enhancement Act of 2006 (PAEA), Governors serve sevenyear terms.10 When their term expires, a Governor may continue to serve during a “holdover”
1 P.L. 91-375.
2 Post Office Act of 1872 (17 Stat. 283).
3 U.S. Postal Service, The United States Postal Service: An American History 1775-2006, November 2012, pp. 38-39,
at http://about.usps.com/publications/pub100.pdf.
4 Ibid.
5 U.S. Postal Service, “A Decade of Facts and Figures,” at https://facts.usps.com/table-facts.
6 Ibid.
7 See “Impact of the Great Recession on the Postal Service,” within U.S. Postal Regulatory Commission, Rate
Adjustment Due to Extraordinary or Exceptional Circumstances: Order Granting Exigent Price Increase, Docket
R2013-11, December 24, 2013, pp. 39-45, at http://www.prc.gov/docs/88/88645/Order_1926.pdf.
8
USPS, About the Board of Governors, at https://about.usps.com/who/leadership/board-governors.
9 P.L. 91-375, §202.
10
P.L. 109-435; 39 U.S.C. §202(b).
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year until a successor is appointed.11 A Governor appointed to fill a vacancy before the term
expires will serve for the remainder of their predecessor’s term. No person may serve for more
than two terms as Governor.12 The Governors appoint, and may remove, the Postmaster General.13
Under postal regulations, appointment or removal of the Postmaster General requires “a favorable
vote of an absolute majority of the Governors in office.”14 The Deputy Postmaster General is
appointed, or may be removed, by vote of the Governors and the Postmaster General.15
The Board is responsible for setting the long-term plan of the Postal Service, including approval
of official statements on policy and official positions on legislative proposals. The Board
approves the annual financial plan, operating plan, and capital plan. Authorization from the Board
is generally required before USPS may pursue certain changes to service standards.16 Select
responsibilities and authorities are exercised by the Governors rather than by the Board as a
whole. For example, the Governors establish rates and classes of competitive products and
appoint the USPS Inspector General.17
Executive Leadership Team
An executive leadership team, headed by the Postmaster General who serves as the Chief
Executive Officer, manages the day-to-day operations of the Postal Service.18 The executive
leadership team includes the Deputy Postmaster General, who serves as Chief Human Resources
Officer, the USPS General Counsel, and the Senior Vice President of Finance and Strategy. The
team also includes Chief Technology, Financial, and Information Officers and Executive Vice
Presidents of Commerce and Business Solutions, Retail and Delivery, Logistics and Processing
Operations, and Marketing. With the exception of the Deputy Postmaster General, executive
officers are appointed by the Postmaster General.
U.S. Postal Service Office of Inspector General
The U.S. Postal Service Office of Inspector General (USPSOIG) conducts audits and
investigations of postal programs and operations. The USPSOIG is responsible for “detecting and
preventing” waste and fraud within the Postal Service.19 Pursuant to the Inspector General Act of
1978 (5 USC App), the USPSOIG publishes its report recommendations on its website.20 In
addition, the USPSOIG investigates alleged misconduct and violations of postal law by postal
employees.21
11 Ibid.
12 Ibid.
13 Ibid., §202(c).
14 39 C.F.R. §6.6(a)
15 Ibid., §202(d).
16 39 C.F.R. §3.3.
17 39 C.F.R. §3.4.
18 USPS, Executive Leadership Team, at https://about.usps.com/who/leadership/pmg-exec-leadership-team.htm; 39
C.F.R. §1.1.
19 39 C.F.R. §230.1.
20 USPSOIG, Audit Recommendations, at https://www.uspsoig.gov/audit-recommendations.
21 USPSOIG law enforcement officers investigate alleged violations of postal law by postal employees. The Postal
Inspection Service investigates alleged violations of postal law by persons other than postal employees. Postal
Inspectors and USPSOIG Special Agents are federal law enforcement officers, with the authority to serve warrants and
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Postal Regulatory Commission
The Postal Regulatory Commission (PRC) is an independent regulatory commission responsible
for oversight of the Postal Service and postal operations.22 Amongst its other responsibilities, the
PRC reviews postal operations to determine whether the USPS is meeting its service standards
and other statutory requirements.23 Before implementing operational changes that will have a
substantial or nationwide impact on postal service, the USPS must request an Advisory Opinion
from the PRC.24
The PRC also establishes, and periodically reviews, the regulations that govern how postal rates
are set.25 The PRC examines the Postal Service’s annual financial statements, and conducts
analysis of USPS operations and expenses to determine if revenue from each postal product and
service is sufficient to covers its costs or if rates need to be adjusted.26 The PRC is composed of
five Commissioners, appointed by the President, by and with the advice and consent of the
Senate.27
Financial Condition of the U.S. Postal Service
The Postal Service faces financial challenges due to a confluence of factors including (1) U.S.
and global economic conditions over the past decade, (2) the impact that technological
innovations have had on the demand for postal products and services, and (3) statutorily required
financial obligations.
The USPS must sell enough postal products to maintain self-sufficiency and meet its statutory
requirements. However, the USPS cannot expand its operations beyond the scope of postal
products and services and other limited nonpostal products authorized by statute.28 Statutes also
limit the USPS’s ability to raise rates on certain postal products. This situation underlies many of
the challenges facing the USPS and is also at the core of many of the reform efforts undertaken
by the USPS and considered by Congress.
Financial Structure of the U.S. Postal Service
The current financial structure of the USPS was largely established by two statutes: the Postal
Reform Act and the Postal Accountability and Enhancement Act. As already noted, the PRA
subpoenas, carry firearms, and make arrests. 39 C.F.R. §230.4; 39 C.F.R. §233.1.
22 39 U.S.C. §501.
23 For example, see PRC, Annual Compliance Determination, at https://www.prc.gov/prc-reports.
24 39 U.S.C. §501.3661(b).
25 39 U.S.C. §§3621-3622; 39 U.S.C §3633; 39 U.S.C §3661. Also see PRC, Statutory Review of the System for
Regulating Rates and Classes for Market Dominant Products (Docket No. RM2017-3), at https://www.prc.gov/
dockets/showdocket/RM2017-3; PRC, Institutional Cost Contribution Requirement for Competitive Products (Dockets
No. RM2022-2 and RM2017-1), at https://www.prc.gov/dockets/showdocket/RM2022-2 and https://www.prc.gov/
dockets/showdocket/RM2017-1, respectively.
26 For example, see PRC, Financial Analysis of United States Postal Service Financial Results and 10-K Statement FY
2020.
27 39 U.S.C. §502(a).
28 Under §102 of the Postal Accountability and Enhancement Act of 2006 (PAEA,), the USPS is prohibited from
offering most nonpostal products and services. The PAEA allowed the USPS to continue offering 11 groups of
“grandfathered” nonpostal products that had been offered prior to enactment of the PAEA. See the section of this report
titled “Nonpostal Products and Services” for additional information.
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created the USPS, which replaced the U.S. Post Office Department as an independent agency of
the executive branch, and made it responsible for generating enough revenue to finance its own
operations. Prior to the PRA, the U.S. Post Office Department was a Cabinet-level agency and
was not expected to be financially self-sustaining.
Since enactment of the PRA, the USPS has generated nearly all of its funding—about $77 billion
in FY2021 according to the USPS’s most recent annual financial statement—by charging users of
the mail for the costs of the services it provides.29 Congress provides an annual appropriation—
about $55 million in FY2021—to compensate the USPS for providing free mailing privileges to
the blind and certain overseas voters.30 In addition, the annual appropriation compensates the
USPS for debt it accumulated in the 1990s while providing postal services at below-cost rates to
nonprofit organizations.31
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act, P.L. 116-136) in March
2020 provided the USPS with $10 billion to fund operational expenses. This was originally
borrowing authority, but pursuant to the Consolidated Appropriations Act, 2021 (P.L. 116-260),
the funds do not need to be repaid. According to communications from USPS, the $10 billion in
CARES Act funding was spent on FY2021 operating expenses.32 USPS also received $233
million in appropriated funds under the American Rescue Plan Act (P.L. 117-2) in March 2021 for
reimbursement of certain leave costs related to the Coronavirus Disease 2019 (COVID-19)
pandemic.33
Funds appropriated to the USPS are deposited in the Postal Service Fund, a revolving fund in the
Treasury that consists primarily of revenue generated from the sale of postal products and
services.34 The revenue in the Postal Service Fund is used to fund the operations of (1) the Postal
Service, which includes the U.S. Postal Inspection Service (USPIS); (2) the U.S. Postal Service
Office of Inspector General (USPSOIG); and (3) the Postal Regulatory Commission (PRC).35
The USPS’s end-of-year financial results for FY2021 marked the 15th consecutive year of losses
for the agency. In the years immediately prior to FY2007, the USPS ran modest profits. Between
FY2007 and FY2021, the USPS accumulated $92 billion in net financial losses, including a net
loss of $4.9 billion in FY2021, a net loss of $9.2 billion in FY2020, and a net loss of $8.8 billion
in FY2019.36
What Happens When USPS Ends the Year with a Net Loss?
The USPS does not receive additional appropriations (beyond the reimbursement for serving
blind and overseas patrons) when it ends a fiscal year with a financial loss. The USPS has access
29 U.S. Postal Service, FY2021 Report on Form 10-K, Washington, DC, 2021, p. 21, at https://about.usps.com/what/
financials/10k-reports/fy2021.pdf (hereinafter USPS, FY2021 10-K).
30 P.L. 116-260.
31 Revenue Forgone Reform Act of 1993 (RFRA; P.L. 103-123, Title VII). For additional information, see CRS Report
RS21025, The Postal Revenue Forgone Appropriation: Overview and Current Issues, by Michelle D. Christensen.
32 Electronic communication from USPS, January 4, 2022.
33 USPS, FY2021 10-K p. 30.
34 39 U.S.C. §2003.
35 Ibid. Additional information on the USPIS, USPSOIG, and PRC is available in the section of this report titled
“Governance and Oversight of the U.S. Postal Service” and at https://www.uspis.gov; https://www.uspsoig.gov; and
https://www.prc.gov, respectively.
