U.S. POSTAL 

SERVICE

Status of Workforce 

Reductions and 

Related Planning 

Efforts

Report to the Chairman, Committee on 

Oversight and Government Reform, 

House of Representatives

November 2014

GAO-15-43

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-15-43, a report to the

Chairman, Committee on Oversight and 

Government Reform, House of 

Representatives

November 2014

U.S. POSTAL SERVICE

Status of Workforce Reductions and Related Planning 

Efforts 

Why GAO Did This Study

USPS has insufficient revenues to 

cover its expenses, has reached its 

statutory borrowing limit, and has 

projected unsustainable losses through 

fiscal year 2020. In its April 2013 5-

Year Business Plan, USPS reported 

that it needs to save up to $20 billion 

annually through fiscal year 2017 to 

help regain financial self sufficiency. A 

key area for potential cost savings is 

managing personnel-related costs,

which account for about 78 percent of 

its expenses. 

GAO was asked to examine USPS’s 

plans to manage the size and cost of 

its workforce. This report discusses (1)

actions USPS has taken since 2006 to 

reduce the size and cost of its 

workforce and the results of those 

actions, (2) the status of other options 

USPS has identified to reduce

workforce costs, and (3) steps that 

USPS has taken to implement

workforce planning. GAO reviewed 

reports from USPS and the Postal 

Regulatory Commission on actions 

USPS has taken to manage the size 

and cost of its workforce; GAO 

interviewed USPS officials and 

stakeholders, including postal labor 

organizations and management 

associations and mailing industry 

organizations, to obtain views on 

planned initiatives. GAO also identified 

key principles for workforce planning 

from prior GAO work and obtained 

documentation to identify steps USPS 

is taking to implement these principles.

GAO is not making any 

recommendations in this report. USPS 

reviewed a draft of this report and 

provided technical comments, which 

GAO incorporated as appropriate.

What GAO Found

From fiscal years 2006 through 2013, the U.S. Postal Service (USPS) decreased 

the size of its workforce and the number of employee work hours through 

retirements, attrition, and initiatives to streamline its operations. According to 

USPS’s data, its workforce declined during this period from approximately 

796,000 to 618,000 employees, or by about 22 percent. The total number of work 

hours also decreased by approximately 24 percent, from 1.5-billion hours in fiscal 

year 2006 to 1.1-billion hours in fiscal year 2013. However, despite the decrease 

in employees and work hours, USPS’s total expenses over this same time period

did not decline. This is because average hourly wage and benefits costs have

increased due to (1) cost-of-living allowances, (2) rising health benefit costs, and 

(3) wage increases negotiated in collective-bargaining agreements. Also, USPS

was required to prefund retiree health benefits through 2016, and other nonpersonnel expenses, such as those for transportation, increased. According to 

USPS officials, personnel costs will continue to rise and are estimated to be $2

billion more in fiscal year 2015 compared to fiscal year 2014. 

USPS has considered requiring customers to change to less costly delivery 

modes and is seeking legislative changes for other initiatives to reduce workforce 

costs. USPS estimates that mandating large-scale conversions from door 

delivery to other less costly modes, such as delivery to a curbside or centralized 

mailbox, has the potential to generate $2 billion in annual savings. However,

although USPS has the authority to mandate such conversions, it has not done 

so because it anticipates that such a change would face resistance from 

customers, employees, postal labor organizations, and mailing-industry 

stakeholders. USPS is seeking legislative authorization for several other

initiatives that would potentially reduce workforce costs, such as implementing 6-

day package and 5-day mail delivery, for an estimated annual savings of $2 

billion. According to USPS officials, such legislative changes are needed 

because initiatives that have been or could be undertaken within its current 

authority will be insufficient to ensure immediate and long-term financial stability.

USPS has also developed initiatives to implement some of the key principles for 

workforce planning, principles that can help it identify future workforce needs and 

develop appropriate strategies. According to USPS officials, USPS has 

incorporated these key principles into its workforce-planning efforts, including its 

5-Year Business Plan and its management process, called Delivering Results, 

Innovation, Value, and Efficiency (DRIVE). During GAO’s review, USPS 

developed a DRIVE initiative called Building the Workforce of the Future, which 

according to USPS officials, addresses workforce planning in a comprehensive 

and coordinated manner. Because the initiative has not been completely

implemented, GAO did not fully assess the extent to which it incorporates key 

principles for workforce planning. Incorporating key principles for workforce 

planning, such as communicating plans to stakeholders and monitoring progress 

toward meeting goals, is important for USPS to demonstrate to Congress and 

other stakeholders how USPS’s current, planned, and proposed workforce 

initiatives will achieve their targets and goals, and to help USPS move toward a 

point where it can be self-sustaining. 