36 USPS, FY2021 10-K, pp. 56, 65.
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to debt instruments from the U.S. Treasury and has a statutory debt limit of $15 billion, which
help it to maintain liquidity and cover operational expenses.37
The USPS has statutory authority to borrow a maximum of $3 billion per fiscal year and hold a
maximum total debt of $15 billion.38 At the end of FY2012, the USPS reached its statutory debt
limit and USPS’s total debt obligations remained at $15 billion from FY2012 to FY2017. As the
USPS paid down its existing debt, it accumulated new debt at or close to its statutory maximum. 39
In FY2018, however, USPS began to reduce its outstanding debt balance. At the end of FY2018,
USPS’s outstanding debt balance was $13.2 billion, $1.8 billion below its debt limit. 40 At the end
of FY2019, USPS’s total debt balance was $11 billion. According to its FY2019 financial
statement, USPS had no plans to pay its debt down further in FY2020.41
Since 1974, USPS’s debt has been issued through a variety of loan instruments (e.g., fixed and
floating rate loans, short term credit lines) issued through the Federal Financing Bank (FFB).42 On
April 3, 2020, the USPS borrowed $3.4 billion on a short-term credit line with FFB, which
increased the total debt balance to $14.4 billion. The short-term credit line was repaid by the
USPS on April 2, 2021, and as of September 30, 2021, their total debt balance was $11 billion,
which is $4 billion under their statutory debt limit.43 Table 1 below shows the amount of cash on
hand at the beginning and end of the fiscal year, and the total debt at the end of the fiscal year, for
FY2010 through FY2020.
37 39 U.S.C. §2005(a).
38 39 U.S.C. §2005(a). Currently, all of USPS’s debt is issued by the Federal Financing Bank, a government
corporation under the general supervision of the Secretary of the Treasury that was created by Congress in 1973 (P.L.
93-224).
39 Federal Financing Bank, U.S. Department of the Treasury, Financial Statements, September 30, 2015 and 2014
(With Independent Auditors’ Reports Thereon), November 10, 2015, pp. 2-3, at https://ffb.treasury.gov/assets/files/
FY2015.pdf. 39 U.S.C. § 2006.
40 U.S. Postal Service, FY2018 Report on Form 10-K, Washington, DC, 2018, p. 43, at https://about.usps.com/what/
financials/10k-reports/fy2018.pdf (hereinafter USPS, FY2018 10-K).
41 U.S. Postal Service, FY2019 Report on Form 10-K, Washington, DC, 2019, p. 41, at https://about.usps.com/what/
financials/10k-reports/fy2019.pdf (hereinafter, USPS FY2019 10-K).
42 USPS, FY2018 10-K, pp. 49-50. Also see Federal Financing Bank, U.S. Department of the Treasury, 2015 Annual
Report, November 13, 2015, p. 4, at https://ffb.treasury.gov/assets/files/AnnualReport2015.pdf.
43 USPS, FY2021 Q2 10-Q. pp. 8-9, at https://about.usps.com/what/financials/financial-conditions-results-reports/
fy2021-q2.pdf; USPS, FY2021 Q3 10-Q, p. 9, at https://about.usps.com/what/financials/financial-conditions-resultsreports/fy2021-q3.pdf; and Federal Financing Bank, U.S. Department of the Treasury, Monthly Activity Report April
2021, p. 1, at https://ffb.treasury.gov/assets/files/Monthly_Activity_Report_2021_May.pdf.
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Table 1. USPS Cash on Hand and Total Debt, FY2010-FY2020
(dollars in billions)
FY
2010
FY
2011
FY
2012
FY
2013
FY
2014
FY
2015
FY
2016
FY
2017
FY
2018
FY
2019
FY
2020
Cash
Start FY
$4.1
$1.0
$1.3
$2.1
$2.3
$4.9
$6.6
$8.1
$10.5
$10.1
$8.8
Cash
End FY
$1.0
$1.3
$2.1
$2.3
$4.9
$6.6
$8.1
$10.5
$10.1
$8.8
$14.4
Total
Debt
$12.0
$13.0
$15.0
$15.0
$15.0
$15.0
$15.0
$15.0
$13.2
$11.0
$14.0
Sources: U.S. Postal Regulatory Commission, Financial Analysis of United States Postal Service Financial Results and
10-K Statement, Fiscal Year 2020 (revised), November 4, 2021, p. 39 (Table II-18), at https://www.prc.gov/sites/
default/files/reports/FY2020%20Financial%20Report%20%28REVISED%29.pdf; FY2015-FY2019 10-K; USPSOIG,
Measurement of Days of Operating Cash on Hand, at https://www.uspsoig.gov/sites/default/files/document-libraryfiles/2016/FT-AR-17-001.pdf.
As shown in Table 2 and Figure 1, in FY2019, the USPS had about 41 days44 of unrestricted
operating cash on hand. This was about 10 times the number of days of unrestricted cash on hand
at its lowest point in FY2007. The USPS also had about 60 days of liquidity, which is an average
daily measure of cash on hand plus available borrowing authority.45 By FY2021, the days of
liquidity had increased to 103.
44 PRC’s estimates of USPS’s average days of unrestricted cash on hand differ slightly from USPS’s calculations,
which are shown here. For example, according to the PRC’s calculation, the USPS had 24 days of operating cash in
FY2015. See U.S. Postal Regulatory Commission, Financial Analysis of United States Postal Service Financial Results
and 10-K Statement, Fiscal Year 2015, March 29, 2016, p. 33, at http://www.prc.gov/sites/default/files/reports/
FY%202015%20Financial%20Analysis%20Report.pdf. The USPS estimate, however, is 25 days, which is based on a
slightly lower average operating cost per day ($270 million) than that used by the PRC ($275 million).
45 USPS defines and calculates average daily liquidity as “unrestricted cash plus available borrowing capacity, divided
by estimated average cash disbursements (including capital expenditures) per calendar day (365 days per year).” USPS,
FY2019 10-K, p. 39.
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Table 2. USPS Liquidity and Unrestricted Cash, FY2006-FY2021
Days of Unrestricted
Cash on Hand
Days of Liquidity
FY2006
5.04
80.91
FY2007
4.06
62.36
FY2008
6.79
57.96
FY2009
21.28
61.87
FY2010
5.89
30.22
FY2011
8.05
24.29
FY2012
9.83
19.26
FY2013
11.89
11.89
FY2014
25.18
25.18
FY2015
33.10
33.10
FY2016
39.00
39.00
FY2017
51.63
51.63
FY2018
48.43
57.10
FY2019
41.32
60.12
FY2020
NA
66.00
FY2021
NA
103.00
Fiscal Year
Sources: U.S. Postal Service10-Ks; electronic communication from USPS December 18, 2019.
Notes: USPS has modified the way it calculates days of liquidity over the years. Table 2 reflects the USPS’s
current methodology. When calculating total liquidity, USPS adds unrestricted cash to available borrowing
authority ($15B minus outstanding debt), rather than the annually available borrowing authority, which is limited
by the annual $3B limitation. For example, on September 30, 2019, USPS assumed total liquidity was $12.8B
($8.8B cash + $4B borrowing authority), even though, under statute, it is restricted to borrowing $3B each
year. In reality, on October 1, 2019, USPS would have had access to $11.8B (the same $8.8B of cash + $3B of
borrowing authority). For FY2020 and FY2021, the USPS 10-Ks provided approximate days of liquidity.
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Figure 1. USPS Liquidity and Unrestricted Cash, FY2006-FY2021
Sources: U.S. Postal Service10-Ks; electronic communication from USPS, December 18, 2019.
Notes: USPS has modified the way it calculates days of liquidity a couple times over the years. Table 2 reflects
the USPS’s current methodology. When calculating total liquidity, USPS adds unrestricted cash to available
borrowing authority ($15B minus outstanding debt), rather than the annually available borrowing authority,
which is limited by the annual $3B limitation. For example, on September 30, 2019, USPS assumed total liquidity
was $12.8B ($8.8B cash + $4B borrowing authority), even though, under statute, it is restricted to borrowing
$3B each year. In reality, on October 1, 2019, USPS would have had access to $11.8B (the same $8.8B of cash +
$3B of borrowing authority).
Postal Revenue, Mail Volume, and Operating
Expenses
The PAEA, for the first time, provided a definition of the term postal service. Under the PAEA,
postal service is defined as “the delivery of letters, printed matter, or mailable packages,
including acceptance, collection, sorting, transportation, or other functions ancillary thereto.”46
This definition is significant because it prevents the Postal Service from developing new
nonpostal products (e.g., expanded banking and financial services) that could compete with
private industry.47
The PAEA also changed how postal rates are established and divided postal products into two
distinct groups: market dominant products and competitive products.48
46 P.L. 109-435, Title I, §101, 120 Stat. 3199.
47
See sections of this report titled “Nonpostal Products and Services” and “Postal Banking”.
48 P.L. 109-435. For the full list of current market-dominant and competitive products, see U.S. Postal Regulatory
Commission, Mail Classification Schedule (with revisions through April 10, 2016), January 15, 2016, at
http://www.prc.gov/mail-classification-schedule.
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Market Dominant and Competitive Products
Market dominant products are those in which the USPS is considered to have a monopoly over the service, such
as first-class and marketing mail. Competitive products, such as shipping and packages services, are those in which
the USPS competes with the other companies in the private market (e.g., FedEx, UPS).
Market Dominant Products include:
First-Class Mail
Marketing Mail (formerly, Standard Mail)
Periodicals
Post Office Box Services
Competitive Products include:
Priority Mail®
Priority Mail Express®
Parcel Select®
International Priority Airmail®
Prior to the passage of the PAEA, there was concern that the USPS was using its revenue from
market dominant products to subsidize the costs of competitive products. Cross-subsidization
could provide an advantage for the USPS in the competitive market by creating artificially low
prices that did not include all the costs attributable to those products. The PAEA addressed this
issue by forbidding the subsidization of competitive products with market dominant revenue and
establishing the Competitive Products Fund (CPF), which receives deposits from the Postal
Service Fund for revenue derived from the sale of competitive products.49
Postal Revenue
In FY2021, overall revenue from postal products and services was $77.1 billion, which was an
increase of nearly $3.8 billion (or 5.2%) from FY2020.50 The increase was due in large part to
revenue from competitive products, though market dominant products had a modest revenue
increase of 0.4%. In FY2021, revenue generated from the sale of market dominant products
accounted for approximately 55% of USPS’s annual operating revenue.51
As shown in Figure 2, total revenue from market dominant products was $42.68 billion in
FY2021, an increase of about $149 million from FY2020. Total revenue from competitive
products was about $34.39 billion in FY2021, an increase of $3.7 billion (or 12%) from FY2020.
49 Ibid. Title IV, §401, 120 Stat. 3221. Title IV of the PAEA also mandates that competitive products not only cover the
costs that are directly attributable to those products, but also cover a portion of the USPS’s institutional costs, which are
not attributable to any specific product.
50 USPS, FY2021 10-K.
51 U.S. Postal Service, FY2020 Report on Form 10-K, Washington, DC, 2020, p. 2, at https://about.usps.com/what/
financials/10k-reports/fy2020.pdf (hereinafter USPS, FY2020 10-K); USPS, FY2021 10-K, p. 5.
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Figure 2. USPS Revenue, by Mail Category, FY2020-FY2021
In billions of dollars
Source: U.S. Postal Service, Final Revenue, Pieces, and Weight by Classes of Mail and Special Services for Fiscal Year
2021, November 12, 2021, https://about.usps.com/what/financials/revenue-pieces-weight-reports/fy2021.csv
(hereinafter USPS, FY2021 RPW)
Historically, competitive products have constituted a much smaller share of USPS revenue than
market dominant products, though that sector’s share of revenue has more than tripled in the past
10 years, from 14% of revenue in FY2011 to 45% in FY2021.52 Competitive products account for
a larger proportion of USPS revenue than they do of USPS volume. As shown in Figure 3 below,
in FY2021, competitive products represented approximately 6% of mail volume, but they
accounted for approximately 45% of USPS revenue.
52 In FY2011, market dominant revenue was $56.4 billion (86% of total revenue) and competitive revenue was $9.4
billion (14%). USPS, Final Revenue, Pieces, and Weight by Classes of Mail and Special Services for Fiscal Year 2012,
December 03, 2012, at https://about.usps.com/what/financials/revenue-pieces-weight-reports/fy2012.pdf.
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Figure 3. USPS Products’ Contribution to FY2021 Volume and Revenue
Market Dominant and Competitive
Source: USPS, FY2021 RPW.
While market dominant products made up 94% of USPS’s FY2021 volume, they generated less
revenue per piece ($0.35) than competitive products ($4.73).53
As previously explained by the USPS, since competitive products represent a relatively small
percentage of total mail volume, growth in shipping and packages might not offset the decline in
market dominant products:
Because Shipping and Packages represents only 20.3% of our 2014 operating revenue,
compared to First-Class and Standard Mail [now, Marketing Mail], which represents
67.5% of operating revenue, revenue growth in Shipping and Packages, by itself, cannot
fully offset the declines in First-Class Mail. Furthermore, the profit margins on both FirstClass Mail and Standard Mail are greater than that of Shipping and Packages. As a result,
revenue from Shipping and Packages would have to grow at a substantially higher rate than
the decline in First-Class Mail revenue in order to replace the lost profit contribution of
First-Class Mail.54
The processing and delivery costs for competitive products, such as First-Class Package Service
or Priority Mail, are greater than those of most market dominant products. For this reason,
USPS’s competitive products might be sold at a lower margin than their market dominant
counterparts, meaning that a lower percentage of competitive product revenue is retained as
profits for the USPS.55
Mail Volume
Between FY2019 and FY2020, mail volume for market dominant products dropped by 14.85
billion pieces. There were declines across nearly all market dominant products, with the
53 Average revenue per piece calculated using data from U.S. Postal Service, Final Revenue, Pieces, and Weight by
Classes of Mail and Special Services for Fiscal Year 2021, November 12, 2021, at https://about.usps.com/what/
financials/revenue-pieces-weight-reports/fy2021.csv.
54 U.S. Postal Service, FY2014 Report on Form 10-K, Washington, DC, 2014, p. 15, at http://about.usps.com/who-weare/financials/10k-reports/fy2014.pdf (hereinafter USPS, FY2014 10-K).
55 USPS, FY2014 10-K, p. 15.
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exception of presort cards and select parcel services, such as library and media mail. Market
dominant mail volume continued its decline in FY2021, but at a smaller overall rate of 0.4% due
to gains in marketing mail volume. Single-piece letters, cards, flats, and periodicals all
experienced volume declines ranging from 2.2% to 10.4%.
Competitive products performed better than market dominant products in FY2021, with a total
increase of 125 million pieces (or 1.8%). However, this is considerably less than the 26.9%
increase in competitive volume between FY2019 to FY2020, which USPS attributed to the surge
in e-commerce due to the COVID-19 pandemic.56 Mail volume gains for competitive products
were 10.8%, 13.5%, 13.3%, and 16.3% in FY2018, FY2017, FY2016, and FY2015, respectively.
Figure 4 shows the mail volume for market dominant and competitive products for FY2020 and
FY2021.
Figure 4. Market Dominant and Competitive Mail Volume, FY2020-FY2021
In billions of pieces
Source: USPS, FY2021 RPW.
Long-Term Trends
Total mail volume and revenue have either been consistent or in decline for the past 15 years.
Periods of decline have been driven largely by reductions in market dominant mail volume and
revenue, which has dropped sharply since FY2007 (see Figure 5).57 The decline in market
dominant volume has been driven by a variety of economic factors and long-term market trends,
such as transition to electronic mail, that have altered the public’s use of the postal service for
more than a decade.
56 USPS, FY2020 10-K, p. 6.
57 Prior to implementation of the PAEA, the USPS did not report mail volume and revenue using the categories
“competitive” and “market dominant.” The FY2008 USPS financial reports were the first to utilize PAEA categories.
In many instances, the FY2008 financial reports provided volume and revenue data for FY2007.
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Figure 5. Market Dominant Revenue and Volume, FY2007-FY2021
In billions of dollars (revenue) and pieces (volume)
Sources: Figure created by Congressional Research Service (CRS) using data from USPS, FY2021 RPW and U.S.
Postal Service “Decade of Facts and Figures,” at https://facts.usps.com/table-facts (hereinafter USPS, Decade of
Facts).
Figure 6. Competitive Revenue and Volume, FY2007-FY2021
In billions of dollars (revenue) and pieces (volume)
Sources: Figure created by CRS using data from USPS, FY2021 RPW and USPS, Decade of Facts.
As shown in Figure 6, growth in both competitive product volume and revenue has likely offset
some of the revenue lost from the decline in market dominant products. Figure 7 below shows
USPS’s total annual mail volume and operating revenue for FY2005 through FY2021.
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Figure 7.Total USPS Mail Volume and Revenue, FY2005-FY2021
In billions of dollars (revenue) and pieces (volume)
Sources: Figure created by CRS using data from USPS, FY2021 RPW and USPS, Decade of Facts.
From FY2005 to FY2021, total annual mail volume dropped 82.8 billion pieces. The drop was
largely due to volume lost in market dominant products. Total annual operating revenue
experienced a significant decline from FY2008 to FY2009, likely due to the economic recession,
but has grown modestly over the past decade and was at about the same point in FY2021 ($77.1
billion) as it was in FY2007 ($74.7 billion). While total annual volume remained in decline after
FY2012, total annual revenue began to recover. By FY2015, total annual revenue was $68.9
billion, or $1 billion below what it had been in FY2005, due in part to a temporary increase in
market dominant prices.58 Between FY2016 and FY2017, revenue decreased slightly at the same
rate as volume. Since FY2017, revenue has increased an average of about 0.5 billion per year,
possibly due to rate increases that went into effect in January of each year.59 By the end of 2019,
total annual revenue was $71.1 billion, or $1.2 billion above what it was in FY2005.
Operating Expenses
To address its financial challenges, the USPS has made several operational adjustments intended
to align its revenue, mail volume, and operating expenses, including
changes to its workforce (e.g., increased use of non-career employees);
consolidation of delivery routes and reductions in number of delivery facilities;
reductions to retail office hours; and
realignment of its mail processing and distribution network.60
58 During “extraordinary or exceptional” circumstances, the PAEA allows the USPS to petition the PRC for an
expedited postal rate adjustment. Between January 26, 2014 and April 10, 2016, the USPS had in place an exigent
surcharge (i.e., a temporary price increase) of 4.3% on many of its market dominant products and services. Under the
PAEA, an exigent surcharge is a temporary price increase above what USPS would otherwise receive based on the
CPI-U.
59 On January 22, 2017, the price of a First-Class Forever stamp increased $0.02 to $0.49. On January 21, 2018, the
price increased to $0.50, and on January 27, 2019 the rate increased $0.05 to $0.55. The current rate, which went into
effect on August 29, 2021, is $0.58. USPS “Rates for Domestic Letters Since 1863,” at https://about.usps.com/who-weare/postal-history/domestic-letter-rates-since-1863.pdf.
60 USPS, FY2020 10-K, pp. 31, 44, 58, 70.
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For FY2021, USPS’s total operating expenses, including retiree health, workers’ compensation,
and pension costs, were about $82 billion. Table 3 provides a further breakdown of expenses for
FY2020 and FY2021.
Table 3. USPS Operating Expenses, FY2020-FY2021
(dollars in billions)
FY2020
FY2021
Change
Change
(%)
Compensation and Benefits Expenses
Salaries/Compensation
$39.754
$40.837
$1.083
2.724%
Health benefits—current employees
$5.188
$5.248
$0.060
1.157%
Social Security
$2.256
$2.372
$0.116
5.142%
Thrift Savings Plan (TSP)
$1.194
$1.250
$0.056
4.690%
Other personnel-related expenses
$0.338
$0.378
$0.040
11.834%
Total Compensation and Benefits
$48.730
$50.085
$1.355
2.781%
PSRHBF unfunded liability amortization
$0.810
$0.907
$0.097
11.975%
PSRHBF normal cost payments
$3.850
$4.203
$0.353
9.169%
FERS normal cost payments
$3.804
$4.117
$0.313
8.228%
CSRS unfunded retirement benefit amortization
$1.817
$1.858
$0.041
2.256%
FERS unfunded retirement benefit amortization
$1.343
$1.401
$0.058
4.319%
Total Retiree Health and Pension
$11.624
$12.486
$0.862
7.416%
Workers’ compensation
$2.903
($0.580)
($3.483)
-119.979%
Transportation (e.g., air and highway contracts)
$8.814
$9.652
$0.838
9.508%
Depreciation and amortization costs
$1.706
$1.668
($0.038)
-2.227%
Supplies and services
$3.088
$2.945
($0.143)
-4.631%
Rent and utilities
$1.757
$1.790
$0.033
1.878%
Other non-personnel expenses
$3.565
$3.798
$0.233
6.536%
$82.187
$81.844
($0.343)
-0.417%
Retiree Health and Pension Expenses
Other Operating Expenses
Total Operating Expenses
Source: USPS, FY2021 10-K, pp. 31, 33, 42, 44, 58.