View GAO-15-43. For more information, 

contact Lori Rectanus at (202) 512-2834 or 

rectanusl@gao.gov. 
Page i GAO-15-43 USPS Workforce 

Letter 1 

Background 3

USPS Has Reduced the Size of Its Workforce through 

Retirements, Attrition, and Initiatives 7

USPS Has Chosen Not to Implement One Other Option It 

Identified to Reduce Workforce Costs and Seeks Congressional 

Action for Others 19

USPS Has Developed Various Initiatives to Implement Workforce 

Planning 22

Concluding Observations 30

Agency Comments 30

Appendix I Objectives, Scope, and Methodology 31

Appendix II GAO Contact and Staff Acknowledgments 33

Tables

Table 1: U.S. Postal Service Separation Incentives Offered to 

Employees (Fiscal Years 2010–2013) 12

Table 2: Selected U.S. Postal Service (USPS) Initiatives with 

USPS’s Current and Projected Cost Savings, Fiscal Year 

2012 through Fiscal Year 2017 13

Table 3: 5 Key Principles of Strategic Workforce Planning 23

Table 4. Selected Objectives, Measures, and Targets for USPS’s 

Workforce of the Future Initiative for Fiscal Years 2013–

2014 29

Figures

Figure 1: U.S. Postal Service Mail Volume in Billions of Pieces for 

Fiscal Years 2006—2013 4

Figure 2: U.S. Postal Service Revenue in Billions of Dollars for 

Fiscal Years 2006—2013 5

Figure 3: Number of U.S. Postal Service Career and Non-Career 

Employees (Fiscal Years 2006–2013) 8

Contents
Page ii GAO-15-43 USPS Workforce 

Figure 4: Total U.S. Postal Service Annual Work Hours in Billions 

(Fiscal Years 2006–2013) 9

Figure 5: USPS’s Annual Total Expenses in Billions (Fiscal Years 

2006–2013) 10

Abbreviations 

APWU American Postal Workers Union 

DRIVE Delivering Results, Innovation, Value and Efficiency 

DUO Delivery Unit Optimization 

FEHBP Federal Employee Health Benefits Program 

FERS Federal Employees Retirement System 

NALC National Association of Letter Carriers 

NAPS National Association of Postal Supervisors 

NAPUS National Association of Postmasters of the United States 

NLPM National League of Postmasters of the United States 

NPMHU National Postal Mail Handlers Union 

NRLCA National Rural Letter Carriers’ Association 

OPM Office of Personnel and Management 

PRC Postal Regulatory Commission 

USPS U.S. Postal Service 

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Page 1 GAO-15-43 USPS Workforce 

441 G St. N.W.

Washington, DC 20548

November 13, 2014

The Honorable Darrell Issa

Chairman

Committee on Oversight and Government Reform

House of Representatives

Dear Mr. Chairman:

The U.S. Postal Service’s (USPS) ability to meet its mission—providing 

prompt, reliable, and efficient universal service to the public1 while 

remaining financially self-sustaining—continues to be at risk. According to 

USPS data from fiscal year 2013, USPS delivered mail to about 153- 

million delivery points.2 As we previously reported, USPS has insufficient 

revenues to cover its expenses and financial obligations3 including wage 

and health care costs—its largest cost category—that continue to rise by 

approximately $2.0 billion per year or more. USPS has also reached its 

statutory borrowing limit of $15 billion, and it has projected unsustainable 

losses through fiscal year 2020. Since 2009, USPS’s financial condition 

has been on our High Risk list.4

In late 2013, USPS requested and the Postal Regulatory Commission 

(PRC) approved a rate increase to fully offset an estimated $2.8-billion 

loss in net revenue from 2008 through 2011 that was attributed to effects 

from the recession.5

 

1

39 U.S.C. § 101(a). 

The rate increase provides USPS additional financial 

security and cash to operate in the short-term; but it is not a long-term 

solution. To remain viable, USPS must realize opportunities to reduce 

2

USPS maintains data on the number of delivery points rather than addresses. A delivery 

point can include multiple addresses. According to USPS data, delivery points have 

increased from about 150 million in 2009 to about 153 million in 2013.

3

GAO, U.S. Postal Service: Action Needed to Address Unfunded Benefit Liabilities, 

GAO-14-398T (Washington, D.C.: Mar. 13, 2014). 

4

GAO, High Risk Series: An Update, GAO-13-283 (Washington, D.C.: Feb. 14, 2013).

5

The PRC is an independent agency that has exercised regulatory oversight over the 

Postal Service since its creation by the Postal Reorganization Act of 1970. Among other 

duties, the PRC is required to develop and maintain regulations for a modern system of 

rate regulation.
 

Page 2 GAO-15-43 USPS Workforce 

costs and/or increase revenues. In its 5-Year Business Plan issued in 

April 2013, USPS stated that it needs to save up to $20 billion annually 

through fiscal year 2017 to help it regain financial self-sufficiency. 

The size and cost of USPS’s workforce is a key area for potential cost

savings because total personnel-related costs comprised about 78 

percent of its expenses in fiscal year 2013,6 totaling about $56 billion out 

of about $72 billion for a workforce of approximately 618,000 career and 

non-career employees. However, any reduction in the size of the USPS 

workforce to gain cost savings may be offset by inflationary pressure on 

compensation and benefits. In prior work, we have determined that an 

organization can use workforce-planning principles to determine the 

appropriate size and composition of its workforce to meet its mission and 

programmatic goals.7

To describe the actions that USPS has taken since 2006 to reduce the 

size and cost of its workforce and the result of those actions, we reviewed 

USPS testimonies and documents including its annual reports to 

Congress and PRC from fiscal year 2006 through fiscal year 2013—the 

latest year for which data were available—and the 2013 5-Year Business 

Plan. We also reviewed PRC proceedings, reports, and advisory opinions 

on proposed USPS actions. We discussed the reliability of the data on 

mail revenue, volume, number of employees, and financial savings with 

USPS and PRC officials and determined that these data were sufficiently 

reliable to discuss historical and future trends of the postal workforce. To 

describe the status of other options USPS identified to manage workforce 

costs, we reviewed USPS documentation and testimonies, and PRC 

advisory opinions on USPS’s projected cost-savings from workforce 

initiatives. We reviewed relevant laws, regulations, and USPS policies as 

You asked us to examine USPS’s efforts to 

manage the size and cost of its workforce. This report discusses (1) 

actions USPS has taken since 2006 to reduce the size and cost of its 

workforce and the results of those actions, (2) the status of other options 

USPS has identified to reduce workforce costs, and (3) the steps that 

USPS has taken to implement workforce planning.

 

6

USPS’s personnel-related costs included in its financial reports are compensation and 

benefits, retiree health- benefit premiums, the legally mandated prefunding of retiree 

health benefits, and workers’ compensation.

7

GAO, Human Capital: Key Principles for Effective Strategic Workforce Planning, 

GAO-04-39 (Washington, D.C: Dec. 11, 2003).
 