Note: FY2021 workers' compensation expense decrease is due primarily to changes in discount rates. PSRHBF
is the Postal Service Retiree Health Benefit Fund; FERS is the Federal Employees Retirement System; CSRS is the
Civil Service Retirement System. In FY2020 and FY2021, USPS did not make its required amortization payments
for retiree health and pension benefits or its PSRHBF normal cost payments. The payments for retiree health
benefits are discussed below in the section titled “Postal Retiree Health and Pension Benefits.”
Each fiscal year, roughly 60% of the USPS’s operating expenses are attributable to personnel
costs, through salaries, compensation benefits, workers’ compensation, and retiree benefits—
excluding the retiree health prefunding payments.61 For FY2021, personnel-related expenses were
61 USPS, FY2020 10-K, pp. 31, 33.
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$50 billion, an increase of about $1.4 billion (or 2.8%) from FY2020.62 The largest line-item for
personnel costs is salaries, which account for nearly all of the $1.4 billion increase to personnelrelated expenses.63 From FY2010 to FY2014, the costs for salaries and other compensation
decreased steadily. USPS spent $35.1 billion on these costs in FY2014 and $37.5 billion in
FY2010, with expenditures dropping an average of $600 million each year.64 These reductions
have been driven by a number of USPS management decisions, including the use of voluntary
separation incentives and the increased reliance on non-career employees. This trend, however,
reversed in FY2015 when USPS’s salaries and compensation costs increased by 2.3% to $35.9
billion. The USPS attributes the increased costs to “contractually obligated salary escalations and
additional work hours associated in part with the growth in the more labor-intensive Shipping and
Packages business.”65
The USPS has not seen significant reductions in non-personnel costs in recent years. For the
period from FY2015 to FY2021, total non-personnel related expenses have been about $15 billion
to $19 billion annually.66 The largest non-personnel expenses are transportation costs. The USPS
spent $9.7 billion for transportation in FY2021, largely on contracts for air, ground, and water
transportation of the U.S. mail.67 Additionally, USPS notes in its FY2020 financial statement that
COVID-19 travel restrictions led to limitations on commercial air carrier availability and
increased air transportation costs for the Postal Service.68 Fuel expenses are also included under
transportation, but they comprise a relatively small portion of costs.69 The other non-personnel
expenses for FY2021 include supplies and services ($2.9 billion), rent and utilities ($1.8 billion),
and depreciation of USPS assets ($1.7 billion).70
Postal Retiree Health and Pension Benefits
Eligible postal employees and retirees receive health care coverage through the Federal
Employees Health Benefits (FEHB) Program.71 Additionally, the Postal Service participates in the
Civil Service Retirement System (CSRS) and Federal Employees Retirement System (FERS)
retirement plans, which provide a defined benefit to eligible postal retirees.72 The Postal Service
62 Ibid.
63 Salaries includes full-time and part-time employees and other costs, such as performance awards.
64 USPS, FY2012-FY2015 10-K, Washington, DC, 2015, available at http://about.usps.com/who-we-are/financials/
welcome.htm.
65 USPS, FY2018 10-K, p. 19.
66 USPS, FY2015-FY2021 10-K.
67 USPS, FY2021 10-K, p. 43.
68
Ibid.
69 U.S. Postal Service, Office of the Inspector General, Peeling the Onion: The Real Cost of Mail, April 18, 2016,
RARC-WP-16-009, pp. 13-14, at https://www.uspsoig.gov/sites/default/files/document-library-files/2016/RARC-WP16-009.pdf. For information on transportation contracts, see U.S. Postal Service, Procurement Manual, Chapter 12
“Mail Transportation,” July 12, 1995, at http://about.usps.com/publications/pub41/pub41c12.pdf.
70 USPS, FY2021 10-K, p. 44.
71 USPS, FY2021 10-K, p. 15; USPS, Compensation and Benefits, at https://about.usps.com/careers/working-usps/
benefits.htm. See also CRS Report R43922, Federal Employees Health Benefits (FEHB) Program: An Overview, by
Ryan J. Rosso and Ada S. Cornell.
72 Ibid; see also CRS Report 98-810, Federal Employees’ Retirement System: Benefits and Financing, by Katelin P.
Isaacs.
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provides pension benefits to about 699,000 postal retirees and survivors and health benefits to
approximately 499,000 postal retirees and eligible family members.73
The Postal Service is required to make annual payments to cover the employer costs for future
retiree health and pension benefits attributable to active employees’ current year of service,
referred to as “normal costs.” Additionally, USPS must make annual amortization payments to
pay down the unfunded liabilities for retiree health and pension benefits. Table 4 below lists the
normal cost and amortization payments for FY2017-FY2021.
Table 4. USPS Payments for Retiree Health and Pension Benefits, FY2017-FY2021
(dollars in billions)
FY2017
FY2018
FY2019
FY2020
FY2021
FERS Normal Cost
$3.5
$3.5
$3.5
$3.8
$4.1
FERS Amortization
$0.9
$1.0
$1.1
$1.3
$1.4
CSRS Amortization
$1.7
$1.4
$1.6
$1.8
$1.9
PSRHBF Normal Cost
$3.3
$3.7
$3.8
$3.9
$4.2
PSRHBF Amortization
$1.0
$0.8
$0.8
$0.8
$0.9
Pension Benefits
Payments
Retiree Health Payments
Source: USPS, FY2017-FY2021 10-K.
Since FY2017, USPS has made its required payments for FERS normal cost, but has defaulted on
its FERS and CSRS amortization payments and its PSRHBF normal cost and amortization
payments (shown in bold in Table 4). According to the Postal Service, this was necessary to
maintain their liquidity and ability to pay other expenses.
Retiree Health Prefunding Payments
The PAEA requires the USPS to prefund its retiree health benefits.74 To accomplish this task, the
PAEA established a ten-year prefunding schedule (from FY2007-FY2016).75 Under the PAEA,
the USPS was to make statutorily prescribed prefunding payments into the Postal Service Retiree
Health Benefits Fund (PSRHBF), which is an on-budget account in the U.S. Treasury. Pursuant to
the PAEA, the USPS payments to the PSRHBF are to be derived from operating revenue held in
the Postal Service Fund. The statutorily prescribed prefunding payments, shown in Table 5,
ranged from $5.4 billion to $5.8 billion annually.
Since the prefunding payment schedule began in FY2007, the USPS has made a total of $17.9
billion in payments into the PSRHBF. USPS has made three of its annual payments in full—
FY2007, FY2008, and FY2010. Congress reduced the FY2009 payment owed from $5.4 billion
73 USPS, FY2021 10-K, p. 15.
74 For additional details on the prefunding requirement and issues related to USPS pension funding, see CRS Report
R43349, U.S. Postal Service Retiree Health Benefits and Pension Funding Issues, by Katelin P. Isaacs and Annie L.
Mach.
75 5 U.S.C. §8909a(d).
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to $1.4 billion, which the USPS paid.76 USPS also transferred $2.958 billion into the PSRHBF in
FY2007 from a USPS escrow account that was set up in 2006, per the terms of the Postal Civil
Service Retirement System Funding Reform Act of 2003 (P.L. 108-18, Sec. 3, “Disposition of
Savings Accruing to the United States Postal Service”),77 which brings their total contributions
into the PSRHBF to $20.9 billion. As of September 30, 2021, the balance in the PSRHBF was
$39.1 billion.78
Since FY2011, the USPS has defaulted on its annual payments, which total $33.9 billion.79
USPS’s prefunding payments to the PSRHFB are listed in Table 5 below.
Table 5. Payments to Postal Service Retiree Health Benefit Fund, FY2007-FY2016
(dollars in billions)
Fiscal Year
Payments Made
Payments Missed
FY2007
$5.40
$0.00
FY2008
$5.60
$0.00
FY2009
$1.40
$0.00
FY2010
$5.50
$0.00
FY2011
$0.00
$0.00
FY2012
$0.00
$11.10
FY2013
$0.00
$5.60
FY2014
$0.00
$5.70
FY2015
$0.00
$5.70
FY2016
$0.00
$5.80
Total
$17.90
$33.90
Source: USPS Annual 10-K Financial Reports, FY2007-FY2016, at https://about.usps.com/what/financials.
Notes: FY2009 payment was reduced from $5.4 billion to $1.4 billion by statute (Sec. 164 of P.L. 111-68) and
FY2011 payment was deferred by Congress until FY2012 (USPS, FY2015 10-K).
The statutorily prescribed payments concluded in FY2016. Starting in FY2017, the USPS is no
longer required to make pre-funding payments and is permitted to access funds from the PSRHBF
to pay for its current retirees’ health benefits. Instead of the prefunding payments, since FY2017
the USPS is required to make payments to fund the estimated normal costs of retiree health
benefits and amortization payments of USPS’s remaining unfunded liability.80
Legislative Proposals
The prefunding policy has been a contentious issue. Proponents argue that prefunding protects
future customers of the USPS and taxpayers by ensuring that they will not need to finance
76 Congress deferred the FY2011 payment until FY2012 (P.L. 112-74).
77 Electronic correspondence with USPS staff on Friday, May 17, 2019.
78 USPS, Fiscal Year 2022 Integrated Financial Plan, November 18, 2021, p. 8, at https://about.usps.com/what/
financials/integrated-financial-plans/fy2022.pdf.
79 USPS, FY2019 10-K, p. 39.
80 USPS, FY2019 10-K, p. 8.
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retirement benefits currently incurred by the USPS. However, according to the USPS, the
prefunding requirement has contributed “significantly” to its financial losses.81 In its FY2018
financial statement, the USPS reiterated its pursuit of legislation that would allow the USPS to
change how it offers health insurance to its employees and retirees. The USPS argues that such
changes would “eliminate any necessity for the [PSRHBF] prefunding requirement.... ”82 The
changes would require statutory authorization from Congress.