Page 3 GAO-15-43 USPS Workforce 

well as its collective bargaining agreements to understand the limitations 

and challenges in making workforce reductions to manage costs. We 

interviewed officials from stakeholder organizations—including four postal 

labor organizations, two management associations, and three mailingindustry organizations—to discuss their viewpoints on USPS initiatives,

options, and associated challenges. To describe the steps that USPS has 

taken to implement workforce planning, we reviewed key principles 

related to strategic workforce planning and effective strategic humancapital management identified in previous GAO reports and the Office of 

Personnel and Management’s (OPM) Human Capital Assessment and 

Accountability Framework. We interviewed USPS officials and obtained 

documentation to understand the steps that the Postal Service has taken 

to address strategic workforce planning and how workforce planning was 

incorporated into its fiscal year 2013 5-Year Business Plan. We also 

reviewed other documentation including USPS’s Delivering Results, 

Innovation, Value and Efficiency (DRIVE) initiatives, PRC and the USPS 

Office of Inspector General reports to understand recent work on USPS’s 

workforce performance measures in relation to workforce initiatives and 

its progress toward meeting established goals.8

We conducted this performance audit from November 2013 to November 

2014 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives.

Further details about our 

scope and methodology can be found in appendix I.

USPS mail volume has decreased since fiscal year 2006 and is expected 

to decline further. Total mail volume for all classes of mail—including 

First-Class, Standard, Shipping and Packages, International, Periodicals, 

and Other—has declined by about 26 percent since fiscal year 2006 (see 

fig.1 ). USPS projects that total mail volume will continue to decline 

through fiscal year 2017, although some types of mail, such as 

 

8

We could not fully assess the extent to which USPS’s workforce planning efforts aligned 

to the strategic workforce-planning principles because parts of the DRIVE initiative for 

workforce planning are still being developed.

Background
 

Page 4 GAO-15-43 USPS Workforce 

“competitive products,”9

Figure 1: U.S. Postal Service Mail Volume in Billions of Pieces for Fiscal Years 

2006—2013

are expected to increase in volume. First Class 

Mail—the most profitable type of mail—volume has declined by about 33 

percent since fiscal year 2006, and USPS projects a continued decline 

through fiscal year 2017. Standard Mail volume has also declined by 

about 21 percent since it peaked in fiscal year 2007, and USPS projects it 

will remain roughly flat through fiscal year 2017. USPS expects mail 

volume to continue decreasing as the migration of mail from traditional 

postal services to electronic media continues.

USPS revenue has fluctuated since fiscal year 2006 but, overall, 

generally decreased (see fig. 2). In fiscal year 2006, total USPS revenue 

was $72.7 billion, and in fiscal year 2013, it was $67.3 billion, a decrease 

of 7 percent. However, revenue recently increased by about 3 percent in 

fiscal year 2013 compared to the prior fiscal year from $65.2 billion to 

 

9

“Competitive products”, which USPS refers to as Shipping and Packages, mainly 

includes Priority Mail Express (formerly Express Mail), Priority Mail, First-Class Package 

Service, Parcel Select, Standard Post, Parcel Return Service, and some types of 

International Mail.
 

Page 5 GAO-15-43 USPS Workforce 

$67.3 billion. This increase was mainly the result of a change in an 

accounting practice and increased growth from Shipping and Packages 

and Standard Mail.10

Figure 2: U.S. Postal Service Revenue in Billions of Dollars for Fiscal Years 2006—

2013

Without the accounting change, revenue would have 

grown by $779 million or 1.2 percent. USPS expects revenue to remain 

relatively flat through fiscal year 2017.

At the end of fiscal year 2013, USPS’s workforce was comprised of about 

618,000 career and non-career employees. Career positions—which are 

generally full-time but also may be part time—are eligible for annual and 

sick leave, health insurance, life insurance, and retirement benefits. 

According to USPS officials, non-career employees supplement the 

career workforce and provide USPS more flexibility. Non-career 

 

10In 2013, USPS updated the estimation technique it uses to determine the amount of 

deferred revenue resulting from postage that has been sold but not yet used by 

customers. Specifically, USPS used new information on the life cycle of stamps to update 

the “breakage” rate, which is a provision for stamps that are sold but may never be used 

due to loss, damage, or collecting activity. As a result of this change, USPS made an 

accounting adjustment of $1.3 billion in increased revenue.
 

Page 6 GAO-15-43 USPS Workforce 

employees are not eligible for life insurance or retirement benefits, and 

receive lower wages. Some non-career employees are eligible for 

specified types of health insurance upon hiring, while others are eligible 

after serving at least one year.

Approximately 90 percent of career employees are covered by collectivebargaining agreements and most are represented through four major 

unions: the American Postal Workers Union (APWU), the National 

Association of Letter Carriers (NALC), the National Postal Mail Handlers 

Union (NPMHU), and the National Rural Letter Carriers’ Association 

(NRLCA).11 Among other provisions, these collective bargaining 

agreements specify caps for the percentage of non-career employees 

that USPS may use in positions covered by the agreements. For 

example, the number of non-career Mail Handler Assistants employed 

can be up to 15 percent of the number of career Mail Handlers for each 

district and up to 20 percent for each installation. These agreements also 

contain clauses that prohibit USPS from laying off career employees who 

have worked for USPS for a certain period of time.12

USPS is required to consult with the following management organizations 

on the planning, development and implementation of certain programs 

and policies that affect them: the National Association of Postal 

Supervisors (NAPS), representing supervisory and managerial 

employees, and the National Association of Postmasters of the United 

States (NAPUS) and the National League of Postmasters of the United 

States (NLPM), representing postmasters.13

 

11The APWU represents clerks, maintenance employees, motor vehicle operators, and 

non-mail processing professional employees. The NALC represents city delivery carriers. 

The NPMHU represents mail handlers who load, unload, prepare, sort and containerize 

mail for delivery. The NRLCA represents rural letter carriers.