Two bills introduced in the 117th Congress would, if enacted, repeal the requirement that the
USPS prepay future retiree health benefits. H.R. 695 and S. 145, the USPS Fairness Act, would
each repeal subsection (d) of 5 U.S.C. §8909a, which includes the prefunding schedule shown in
Table 5. This would eliminate the $33.9 billion in defaulted prefunding payments from the
USPS’s financial accounts. If enacted, the USPS could continue to pay its contributions for
eligible retiree health premiums from the fund until it is depleted of resources, which is estimated
to occur by FY2030.83 The bill, however, would not alter or alleviate the USPS’s future retiree
health liabilities.84
H.R. 3076, the Postal Reform Act of 2022,85 includes an expanded version of the USPS Fairness
Act as well as other provisions that may reduce the USPS’s future retiree health liabilities by
requiring eligible postal retirees to enroll in Medicare as part of their health coverage.
Additionally, the bill would establish a new mechanism for calculating USPS’s future payments
into the PSRHBF, based on the amount (if any) that USPS’s contributions for retiree health
premiums paid from the PSRHBF exceeded the estimated net claims costs of enrollees. The bill
was reported out by the House Committee on Oversight and Reform in July 2021 (H.Rept. 11789, Parts I and II), and was passed by the House on February 8, 2022.
Postal Delivery Standards
The USPS’s delivery standards are performance goals that reflect “the number of days after
acceptance of a mail piece by which the sender and recipient can expect it to be delivered.”86
Delivery standards differ for each mail class and product. Since 2012, the Postal Service has
phased-in revisions to its delivery standards for market dominant products.87
Under new regulations that went into effect on October 1, 2021, the USPS adjusted its service
standards on select market-dominant products, specifically First-Class Mail and Periodicals.
Service standards reflect USPS’s estimate of the amount of time it will take to deliver a piece of
mail. The new standards increase the target in-transit time for delivery by 1-2 days. While some
market dominant mail will be unaffected, USPS expects that approximately 40% of First-Class
81 USPS, FY2018 10-K, p. 5.
82 USPS, FY2018 10-K, p. 32.
83
Ibid; Government Accountability Office, Postal Retiree Health Benefits: Unsustainable Finances Need to Be
Addressed, p. 6, at https://www.gao.gov/assets/gao-18-602.pdf.
84 CRS analysis of USPS, FY2019 10-K; electronic correspondence with USPS staff on May 17, October 7, and
October 31, 2019.
85 H.R. 3076.
86 See U.S. Postal Service, “Our Future Network: USPS Delivery Standards and Statistics Fact Sheet,” at
http://about.usps.com/news/electronic-press-kits/our-future-network/ofn-usps-delivery-standards-and-statistics-factsheet.htm.
87 The new revised standards went into effect on January 5, 2015, and are available at 39 C.F.R. §121. Also see U.S.
Postal Service, Five-Year Business Plan, April 16, 2013, pp. 15-19, at http://about.usps.com/strategic-planning/
fiveyearplan-04162013-final.pdf.
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Mail (particularly that which travels longer distances) will be subject to an adjusted standard that
is 1-2 days greater than the previous standard. Most local First-Class Mail (i.e., mail traveling
three hours or less by ground) will keep its 2-day standard. Prior to revisions implemented in
2015, First-Class mail sent within a certain geographical boundary was generally guaranteed to be
delivered overnight.88
As shown in Table 6, the end-to-end range for First-Class Mail within the contiguous United
States is 1-5 days, while the end-to-end range for Periodicals is 3-9 days and, for Marketing Mail,
3-10 days. 89 Within the end-to-end ranges, USPS adjusted its distance-based business rules for
First-Class Mail and Periodicals, increasing the number of days for mail with delivery drive times
exceeding 20 hours.
Table 6. USPS Delivery Standards
Mail Traveling within Contiguous States and DC
End-to-End Range (days)
Service Standards
(through September 30, 2021)
Revised Standards
(effective October 1, 2021)
First-Class Mail
1-3
1-5
Periodicals
3-9
3-9
Marketing Mail
3-10
3-10
Package Services
2-8
2-8
Mail Class
Source: 39 C.F.R. §121, Appendix A; USPS, “Revised Service Standards for Market Dominant Mail Products,” 86
Federal Register 43941.
Notes: USPS’s service standards map is available at https://postalpro.usps.com/ppro-tools/service-standardsmaps.
USPS also increased the end-to-end ranges 1-2 days for First-Class Mail and Periodicals traveling
within and to/from noncontiguous states and territories, such as Puerto Rico and Guam. Standards
for Marketing Mail and Package Services were unchanged.
The delivery standards are not, however, a guarantee of specific delivery times. Based on the
delivery standards, the Postal Service sets “Service Performance Targets,” which are the
percentage of time it expects to meet its delivery standards. USPS’s adherence to its service
standards is measured against those performance targets.
Table 7 shows FY2021 service performance targets and the USPS’s actual percent on-time score
for select categories of market dominant mail. Actual percent on-time scores that fail to meet the
percent on-time service performance targets are shown in bold. Those that are more than 10
percentage points below the percent on-time performance targets are in bold and underlined.
88 Specifically, prior to January 5, 2015, with certain exceptions, an overnight service standard applied to First-Class
mail that was received and was being delivered within an area served by a single U.S. Postal Service Sectional Center
Facility (i.e., postal processing and distribution facility), provided the mail arrived at the facility by a certain time
(referred to as the “critical entry time” or CET). After January 5, for First-Class mail to be subject to overnight business
rules, it must be “Presort” mail (i.e., sorted and containerized by Zip code by the mailer). For additional details, see
summary and comments accompanying the Final Rule, “Revised Service Standards for Market-Dominant Mail
Products,” at http://about.usps.com/news/facility-studies/_pdf/market-dominant-final-rule.pdf.
89 39 C.F.R. §121, Appendix A.
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Table 7. USPS FY2021 Service Performance Targets and Percent On-Time
Percent On-Time (National)
Target %
On-Time
FY2021
Q1
FY2021
Q2
FY2021
Q3
FY2021
Q4
FY2021
Annual
Single-piece letters (2day)
82.81
81.5
85.9
90.8
90.9
86.4
Single-piece letters (3-to5-day)
68.64
54.6
57.9
73.8
75.1
63.2
Presort letters/postcards
(overnight)
93.99
91.3
92.7
95.2
94.6
93.4
Presort letters/postcards
(2-day)
89.20
84.7
84.8
92.2
92.3
88.3
Presort letters/postcards
(3-to-5-day)
84.11
78.0
73.8
85.9
87.0
80.9
Marketing Mail
86.62
70.4
60.7
73.7
78.4
70.0
Marketing Mail
Destination Entry
86.62
86.3
88.2
93.3
94.4
90.0
First-Class Mail
Marketing Mail
Other Market Dominant Mail
Package services
90.00
80.7
79.5
86.3
89.9
83.7
Periodicals
86.62
69.8
71.5
79.0
82.7
75.6
Single-Piece First Class
International
(Inbound/Outbound)
82.43
58.9
60.2
74.4
73.8
66.1
Source: U.S. Postal Regulatory Commission, FY2021 Q4 Performance Reports, at https://www.prc.gov/dockets/
quarterly-performance.
Notes: Marketing Mail Destination Entry are mailpieces entered at a distribution center or other processing
facility.
In FY2021, USPS met or exceeded its percent on-time performance targets for Single-Piece
letters (2-day) and Marketing Mail Destination Entry. USPS did not meet its performance targets
for most other types of market dominant mail. While performance generally improved in the 3rd
and 4th quarters of the fiscal year, in many instances USPS’s annual on-time performance was
below the targets. Performance for Periodicals, Marketing Mail, and Single-Piece International
Mail was more than 10% below the USPS’s targets.
In the FY2020 Annual Compliance Report, the USPS attributes its performance issues to (1)
winter weather storms, (2) insufficient air transportation capacity, and (3) staff realignments and
other issues related to the network rationalization initiative.90 USPS has argued that the revised
standards will enable them to shift long-range delivery of select market dominant mail products to
ground transportation (from air transportation), which they state is more reliable, less costly, and
less subject to service delays than air transportation.91
90 Ibid.
91 USPS, “Revised Service Standards for Market Dominant Mail Products,” August 11, 2021, 86 Federal Register
43941.
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Postal Processing and Delivery Network
The revised delivery standards discussed above are part of the USPS’s broader initiatives to
modernize its processing and delivery network to handle ongoing changes to mail volume. 92
These initiatives involve consolidation and realignment of operations at select mail processing
facilities, which USPS terms Area Mail Processing (AMP). In its AMP guidance, the USPS states
“mail and packages require different machinery, processes and space allocations in terms of scope
and physical location.” 93 USPS argues that changes to its processing network are necessary to (1)
address recent changes to mail volume (i.e., decreases in first-class mail volume and increases in
package volume) and (2) improve the efficiency of the overall postal delivery network.94
Six- to Five-Day Delivery Schedule95
One reform that the USPS proposed in its previous Five-Year Business Plan was to move from
delivering mail six days a week (except Sunday) to five days a week (except Saturday and
Sunday) for all or most classes of mail, including first-class mail and marketing mail.96 To
maximize revenue from the competitive portion of its product line, however, USPS proposed
maintaining six-day delivery of packages, or further expanding its Sunday package delivery
services.97
Opponents of reducing USPS’s delivery days argue that it will have a negative effect on postal
delivery standards, which—according to the PRC’s FY2015 Annual Compliance Report—have
already suffered following the closure and consolidation of postal processing facilities from 20212015.
According to economic estimates prepared for the PRC, shifting to five-day delivery of mail
while maintaining Saturday delivery of packages would increase revenue by an estimated $912
million to $1.677 billion.98 The estimated net profit may vary due to customer behavior. For
example, if post offices close on Saturdays, some customers may mail fewer items or choose
92 See U.S. Postal Service, “Our Future Network: Phase 2 Network Rationalization Frequently Asked Questions,” at
http://about.usps.com/news/electronic-press-kits/our-future-network/ofn-phase-2-faqs-new.htm; U.S. Postal Service,
Delivering for America: Our Vision and Ten-Year Plan to Achieve Financial Sustainability and Service Excellence, at
https://about.usps.com/what/strategic-plans/delivering-for-america/assets/USPS_Delivering-For-America.pdf.
93 USPS, “Area Mail Processing,” at https://about.usps.com/what/strategic-plans/area-mail-processing. Also see U.S.
Postal Service, Five-Year Business Plan, April 16, 2013, pp. 15-19, at http://about.usps.com/strategic-planning/
fiveyearplan-04162013-final.pdf.
94 Ibid.
95 For additional background on the history of six-day delivery, see CRS Report R40626, The U.S. Postal Service and
Six-Day Delivery: History, Issues, and Current Legislation, by Michelle D. Christensen.