According to USPS, these 

12The specific provisions of the no layoff clause vary under the different collective 

bargaining agreements. For example, the collective bargaining agreement for the NALC 

specifies that the no layoff clause covers full-time and part-time employees in the regular 

work force who have had at least 6 years of continuous service while the no layoff clause 

for the NRLCA covers all employees in the career workforce. 

1339 U.S.C. § 1004(b). A postmaster is the manager in charge of a post office.
 

Page 7 GAO-15-43 USPS Workforce 

associations represent most of the employees not covered by collective 

bargaining agreements.14

From the end of fiscal year 2006 through fiscal year 2013, USPS 

decreased the size of its workforce, increased its percentage of noncareer employees, and decreased its employee work hours. Specifically, 

according to USPS data, USPS reduced its workforce from approximately 

796,000 employees to 618,000 employees, or by about 22 percent. 

During the same time, both the number and percentage of non-career 

employees increased from approximately 100,000 employees (13 percent 

of the total workforce) in fiscal year 2006 to approximately 127,000 (21 

percent of the total workforce) in fiscal year 2013 (see fig. 3).15

 

14United States Postal Service, 2013 Report on Form 10-K (Washington, D.C: Nov. 15, 

2013).

15We discuss non-career employees in more detail later in the report.

USPS Has Reduced 

the Size of Its 

Workforce through 

Retirements, Attrition, 

and Initiatives

Since 2006, USPS Has 

Reduced the Size of Its 

Workforce and Number of 

Work Hours by Nearly a 

Quarter, but Expenses 

Have Remained Stable
 

Page 8 GAO-15-43 USPS Workforce 

Figure 3: Number of U.S. Postal Service Career and Non-Career Employees (Fiscal 

Years 2006–2013)

The total number of work hours decreased by approximately 24 percent 

over this time, from 1.46-billion hours in fiscal year 2006 to 1.11-billion 

hours in fiscal year 2013 (see fig. 4). USPS communicates work hour 

reduction targets for the upcoming year through its Integrated Financial 

Plan.16

 

16The Integrated Financial Plan describes USPS’s plans and projections for the upcoming 

fiscal year.

The annual decrease in work hours peaked at approximately 115 

million in fiscal year 2009 and has diminished in each of the following 

fiscal years through fiscal year 2013.
 

Page 9 GAO-15-43 USPS Workforce 

Figure 4: Total U.S. Postal Service Annual Work Hours in Billions (Fiscal Years 

2006–2013)

Despite USPS’s reductions in the numbers of employees and work hours 

from fiscal year 2006 to fiscal year 2013, its total expenses have not 

decreased over this same time period. As shown in figure 5, total 

expenses were $71.8 billion in fiscal year 2006 and $72.3 billion in fiscal 

year 2013.
 

Page 10 GAO-15-43 USPS Workforce 

Figure 5: USPS’s Annual Total Expenses in Billions (Fiscal Years 2006–2013)

Although total expenses were similar in fiscal years 2006 and 2013, they 

ranged from a low of $70.8 billion in fiscal year 2011 to a high of $81.2 

billion in fiscal year 2012. These fluctuations were primarily due to 

changes in payments USPS was required by statute to make in order to 

prefund retiree health benefits. Specifically, in 2006, the Postal 

Accountability and Enhancement Act established requirements for USPS 

to begin prefunding its retiree health benefits and required USPS to make 

prefunding payments at pre-established amounts ranging from $5.4 billion 

to $5.8 billion per year, due each fiscal year from 2007 through 2016.17

 

17Pub. L. No. 109-435, § 803 121 Stat. 3251 (2006). Before 2007, USPS had funded its 

retiree health benefit on a pay-as-you-go basis—an approach in which USPS paid its 

share of premiums for existing retirees, without setting aside funds for current employees.

As 

shown in figure 5 above, total expenses increased in fiscal year 2012 and 

decreased in fiscal year 2013. This increase was primarily because the 

payment schedule for prefunding retiree health benefits changed. USPS 

was required to pay $11.1 billion in fiscal year 2012 and $5.6 billion in 
 

Page 11 GAO-15-43 USPS Workforce 

fiscal year 2013.18

Without including these required prefunding payments, USPS expenses 

declined by $5.1 billion from fiscal years 2006 to 2013—a 7.1 percent 

decline. This is a smaller decline than the 24 percent decline in USPS 

work hours over the same period. According to USPS, three primary 

reasons explain why total expenses have declined to a lesser extent than 

work hours. First, the average hourly wage and benefits costs have 

increased due to factors such as cost-of-living allowances, increased 

health-benefits costs, and wage increases from collective-bargaining 

agreements. Second, some other non-personnel related USPS expenses 

have risen, such as transportation expenses that have increased from 

$6.0 billion in fiscal year 2006 to $6.7 billion in fiscal year 2013. Finally, 

many of USPS’s expenses are fixed and, therefore, do not vary with 

changes in mail volume.

However, USPS did not make these retiree healthbenefit prefunding payments totaling $16.7 billion because it did not have 

sufficient cash on hand or borrowing capacity to do so, according to

USPS officials.

Looking forward, according to USPS officials, despite taking cost-cutting 

measures, USPS continues to face rising cost pressures. If there were no 

change in the workload, number of employees, or composition of the 

workforce, USPS estimates its personnel costs to be approximately $2 

billion higher in fiscal year 2015 compared to fiscal year 2014.19

USPS has reduced the size of its workforce largely through retirements 

and attrition instead of laying off employees. In the context of decreased 

workload from reduced mail volume, as well as USPS initiatives to 

streamline its operations, USPS generally has not replaced employees 

who have left because of retirement or attrition. USPS is prohibited by 

collective bargaining agreements with labor organizations from laying off 

certain employees. In addition, according to USPS officials, a sufficient 

number of employees have separated or retired from the Postal Service, 

 

18Pub..L. No.112-74 § 632, 126 Stat. 786 (2011) changed the due date of the scheduled 

payment for prefunding retiree health benefits from September 30, 2011, to August 1, 

2012, resulting in two payments in fiscal year 2012.

19Personnel costs included in these figures include wages and salary, health care 

premiums for employees and retirees, retiree health benefit prefunding, other benefits, 

and workers’ compensation.

Retirements, Attrition, and 

Initiatives Have 

Contributed to the Decline 

in Workforce Size and 

Cost
 

Page 12 GAO-15-43 USPS Workforce 

thereby alleviating the need for layoffs. In May 2014, however, USPS 

announced a planned reduction in force for postmasters who are not 

covered by collective-bargaining agreements; this reduction in force 

would take effect in January 2015 as part of the POStPlan initiative,20

To encourage retirements among certain classes of employees, USPS 

has offered voluntary separation incentives at various times from fiscal 

year 2010 to fiscal year 2013 (see table 1). During this period, 

approximately 122,000 USPS career employees retired, with almost 

53,000 taking advantage of a separation incentive. The monetary 

incentives require upfront costs for USPS; however, they result in longterm savings from fewer employees receiving wages and benefits.

which we discuss later in this report.

Table 1: U.S. Postal Service Separation Incentives Offered to Employees (Fiscal 

Years 2010–2013)

Fiscal year 

initiated

Employees 

affected

Monetary 

incentive per 

employee

Number of 

employees 

accepted

Total one time 

expense

2010 APWU Members 

and Mail Handlers

$15,000 20,800 $312 million

2011 Administrative

Administrative

$20,000

$20,000

2,055

189

$41.1 million

$3.8 million

2012 Postmasters

Mail Handlers

$20,000

$15,000 

4,192

3,025

$83.8 million

$45.4 million

2013 APWU Members $15,000 22,609 $339.1 million

TOTAL 52,870 $825.2 million

Source: USPS. | GAO-15-43

On June 27, 2014, the Postal Service announced a $10,000 separation 

incentive for 3,817 postmasters affected by the POStPlan. As of 

September 30, 2014, 1,380 employees had accepted the incentive. USPS 

estimates the cost of this incentive to be approximately $14 million.

In addition to offering separation incentives, USPS has reduced its 

workforce costs since fiscal year 2006 through various initiatives, which 

will be described in greater detail later in this report. One major source of 

 

20POStPlan is an initiative to reduce costs at retail facilities.
 

Page 13 GAO-15-43 USPS Workforce 

cost savings was downsizing the workforce through attrition as mail 

volume and workload declined. In addition, USPS consolidated mailprocessing operations and realigned its transportation network. Thus, 

from fiscal years 2006 through 2013, USPS’s workforce declined by about 

178,000 employees. According to USPS, the reduction in the workforce 

and work hours saved approximately 349 million work hours and $15 

billion.21

In April 2013, USPS released a 5-Year Business Plan that included a goal 

of reducing the workforce by 146,000 employees from the fiscal year 

2012 level through fiscal year 2017.22

Table 2: Selected U.S. Postal Service (USPS) Initiatives with USPS’s Current and Projected Cost Savings, Fiscal Year 2012 

through Fiscal Year 2017

The 5-Year Business Plan includes 

various ongoing and planned initiatives (see table 2). As will be discussed 

below, these initiatives have been aimed at streamlining operations, 

reducing work hours, and reducing costs. The business plan also 

included proposed actions that require congressional action. (These 

proposed actions will be discussed in the following section.) The goal of 

reducing the workforce by 146,000 was based on assumptions about 

USPS’s workload and certain proposed actions, such as the transition to 

6-day package /5-day mail delivery service, that have not been adopted 

as of September 2014.

Initiative

Fiscal year 2012 

savings

Fiscal year 2013 

savings

Fiscal year 2014 

projected 

savings

Fiscal year 2015 

projected

savings

Fiscal year 2016 

projected

savings

Fiscal year 2017 

projected

savings

Phase 1 Network 

Consolidationa $17 million $552 million $272 million $24 million No additional 

savings

No additional 

savings

Phase 2 Network 

Consolidationa N/A N/A N/A TBD TBD No additional 

savings

POStPlanb $25.4 million $167.9 million $47.2 million $291 million $9.0 million No additional 

savings

Voluntary delivery 

conversionsc N/A N/A $27 million $24 million $24 million $24 million

 

21To determine cost savings, USPS multiplied the number of work hours saved by the 

average wage and benefit hourly rate and then added an additional $500 million in 

savings from substituting new non-career employees for career employees in 2013.

22During the time of our review, an update of the 5-Year Business Plan was not available.
 

Page 14 GAO-15-43 USPS Workforce 

Initiative

Fiscal year 2012 

savings

Fiscal year 2013 

savings

Fiscal year 2014 

projected 

savings

Fiscal year 2015 

projected

savings

Fiscal year 2016 

projected

savings

Fiscal year 2017 

projected

savings

Delivery Unit 

Optimizationd $69 million $40.5 million No additional savings

No additional 

savings

No additional 

savings

No additional 

savings

Increased use of 

non-career 

workforce 

$459 million $536 million $1,361 million Uncertain Uncertain Uncertain

New wage rates N/A $32 million $121 million Uncertain Uncertain Uncertain

Load levelinge N/A N/A $88 million $134 million No additional 

savings

No additional 

savings

Source: USPS. | GAO-15-43

Note: Savings figures are USPS estimates. USPS calculated these savings using the prior fiscal 

year’s costs as a baseline.

a

Network Consolidation is a two-phased initiative to streamline USPS’s mail processing network.

b

POStPlan is an initiative to reduce costs at retail facilities.

c

Voluntary delivery conversions shift door deliveries to less costly delivery modes, such as curbside or 

delivery to a central location.

d

Delivery Unit Optimization refers to a process that includes relocating letter carriers from some local 

postal offices to centralized delivery offices.

e

Load leveling is an initiative to revise delivery times and reduce overtime hours.