96 For example, in the USPS’s Business Plan, section titled “Executing on Identified Initiatives is Core to Addressing
USPS’s Financial Challenges,” the USPS recommended adjusting service levels to six-day delivery of packages and
five-day delivery of first-class mail. U.S. Postal Service, Five-Year Business Plan, April 16, 2013, p. 17, at
http://about.usps.com/strategic-planning/fiveyearplan-04162013-final.pdf#page=17.
97 The Postal Service has offered seven-day package delivery in select regions during the holiday shipping season. It
has also entered into negotiated service agreements with large shippers (e.g., Amazon) to offer Sunday delivery from
select hubs across the United States. U.S. Postal Service, “Postal Service to Delivery Packages Seven Days a Week
During Holidays,” November 6, 2014, http://about.usps.com/news/national-releases/2014/pr14_057.htm; U.S. Postal
Service Office of Inspector General, Sunday Parcel Delivery Service: Audit Report, December 5, 2014,
https://www.uspsoig.gov/sites/default/files/document-library-files/2015/dr-ar-15-002.pdf.
98 Urs Trinkner and Andreas Haller, Impact of Discontinuance of Saturday Delivery for Letters and Flats, Swiss
Economics for the U.S. Postal Regulatory Commission, ISSN 2235-1868, February 2014, pp. 7-8, at
http://www.prc.gov/sites/default/files/reports/FinalReport.pdf.
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another service for shipping packages, leading to lost revenue in competitive products. If,
however, post offices remain open on Saturdays, there may be additional operational costs, even
if they do not sort or deliver mail. Further, the Postal Service may incur additional labor costs due
to increased mail volume on Mondays.99 The PRC report based its estimation on a model where
post offices remained open on Saturdays but did not sort or dispatch letter mail.100 Under this
scenario, the PRC report estimated that the annual net savings to the Postal Service would be
between $625 million and $1.393 billion.101
Post Office Closures and Reduction of Operating Hours
Another reform from its previous Five-Year Business Plan was a proposal to reduce retail post
office hours to better align them with estimates of operational demand.102 In 2012, the USPS
announced a plan to reduce hours at 13,000 “low foot traffic” U.S. Post Offices in rural
communities. The Post Office Structure Plan, commonly referred to as the “POStPlan,” is,
according to the USPS, an initiative intended to prevent closures of postal retail facilities by
reducing operational hours at selected locations. According to communications from the PRC,
most POStPlan facilities are small and often in rural areas, though neither term (i.e., “small” or
“rural”) has been defined by either the USPS or the PRC for the purpose of identifying specific
retail postal facilities.103
Table 8 below provides data on the number of USPS retail facilities in existence at the end of
each fiscal year from FY2010 through FY2021.104
99 Ibid., pp. 8-9.
100 Ibid.
101 Ibid., p. 9.
102 U.S. Postal Service, Five-Year Business Plan, April 16, 2013, pp. 15-19, at http://about.usps.com/strategic-planning/
fiveyearplan-04162013-final.pdf.
103 The list of POStPlan facilities is available at http://about.usps.com/news/electronic-press-kits/our-future-network/
assets/pdf/postplan-affected-post-offices-120509.pdf.
104 For descriptions of the categories and types of postal facilities, please see CRS Report R41950, The U.S. Postal
Service: Common Questions About Post Office Closures, by Michelle D. Christensen.
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Table 8. Total USPS Retail Postal Facilities, FY2010-FY2021
Fiscal Year
Post
Offices
Stations, Branches,
Annexes
Contract
Postal Units
Village Post
Offices
Community
Post Offices
Total
2010
27,077
5,451
2,931
0
763
36,222
2011
26,927
5,219
2,904
0
706
35,756
2012
26,755
5,102
2,792
47
673
35,369
2013
26,670
5,032
2,718
385
629
35,434
2014
26,669
4,993
2,660
759
560
35,641
2015
26,615
4,991
2,504
848
536
35,494
2016
26,611
4,974
2,458
856
503
35,402
2017
26,410
4,967
2,331
821
476
35,005
2018
26,365
4,959
2,240
743
465
34,772
2019
26,362
4,960
2,175
667
449
34,613
2020
26,362
4,968
2,094
590
437
34,451
2021
26,362
4,885
2,009
542
425
34,223
Change 2010
to 2021
-715
-566
-922
+542
-338
-1,999
Source: U.S. Postal Service, Annual Report to Congress (FY2013-FY2021), at https://about.usps.com/what/
financials.
Notes: Stations and branches are post office facilities that are under the administration of another, typically
larger, post office. Carrier annexes are postal facilities that house carrier operations, but that may not provide
retail services. Post offices, stations, branches, and carrier annexes are managed and operated by the USPS.
Contract Postal Units, Village Post Offices, and Community Post Offices offer USPS products and services, but
are managed and operated by private entities.
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Figure 8. USPS Retail Postal Facilities
FY2005-FY2021
Source: Figure created by CRS using data from USPS, Decade of Facts.
Notes: “Total retail post offices” includes contractor-owned-and-operated postal facilities.
Legislative Reforms
USPS revised its service standards for market-dominant mail products in 2012 as part of its
broader Network Rationalization initiative,105 and multiple bills have been introduced since
instructing USPS to roll back standards to those that were in place before the revision. For
example, in the 117th Congress, H.Res. 119 expresses the sense of the House that USPS should
“take all appropriate measures to restore service standards [to those] in effect as of July 1,
2012.”106 Additionally, S. 1678 and H.R. 2230, the Delivering Envelopes Judiciously On-time
Year-round Act (or “DEJOY Act”) would require USPS to adopt service standards for First-Class
Mail that were in effect on January 1, 2021.107
Postal Workforce
USPS’s challenging financial circumstances have prompted the agency to implement several
cost-cutting strategies, one of which has been to reduce the size and cost of the USPS workforce.
The sections below discuss three USPS initiatives to reduce its workforce size and cost: (1)
attrition and separation incentives, (2) increased use of non-career employees, and (3) nonpersonnel initiatives that could impact workforce size and cost. The sections focus on
105 USPS, “Revised Service Standards for Market Dominant Mail Products, final rule with phased implementation
dates,” May 25, 2012, 77 Federal Register 31190.
106 H.Res. 119.
107 S. 1678 and H.R. 2230.
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implementation of these three initiatives since FY2007, at which time the USPS began to
experience substantial revenue losses.
Size and Cost of the Postal Workforce
The USPS has reduced its workforce size through voluntary attrition and separation incentives.108
The total number of USPS employees declined about 20% between FY2007 and FY2020, from
about 786,000 to 644,000 employees.109 To increase the voluntary attrition rate, the USPS has
offered certain employees separation incentives to resign or retire early, which have ranged from
$10,000 to $20,000 per person.110 Between FY2007 and FY2018, 57,617 employees accepted a
separation incentive (Table 9).
The USPS has also utilized separation incentives to avoid or minimize reductions in force (RIFs),
which involve involuntary employee layoffs upon the abolishment of agency positions.111Many of
the separation incentives offered between FY2012 and FY2018 were associated with various
postal facility closure and consolidation initiatives.112
108 USPS, FY2014 10-K, p. 20.
109 CRS analysis of U.S. Postal Service, FY2007 Report on Form 10-K, Washington, DC, 2007, p. 5, at
https://about.usps.com/what/financials/10k-reports/fy2007.pdf (hereinafter USPS, FY2007 10-K) and USPS, FY2020
10-K, p. 32.
110 USPS has utilized the Voluntary Early Retirement Authority (VERA) and Voluntary Separation Incentive Program
(VSIP). For more information on the VERA, see 5 U.S.C. §8336(d)(2)(D), 5 U.S.C. §8414(b)(1)(B), 5 C.F.R.
§831.114, 5 C.F.R. §842.213, and Office of Personnel Management (OPM), Guide To Voluntary Early Retirement
Regulations, August 2006, at https://www.opm.gov/policy-data-oversight/workforce-restructuring/voluntary-earlyretirement-authority/vera_guide.pdf. For more information on the VSIP, see 5 U.S.C. §3521, 5 C.F.R. Part 576, and
OPM, Guide to Voluntary Separation Incentive Payments, August 2006, at https://www.opm.gov/policy-dataoversight/workforce-restructuring/voluntary-separation-incentive-payments/guide.pdf.
111 For more information on reductions-in-force, see 5 U.S.C. §3501-3503, and 5 C.F.R. Part 351. In 2015, however,
USPS implemented a RIF for 249 postmasters who had not accepted a separation incentive offered in FY2014.
According CRS correspondence with the USPS, all postmasters affected by the RIF were offered part-time career
positions at the USPS. Electronic correspondence with USPS staff on June 8, 2015. For more information on
Discontinued Service Retirement, see 5 U.S.C. §8336(d) and 5 C.F.R. §831.503.
112 See sections of this report titled “Postal Processing and Delivery Network” and “Post Office Closures and Reduction
of Operating Hours.” U.S. Postal Service Office of the Inspector General (hereinafter USPS OIG), Management
Advisory Report, Lessons Learned from Mail Processing Network Rationalization Initiatives, March 27, 2013, p. 4, at
https://www.uspsoig.gov/sites/default/files/document-library-files/2015/no-ma-13-004.pdf.
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Table 9. Total Number of Separated USPS Career Employees, FY2007-FY2018
Fiscal
year
Total number of
employees
Total number separated without
of separations
an incentive
Total number of
employees
Incentive
Total cost
separated with an
amount
Target employee of incentive
incentive
(per person)
category
(millions)
2007
7,437
7,437
0
0
N/A
0
2008
33,685
33,685
0
0
N/A
0
2009
42,235
42,235
0
0
N/A
0
2010
40,873
20,073
20,800
$15,000
American Postal
Workers Union
(APWU)
employees; mail
handlers
$312.0
2011
30,302
28,058
2,244
$20,000
Administrative
employees
$44.9
2012
33,137
25,920
4,192
$20,000
Postmasters
$129.2
3,025
$15,000
Mail handlers
22,609
$15,000
APWU employees
1,223
0
Managers,
supervisors,
postmasters
Postmasters
2013
41,823
17,991
$339.1
2014
28,900
27,520
1,380
$10,000
$13.8
2015
30,109
30,093
16
0
APWU Western
Area
0
2016
31,835
31,835
0
0
NA
0
2017
33,905
33,905
0
0
NA
0
2018
40,695
38,567
2,128
0
APWU, Mail
Handlers
0
Total
394,936
337,319
57,617
N/A
N/A
$839.0
Source: Adapted from Table 1 found at GAO, U.S. Postal Service, Status of Workforce Reductions and Related
Planning Efforts, GAO-15-43, November 13, 2014, p. 12, at http://www.gao.gov/assets/670/666884.pdf; CRS
analysis of data from “Form 10-Ks”; data provided by USPS staff on April 1, 2019.