Mail-Processing Networks

USPS announced its Network Consolidation23

In May 2012, USPS changed the original Network Consolidation initiative 

into a two-phased plan. As part of the Phase 1 plan to modernize its mailprocessing network, USPS made changes to its delivery standards that 

initiative in 2011, noting 

that its aim is to increase the efficiency of the mail-processing network 

and reduce costs. According to USPS, this initiative addresses excess 

capacity resulting from decreased mail volume by reducing the number of 

mail-processing and distribution plants and rescheduling transportation 

routes. USPS’s original plan was to reduce the number of processing 

facilities from 461 to less than 250 and the workforce by up to 35,000 

employees.

 

23USPS also refers to this initiative as Network Rationalization.

Some Initiatives Are Focused 

on Streamlining Operations 

and Reducing Work Hours
 

Page 15 GAO-15-43 USPS Workforce 

became effective in July 2012.24 USPS reported that, as a result of the 

new delivery standards, it closed 141 mail-processing plants in 2012 and 

2013 and reduced mail-processing work hours by over 6 million in 2013.

According to USPS, Phase 1 resulted in $17 million in cost savings in 

fiscal year 2012 and an additional $552 million in cost savings in fiscal 

year 2013. For fiscal years 2014 and 2015, USPS estimates that Phase 1 

will result in an additional $272 million and $24 million, respectively.25

Phase 2 of the Network Consolidation initiative was originally scheduled 

to begin in February 2014. In January 2014, USPS delayed Phase 2, but 

recently—in June 2014—announced plans to resume it beginning in 

January 2015. Plans for Phase 2 involve making more changes to 

delivery standards—including eliminating 1-day (overnight) delivery of 

single-piece First-Class Mail—that would enable USPS to consolidate up 

to an additional 82 mail-processing facilities. According to USPS, Phase 2 

will result in a more flexible operating schedule, allowing for higher 

efficiency and lower costs. Phase 2 is expected to result in workforce 

reductions of approximately 15,000 full-time equivalent positions.

26

Stakeholder views are mixed on USPS pursuing Phase 2 Network 

Consolidation. Some mailers reportedly expect not to notice any negative 

impact on the quality of service. For example, one mailing association 

official said that USPS did a good job implementing Phase 1 and that he 

does not expect Phase 2 to affect the quality of service for advertising 

mail. On the other hand, officials from all four major postal labor 

organizations and one major mailing-industry organization expressed 

concern about USPS pursuing Phase 2 because they believe it will further 

decrease USPS’s capacity to process mail. In their view, USPS is 

decreasing mail-processing capacity too quickly and aggressively and by 

USPS 

projects that Network Consolidation will result in $2.1 billion in annualized 

savings when both phases are fully implemented.

 

24USPS has established standards for the timely delivery of each type of mail; these 

specify the maximum number of days for “on-time” delivery based on the time of day, 

location at which USPS receives the mail, and mail’s final destination.

25According to USPS, cost savings were calculated using the previous fiscal year’s costs 

as a baseline.

26During the time of this review, USPS had not completed estimates of Phase 2 savings to 

be captured in fiscal years 2015 and 2016.
 

Page 16 GAO-15-43 USPS Workforce 

doing so, may hinder the ability to meet current delivery standards and 

may miss potential opportunities for future revenue growth.

Retail

In July 2011, USPS announced a strategy to reduce costs, called 

POStPlan, that reduces retail hours at selected post offices to 2, 4, or 6 

hours per day; replaces postmasters with career and non-career clerks; 

and expands self-service kiosks. As of May 2014, USPS has adjusted 

retail hours at 9,089 of the 12,802 facilities that are planned to be 

adjusted. In addition, USPS has placed 2,882 self-service kiosks in postal 

retail facilities, such as post offices, and other facilities. USPS has further 

decreased the number of postmasters and other career retail positions 

while increasing the number of non-career employees. USPS officials 

expect that POStPlan will be fully implemented in fiscal year 2015. After 

that point, post offices will be reviewed annually and targets will be 

adjusted based on workload to capture additional efficiencies, according 

to USPS officials.

POStPlan has produced work hour savings. In fiscal year 2013—the first 

year of work hour savings—USPS estimated that it saved 3.1-million 

hours. USPS predicts further work hour savings in fiscal years 2014, 

2015, and 2016 of 4.4-million work hours, 4.0-million work hours, and 0.5-

million work hours, respectively.

Delivery

USPS has developed two initiatives associated with delivery. First, USPS 

has taken some actions to shift door deliveries to less costly delivery 

modes, such as curbside or delivery to a central location. USPS revised 

its regulations in April 2012 specifying that USPS will determine the mode 

of delivery for new addresses and that those new addresses must receive 

less costly modes, such as centralized delivery, unless USPS approves 

an exception.27

 

27According to USPS officials, USPS used to provide for customer preferences as a factor 

in deciding on the mode of delivery.

Additionally, USPS implemented voluntary business 

conversions to less costly delivery modes in fiscal year 2013. As we 

reported in May 2014, USPS reported that 43,333 out of about 5.6-million 

business door delivery points—or about 0.8 percent—were voluntarily 
 

Page 17 GAO-15-43 USPS Workforce 

converted in fiscal year 2013.28

The second delivery initiative, Delivery Unit Optimization (DUO), refers to 

a process that includes relocating letter carriers from some local postal 

offices to centralized delivery offices. The retail portion of those local post 

offices would remain open, while the carriers would report to the 

centralized locations to pick up their mail for delivery. This initiative is 

designed to increase operational efficiency and save space, thereby 

producing cost savings. Through DUO, USPS plans to consolidate 1,500 

delivery (non-retail) offices by 2015. In fiscal years 2012 and 2013, USPS 

said it realized $69 million and $40.5 million, respectively, in cost savings 

from DUO implementation. USPS does not project any additional savings 

from DUO for fiscal years 2014 to 2017.