Notes: FY2007 data may be incomplete, as USPS only had partial access to data due to the agency’s migration
from its legacy human resources system to its current system during that year. The total number of separated
employees is not equal to the total reduction in the number of employees between FY2007 and FY2014. The
difference might be due to additional hiring for existing or newly created positions that occurred over that time
period.
Use of Non-Career Postal Employees
The USPS categorizes its workforce into two employee types: career and non-career. Career
employees serve in permanent positions and are typically provided full federal benefits.113 Non113 For a list of benefits provided to USPS career employees, see U.S. Postal Service, “Compensation & Benefits,” at
https://about.usps.com/careers/working-usps/benefits.htm.
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career employees, in contrast, serve in time-limited or otherwise temporary positions. In many
cases, non-career employees earn lower wages and are not provided benefits that are provided to
career employees. For example, non-career employees are not eligible for federal life insurance
and are not covered under the Federal Employees Retirement System (FERS).114
The USPS has, at times, increased its use of non-career employees in an effort to contain costs.
For example, the number of non-career employees grew by 28% between FY2007 and FY2014,
from 101,167 to 129,577. The number of career employees, in contrast, decreased by 28% over
the same time period, from 684,762 to 488,300. Between FY2011 and FY2014, the use of noncareer employees increased by 46.1% (40,878 employees).115 The influx of non-career employees
during that period was primarily attributable to the establishment of three new non-career
positions: Postal Support Employees (PSEs), City Carrier Assistants (CCAs), and Mail Handler
Assistants (MHAs).116 Employees in these three positions constituted 51% of the USPS noncareer workforce in FY2014.117
From FY2015 to FY2019, the USPS continued its use of non-career employees. In recent years,
however, the USPS has also converted thousands of non-career employees to career status. For
example, in FY2019 and FY2018, the USPS converted approximately 36,000 and 35,000
employees from non-career to career status, respectively, due to operational needs and contract
agreements.118 At the end of FY2019, the total number of non-career employees was 136,174 and
the total number of career employees was 496,934.119 The trend also continued with PSEs, CCAs,
and MHAs, and employees in these three categories now constitute approximately 55% of
USPS’s non-career workforce.120
According to the USPS, non-career employees can reduce the overall costs of certain agency
functions.121 Non-career employees can often perform the full range of duties undertaken by their
career counterparts at lower wage rates. For instance, non-career CCAs can perform the duties of
career city letter carriers while receiving a lower starting hourly rate.122 The wage difference
between CCAs and city letter carriers is greater after accounting for benefits and overtime,
according to a 2014 Government Accountability Office (GAO) report.123 In addition, the USPS
114 U.S. Postal Service, Employee and Labor Relations Manual, ELM 36, September 2013, p. 572, at
http://about.usps.com/manuals/elm/elmc5.pdf.
115 CRS analysis of U.S. Postal Service, Reports on the Form 10-K, and U.S. Postal Service, Annual Reports to
Congress, available at https://about.usps.com/what/financials.
116 CRS analysis of U.S. Postal Service, Annual Reports to Congress. For more detailed information on trends in USPS
career and non-career employees, see CRS Report RS22864, U.S. Postal Service Workforce Size and Employment
Categories, FY1995-FY2014, by Kathryn A. Francis.
117 CRS analysis of U.S. Postal Service, Reports on the Form 10-K.
118 USPS, FY2019 10-K, p. 25.
119 USPS, FY2019 Annual Report to Congress, pp. 1, 16.
120 Ibid.
121 For an example of the intended goals of Mail Handler Assistants, see National Postal Mail Handlers Union, and U.S.
Postal Service, Board of Interest Arbitration Award, February 15, 2013, p. 12, at http://www.npmhu.org/resources/
document/20130215-Final-NPMHU_USPS-Interest-Arbitration-Award.pdf.
122 National Association of Letter Carriers (hereinafter NALC) and USPS, 2011-2016 National Agreement, p. 28, at
http://www.nalc.org/member-benefits/body/na2011.pdf. See GAO, U.S. Postal Service, Status of Workforce Reductions
and Related Planning Efforts, GAO-15-43, November 13 2014, p. 18, at http://www.gao.gov/assets/670/666884.pdf.
123 GAO, U.S. Postal Service, Status of Workforce Reductions and Related Planning Efforts, GAO-15-43, November
13 2014, p. 18.
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OIG reported that non-career employees could be used in place of career employees earning
overtime and thus could reduce compensation costs.124
The USPS’s use of certain non-career employees is governed by postal labor union contracts,
which limit the total number of non-career employees that can comprise the USPS workforce, and
the USPS’s ability to maintain or increase its use of certain non-career employees will depend on
contract negotiations. Union contracts limit the number of non-career employees that can be used
for certain functions, often within certain pay periods or within certain locations. Exceptions to
the non-career limitations are generally made for high-volume pay periods, such as those that fall
within the holiday shipping season, or under emergency circumstances. For example, the
collective bargaining agreement between the American Postal Workers Union (APWU) and the
USPS limits the number of non-career PSE mail processing employees to 20% of career staff.125
Similarly, the 2019-2022 National Postal Mail Handlers Union (NPHMU) agreement limits the
number of non-career mail handler assistants who may work at an installation to 24.5% of total
number of career mail handlers, but exceptions are permitted during two select accounting
periods (such as the month of December), and for emergencies.126
Lower caps on the percentage of non-career employees might have implications for the size and
cost of the USPS’s workforce. According to a 2014 GAO report, the USPS asserted that it was
close to reaching current caps on non-career employees.127 Lower caps, therefore, might require
the USPS to reduce the number of non-career employees, which might prompt changes to the
agency’s workforce composition in ways that might increase personnel costs. For instance,
compensation costs might increase if the USPS increases the number of career employees to
comply with lower caps, either through additional hires or transitioning non-career employees to
career positions. Alternatively, overtime pay costs might increase if the USPS reduces the number
of non-career employees that were being used in place of career employees earning overtime.
Impact of Workforce Initiatives on Costs
The USPS’s initiatives to reduce the size and cost of its workforce have reportedly contributed to
lowered compensation expenses in past years. For example, the USPS’s total compensation costs
decreased $526 million from FY2013 to FY2014, and the PRC found that 36.1% of the decreased
amount ($190 million) resulted from increased use of non-career employees and a decrease in
employee work hours.128 These trends have reversed in recent years as the USPS has converted
greater numbers of non-career employees to career status. For example, the USPS’s total
compensation costs increased $3.5 billion from FY2015 to FY2019 (from $44.0 to $47.5 billion).
The USPS notes in its FY2019 financial statement that workforce numbers remained relatively
124 USPS OIG, Use of Non-Traditional Full-Time and Postal Support Employee Positions in Processing Operations,
Report Number NO-AR-13-003, May 17, 2013, p. 5, at https://www.uspsoig.gov/sites/default/files/document-libraryfiles/2015/no-ar-13-003.pdf.
125 American Postal Workers Union, 2018-2021 National Interest Arbitration Award - Collective Bargaining
Agreement (Contract), at https://www.apwu.org/contract-database?issue=3957.
126 National Postal Mail Handlers Union, AGREEMENT between National Postal Mail Handlers Union, A Division of
the Laborers’ International Union of North America, AFL-CIO and United States Postal Service, September 21, 2019 –
September 20, 2022, at https://www.npmhu.org/resources/body/FINAL-2019-Agreement.pdf.
127 Government Accountability Office, U.S. Postal Service, Status of Workforce Reductions and Related Planning
Efforts, GAO-15-43, November 13, 2014, p. 18.
128 USPS, FY2014 10-K, p. 20; U.S. Postal Regulatory Commission, Financial Analysis of United States Postal Service
Financial Results and 10-K Statement, Fiscal Year 2014, April 1, 2015, p. 12. Total compensation does not include
retirement, health benefits, workers’ compensation, or PSRHBF payments.
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flat in FY2019, and that the increased compensation costs are attributable to contractual wage
adjustments, including general cost of living adjustments, increased work hours, and increased
overtime costs.129
Further Postal Reform Issues for Congress
Postal Fleet
The Postal Service maintains a fleet of 232,368 vehicles, including over 200,000 mail delivery
vehicles.130 However, many of the USPS’s delivery vehicles are older than the expected service
life and the USPSOIG notes that nearly 70 percent of USPS’s mail delivery vehicles are between
25 and 32 years old.131
To replace its aging fleet, in October 2015, the USPS issued a Request for Proposal (RFP)
seeking a qualified supplier to design and manufacture six “fully functional” prototypes for Next
Generation Delivery Vehicles (NGDVs).132 Following a five-year process, which involved the
development and testing of prototypes, on February 23, 2021 the USPS awarded a ten-year
contract to Oshkosh Defense, LLC to produce 50,000 to 165,000 NGDVs.133 The first NGDVs
are expected to be available for mail carriers beginning in 2023.134
USPS’s Ten-Year Plan, Delivering for America, includes a commitment to transition to an electric
mail delivery fleet by 2035, with “the right level of Congressional support.”135 The Postal Service
estimates that approximately $8 billion is needed to transition their mail delivery fleet to electric
vehicles.136 Several bills have been introduced in the 117th Congress that would provide the USPS
with funding for electric vehicles. For example, H.R. 3521, the Postal Service Electric Fleet
Authorization Act of 2021, would, if enacted, authorize $8 billion in appropriations to the USPS
for the acquisition of electric vehicles and charging stations.137 Similarly, H.R. 1636, the Postal
Vehicle Modernization Act, would authorize $6 billion in appropriations for electric vehicles and
charging stations.138
129 USPS, FY2019 10-K, p. 25.
130 U.S. Postal Service, 2021 Annual Report to Congress, p. 28, at https://about.usps.com/what/financials/annual-
reports/fy2021.pdf.
131 USPSOIG, “Delivery of a New Delivery Vehicle,” September 17, 2020, at https://www.uspsoig.gov/blog/deliverynew-delivery-vehicle.