USPS has set a goal of about 35,000 

additional voluntary business conversions for fiscal year 2014. USPS also 

converted about 36,302 out of about 32.2-million residential door delivery 

points—or about 0.1 percent—to centralized delivery on a voluntary basis 

in fiscal year 2013. As will be discussed in the next section, USPS has 

not implemented mandatory delivery conversions. According to USPS, 

voluntary delivery conversions have resulted in an estimated $13.1 million 

in savings for the first two quarters of fiscal year 2014 and are projected 

to reach a total of $27 million by the end of fiscal year 2014. USPS 

projects additional cost savings of $24 million for each fiscal year from 

2015 through 2017 from voluntary delivery conversions.

Load Leveling

USPS implemented Load Leveling in April 2014 to revise delivery 

expectations for some Standard Mail to help balance the distribution of 

mail through the week. It is expected to reduce overtime hours on heavy 

load days, such as Mondays. According to USPS, Load Leveling will 

increase efficiency and would also benefit customers since a smaller 

number of pieces will be delivered each day and therefore there will be 

less competition for the recipient’s attention.29

 

28See GAO, U.S. Postal Service: Delivery Mode Conversions Could Yield Large Savings, 

but More Current Data Are Needed, 

While savings vary among 

sites because of local conditions, the Postal Service has estimated that 

Load Leveling will save $88 million in fiscal year 2014 and $134 million in 

fiscal year 2015.

GAO-14-444, (Washington, D.C.: May 12, 2014).

29The mailers that we interviewed did not offer opinions on this aspect of Load Leveling.
 

Page 18 GAO-15-43 USPS Workforce 

In March 2014, PRC issued an advisory opinion stating that Load 

Leveling had potential benefits, but limited testing was inconclusive 

regarding the effects of the plan on a nationwide basis. Therefore, PRC 

recommended that USPS conduct additional testing before rolling out 

Load Leveling nationwide. According to one PRC official, USPS has 

made many changes to reduce costs over the last few years, and PRC 

officials were concerned that it is difficult for USPS to maintain service 

when making so many changes. An official from one of the major mailing 

organizations whom we interviewed also expressed concern about this 

initiative because of the impact on mailers’ plans based on current 

delivery schedules. However, USPS moved to national implementation in 

April 2014 and completed implementation in May 2014.

Increased Use of Non-Career Workforce

As previously mentioned, USPS has created lower cost non-career 

positions to replace certain career positions. According to USPS, using 

non-career employees increases USPS’s workforce flexibility and 

provides cost savings through lower wages and reduced benefits. For 

example, non-career City Carrier Assistants have replaced some career 

City Letter Carriers. The average hourly salary including overtime for a 

non-career City Carrier Assistant is $17.05 per hour compared to $28.87 

per hour for a full-time career City Letter Carrier. When considering the 

full cost per hour including salary and benefits, the difference increases 

even more. The average hourly salary and benefits rate including 

overtime for a City Carrier Assistant is $19.35 per hour compared to 

$46.11 for a City Letter Carrier.30

The most recent round of collective-bargaining agreements expanded 

USPS’s ability to use non-career employees but placed caps on the 

percentage of non-career employees as compared to career employees. 

For example, the number of non-career Mail Handler Assistants 

employed can be up to 15 percent of the number of career Mail Handlers 

for each district and up to 20 percent for each installation. According to 

USPS officials, USPS is near the cap for all categories of non-career 

employees.

 

30Not all City Carrier Assistants receive health benefits. City Carrier Assistants may 

receive some health benefits if they have been employed by USPS for more than 360 

days.

Other Initiatives Focus 

Primarily on Reducing Costs
 

Page 19 GAO-15-43 USPS Workforce 

New Wage Rates

The most recent round of collective bargaining agreements also resulted 

in lower starting salary rates for certain categories of employees newly 

hired or converted from non-career employees to career employees. For 

example, the starting wage for a career City Letter Carrier that began 

working for USPS in 2014 is $16.71 per hour compared to $22.15 per 

hour for a career City Letter Carrier who began working for USPS prior to 

2014. To stay below the caps for non-career employees as agreed to in 

its collective-bargaining agreements, USPS converted approximately 

17,200 non-career employees to career employees from October 2012 

through May 2014. These employees received the new lower starting 

salary rates, resulting in approximately $155 million in cost savings.

USPS officials told us that future cost savings from lower starting salary 

rates are uncertain because it depends on the composition of USPS’s 

workforce, attrition rates, and workload.

USPS has the flexibility to revise its regulations to convert delivery points 

from more costly to less costly modes of delivery. While, as discussed, 

USPS has converted some delivery points to less costly modes on a 

voluntary basis, USPS has not used its authority to require changes to 

delivery modes, known as mandatory delivery conversions. This is an 

option that USPS estimates has the potential to generate more than $2.0 

billion in annual savings. In May 2014, we issued a report on delivery 

mode conversions.31

 

31

Specifically, we found that:

GAO-14-444. 

USPS Has Chosen 

Not to Implement One 

Other Option It 

Identified to Reduce 

Workforce Costs and 

Seeks Congressional 

Action for Others

USPS Has Chosen Not to 

Implement Mandatory 

Delivery Conversion
 

Page 20 GAO-15-43 USPS Workforce 

• USPS’s estimates of delivery mode costs, and its potential savings 

from converting to less costly modes, show that door-to-door delivery 

is much costlier than delivery to a curbside or centralized mailbox.

USPS could achieve large savings by mandating large-scale 

conversions from door delivery to other modes. USPS estimates 

potential ongoing savings of over $2 billion annually from mandating 

conversions of about one-third of door delivery to other modes. 

However, USPS’s estimates of these savings have limitations, in part 

because they rely on data from a 1994 USPS study.

• USPS is reluctant to mandate conversions. There is some evidence 

that USPS would face resistance from customers, USPS employees, 

postal unions, and mailing-industry stakeholders if it were to 

implement mandatory conversion of delivery to less costly modes. 