132 U.S. Postal Service, Next Generation Delivery Vehicle (NGDV) Prototype Request for Proposal (RFP): Statement of
Objectives (Attachment 1), October 20, 2015, p. 2.
133 U.S. Postal Service, Next Generation Delivery Vehicle (NGDV): Contract Award Notice, at https://sam.gov/opp/
1e56c386808444d886124fc1927f4eb0/view. Also see USPSOIG, Next Generation Delivery Vehicles –Contract
Clauses, January 12, 2022, at https://www.uspsoig.gov/sites/default/files/document-library-files/2022/21-215-R22.pdf.
134 USPS, “U.S. Postal Service Awards Contract to Launch Multi-Billion-Dollar Modernization of Postal Delivery
Vehicle Fleet,” February 23, 2021, at https://about.usps.com/newsroom/national-releases/2021/0223-multi-billiondollar-modernization-of-postal-delivery-vehicle-fleet.htm.
135 U.S. Postal Service, Delivering for America: Our Vision and Ten-Year Plan to Achieve Financial Sustainability and
Service Excellence, p. 32.
136 Ibid.
137 H.R. 3521.
138 H.R. 1636.
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Nonpostal Products and Services
The PAEA defines postal services as “the delivery of letters, printed matter, or mailable packages,
including acceptance, collection, sorting, transportation, or other functions ancillary thereto” and
prohibits the USPS from offering all but a limited number of excepted nonpostal products and
services.139 This restriction prevents the Postal Service from offering or developing new nonpostal
products (e.g., expanded banking and financial services) or expanding into new markets that
might increase its market share and revenue.140
Under the PAEA, the Postal Service is currently authorized to offer 11 nonpostal products and
services, including two market dominant and nine competitive products.141 The two market
dominant products are
USPS/public sector alliances, e.g., MoverSource, which allows the USPS to
provide free change-of-address services by including moving tips and related
advertisements;142 and
philatelic sales intended for stamp collectors, e.g., uncut press sheets, framed
stamps, binders for storing stamps, and philatelic guides.143
The nine competitive products are
private sector advertising on USPS.com, within U.S. post offices, or in other
postal venues;
licensing of USPS’s copyrights and trademarks;
mail service promotions, which “allow merchants who offer web-based
customers the ability to create mail pieces through an online service.” Prices for
these products are negotiated between the merchant and the Postal Service;
sale of officially licensed USPS retail products;
U.S. Passport photo services;
photocopying services;
rental, leasing, and non-sale of USPS property;
use of USPS training facility and courses; and
the USPS Electronic Postmark (EPM) program, which “authorizes vendors to
provide their customers with Postal Service-authorized timestamps.”144
139 P.L. 109-435, Title I, §§101-102, 120 Stat. 3199. Regulations subsequently issued by the PRC state that a postal
service “refers to the delivery of letters, printed matter, or mailable packages, including acceptance, collection, sorting,
transportation, or other functions ancillary thereto” and that a postal product “means a postal service with a distinct
cost or market characteristic for which a rate or rates are, or may reasonably be, applied.” 39 C.F.R. §§3001.5(s)-(t).
140 Ibid.
141 U.S. Postal Regulatory Commission, Order Approving Mail Classification Schedule Descriptions and Prices for
Nonpostal Service Products, Docket No. MC2010-24, December 11, 2012.
142 U.S. Postal Regulatory Commission, Mail Classification Schedule, at https://www.prc.gov/mail-classificationschedule.
143 Ibid.
144 U.S. Postal Regulatory Commission, Mail Classification Schedule, July 1, 2020, pp. 648-657. Also see U.S.
Government Accountability Office, U.S. Postal Service: Overview of Initiatives to Increase Revenue and Introduce
Nonpostal Services and Experimental Postal Products, January 2013, pp. 18-20.
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Reforming the U.S. Postal Service: Background and Issues for Congress
In FY2020, net revenue from competitive nonpostal products were $96 million, which is a
decrease of approximately 14% from FY2019.145 Select postal reform legislation introduced in
recent Congresses would provide the USPS with authority to offer additional nonpostal products
and services. For example, H.R. 3076, if enacted, would allow the USPS to provide certain
nonpostal products and services to state, local, or tribal governments if the reimbursement for the
product or service sufficiently covers the USPS’s costs.146
In previous Congresses, postal reform legislation was introduced that would have expanded
USPS’s authority to offer nonpostal products and services, such as
public Internet access;147
drivers’ license services;148
hunting and fishing license services;149
voter registration;150 and
postal banking and financial services.151
Postal Banking
Until 1965, the USPS offered a government-backed savings system to its customers.152
Established by Congress in 1910, the Postal Savings System provided postal customers with a
safe and convenient place to deposit money.153 In recent Congresses, bills have been introduced
that would provide the USPS with authorization to reinstitute postal banking, often as a means to
expand financial services to underbanked communities.154
In 2015, the USPSOIG published a white paper that explored a range of possible postal banking
approaches, ranging from the limited expansion of USPS’s existing money order, cash checking,
and debit card products and services to the establishment of a licensed USPS bank, with authority
to take deposits, issue loans.155 The Postal Service began a financial services pilot program in
2021, which is similar in scope to the limited expansion of services proposed by the USPSOIG.
145 U.S. Postal Regulatory Commission, Annual Compliance Determination Report FY2020, March 29, 2021, p. 90, at
https://www.prc.gov/sites/default/files/reports/2020_ACD.pdf.
146 H.R. 3076.
147 S. 316 (113th); H.R. 630 (113th); H.R. 2960 (113th); S. 1742 (114th); S. 1854 (114th). Also see USPSOIG, Next
Generation Connectivity: Postal Service Roles in 5G and Broadband Deployment, September 14, 2020, at
https://www.uspsoig.gov/sites/default/files/document-library-files/2020/RISC-WP-20-007.pdf.
148 S. 316 (113th); H.R. 630 (113th).
149 Ibid.
150 Ibid.
151 S. 316 (113th); H.R. 630 (113th); H.R. 2960 (113th); H.R. 5179 (113th); S. 1854 (114th); H.R. 4422 (114th).
152 USPSOIG, Banking on the Postal Service, May 4, 2009, at https://www.uspsoig.gov/blog/banking-postal-service.
153 USPS, “Postal Savings System,” at https://about.usps.com/who-we-are/postal-history/postal-savings-system.pdf.
154 For example, H.R. 3617 (115th), POSTAL Act of 2017, would have authorized the USPS to provide basic financial
services, such as (1) small-dollar loans; (2) checking accounts, and (3) interest-bearing savings accounts. Also see
USPSOIG, Providing Non-Bank Financial Services for the Underserved, January 27, 2014, at
https://www.uspsoig.gov/sites/default/files/document-library-files/2015/rarc-wp-14-007_0.pdf.
155 USPSOIG, The Road Ahead for Postal Financial Services, May 21, 2015, at https://www.uspsoig.gov/sites/default/
files/document-library-files/2015/rarc-wp-15-011_0.pdf.
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On September 13, 2021, the USPS pilot program was launched at the following post office retail
locations:
Baychester Post Office, Bronx, New York;
Bailey Crossroads Post Office, Falls Church, Virginia;
National Capital (Dorothy Height) Post Office, Washington DC; and
Baltimore Post Office, Baltimore, Maryland.
According to a statement from the USPS, there are no costs associated with the pilot aside from
the “very minimal expense” for signage at the four post offices.156 USPS notes that no
appropriated funds were used for the pilot and that the cost of the signage was paid for out of the
Postal Service Fund.157
The pilot program allows customers to purchase a gift card using a payroll or business check. To
qualify, the check must be made out to the customer and have the company name preprinted on
the check.158 In response to a request for program details, the USPS filed a report on the pilot with
the PRC. According to the filing, six gift cards have been issued under the pilot with an average
value of $91.41.159 The total fee revenue for the six cards is $35.70. USPS stated that “although
we are considering potential next steps for this initiative, no decisions or definitive plans
regarding terminating, changing, or expanding the pilot have been made.”160
Selected provisions in FY2022 appropriations acts would provide the USPS with funding to
expand and continue its financial services pilot program. H.R. 4345, the Financial Services and
General Government Appropriations Act, 2022, would provide $58.57 million for the Postal
Service Fund, which is $6 million above USPS’s budget request. According to the accompanying
report, the additional $6 million is to be used by USPS to carry out non-bank financial services
pilot programs in at least five rural and five non-rural ZIP codes “to the fullest extent permitted
under current statutory authority.”161 A proposed FY2022 appropriations measure would also
provide $58.57 million for the Postal Service Fund, though it does not state whether the
additional $6 million is for postal financial services pilot programs.162 Similar language was
considered, but not enacted, in FY2021, as part of the Consolidated Appropriations Act, 2021.163
The report accompanying the Financial Services and General Government Appropriations Act,
2021, encouraged the USPS to carry out postal banking pilot programs in “at least one urban zip
code and at least one rural zip code.”164
156 Electronic correspondence from the USPS, December 15, 2021.
157 Ibid.
158 Postal Regulatory Commission, Annual Compliance Review 2021, Responses of the United States Postal Service to
Questions 1-2 of Commission Information Request No. 1 (Docket No. ACR2021), January 14, 2022, at
https://www.prc.gov/docs/120/120699/CIR%20No.%201.Responses.pdf.
159
Ibid.
160 Ibid., p. 6.
161 H.Rept. 117-79, p. 113.
162 H.R. 4502.
163 P.L. 116-260. H.Rept. 116-456, p. 105. While the joint explanatory statement for P.L. 116-260 incorporates most of
the language from H.Rept. 116-456, it did not adopt the House report directive on postal banking pilot programs. See
explanatory statement in Book IV of the December 21, 2020 Congressional Record, at H8444, subheading titled
“Postal Banking Pilot Programs.”
164 H.R. 4345; H.Rept. 116-456, p. 105. While the joint explanatory statement for P.L. 116-260 incorporates most of
the language from H.Rept. 116-456, it did not adopt the House report directive on postal banking pilot programs. See
explanatory statement in Book IV of the December 21, 2020, Congressional Record, at H8444, subheading titled
“Postal Banking Pilot Programs.”
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Reforming the U.S. Postal Service: Background and Issues for Congress
Author Information
Michelle D. Christensen
Analyst in Government Organization and
Management
Acknowledgments
Meghan M. Stuessy, Analyst in Government Organization and Management, and Garrett Hatch, Specialist
in American National Government, provided assistance on earlier versions of this report.
Disclaimer
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Congressional Research Service
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This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.