USPS officials and several mailing-industry stakeholders noted that 

many postal customers would resist service changes, especially those 

that might inconvenience them, but USPS officials told us that some 

of the concerns could be addressed though hardship exceptions to 

continue door delivery, although any exceptions would increase costs. 

Stakeholders have also raised concerns about the mandatory delivery 

conversions pertaining to personal safety, mail security, and locations 

of curbside or centralized location delivery points.

USPS is seeking legislative changes to implement several additional 

initiatives that would potentially reduce the size and cost of the workforce.

According to USPS officials, initiatives undertaken by USPS management 

that do not require congressional action will not be sufficient to ensure 

both immediate and long-term financial stability, and therefore, 

congressional action is needed. The key initiatives that USPS described 

in its April 2013 5-Year Business Plan that would require congressional 

action include:

• Implementing 6-day package / 5-day mail delivery: USPS has 

proposed transitioning to a new delivery schedule that would change 

the current schedule of mail and package delivery from Monday 

through Saturday to package delivery to street addresses Monday 

through Saturday and mail delivery Monday through Friday. USPS 

expects this change to generate cost savings of approximately $2 

billion annually, when fully implemented. However, Congress has 

included language in appropriation acts since fiscal year 1987, which 

USPS Is Seeking 

Congressional Action to 

Implement Other CostSaving Options
 

Page 21 GAO-15-43 USPS Workforce 

requires USPS to continue 6-day delivery at not less than the 1983 

level.32 All four major postal labor organizations have strongly 

opposed 5-day delivery.

• Establishing its own health care plan within the Federal Employee 

Health Benefits Program (FEHBP) Program: USPS has proposed 

creating a unique health care program within the FEHBP for postal 

employees and eligible annuitants. This program would integrate 

Medicare within the structure of FEHBP and make Medicare the 

primary payer for health care benefits for eligible annuitants and 

covered family members, unlike the current plan where Medicareeligible retirees are not required to enroll in Medicare. 33 Also, USPS 

Medicare-eligible annuitants and covered family members would be 

required to enroll in Medicare Parts A and B, and the carriers would 

provide prescription drug benefits to Medicare-eligible individuals 

through Medicare Part D Employer Group Waiver Plans. According to 

USPS’s March 2014 testimony before the House Subcommittee on 

Federal Workforce, U.S. Postal Service, and the Census, requiring 

annuitants to enroll in Medicare would lower USPS’s health care 

costs, almost completely eliminate the unfunded liability associated 

with these benefits,34 and make future payments manageable. 

Because these changes would result in additional costs to Medicare, 

we have previously recommended that Congress weigh the impact on 

Medicare when considering changes to USPS’s health care plan.35

• Eliminating a projected surplus in USPS obligations for the Federal 

Employees Retirement System (FERS): USPS has also proposed that 

it receive a refund of the amount of its projected FERS surplus.36

 

32Most recently in Pub. L. No. 113-78, 126 Stat. 5 (2014)

The

33We testified on USPS’s proposal for a separate health plan outside of FEHBP in 2013 

(GAO-13-872T). USPS has modified the proposal since then and now proposes a unique 

plan within FEHBP. 

34As previously discussed, USPS is currently required to prefund retiree health benefits. 

As of September 30, 2014, OPM calculated USPS’s unfunded retiree health benefit 

liability to be $48.3 billion.

35GAO, U.S. Postal Service: Proposed Health Plan Could Improve Financial Condition, 

but Impact on Medicare and Other Issues Should Be Weighed before Approval, 

GAO-13-658 (Washington, D.C., July 18, 2013).

36We commented on issues and options related to the USPS FERS surplus in GAO, U.S. 

Postal Service: Allocation of Responsibility for Pension Benefits between the Postal 

Service and the Federal Government, GAO-12-146 (Washington, D.C.: Oct. 13, 2011).
 

Page 22 GAO-15-43 USPS Workforce 

most recent OPM estimate shows a relatively small FERS surplus for 

USPS—an estimated $2.4 billion. As we noted in a March 2014 

testimony, legislation would be needed to return to USPS any FERS 

surplus.37

In addition, USPS has identified the following additional options, among 

others, that would require congressional action but that have the potential 

for less cost savings than the initiatives previously mentioned:

We also noted that we support the use of the most accurate 

actuarial assumptions available and that if USPS-specific 

assumptions are used, they continue to be recommended by an 

independent body.

• granting USPS authority to expand products and services, such as by 

providing nonpostal services;

• requiring a defined contribution system—where employees save for 

their own retirement and employers can match some or all of 

employees’ savings—for future USPS employees instead of the 

current defined benefit plan (pension) that bases retirement benefits 

on salary and length of service; and

• reforming workers’ compensation by, for example, allowing USPS to 

settle cases. 38

 

37GAO-14-398T. 

38Additional initiatives that USPS has identified that would require Congressional action 

include: (1) streamlining USPS’s governance model by eliminating duplicative oversight 

from the Postal Service Board of Governors and PRC, (2) requiring arbitrators to consider 

USPS’s financial condition when rendering decisions, and (3) granting USPS the right to 

appeal class action Equal Employment Opportunity Commission decisions. USPS has not 

estimated cost savings from these initiatives.

USPS Has 

Developed Various 

Initiatives to 

Implement Workforce 

Planning
 

Page 23 GAO-15-43 USPS Workforce 

Agencies can use workforce planning that is linked to their strategic goals 

to systematically identify the current and future workforce that they need 

and develop strategies for shaping their workforce. We have previously 

determined that successful strategic workforce planning includes the five 

key principles listed in Table 3.39

Table 3: 5 Key Principles of Strategic Workforce Planning

Principle Description

Principle 1: Involve top management, employees, and other 

stakeholders in developing, communicating, and implementing 

the strategic workforce plan

Included in this principle are the setting of the overall direction, 

pace, tone, and goals of the effort, and involving employees and 

other stakeholders in establishing a communication strategy that 

creates shared expectations, transparency, and reporting the 

outcome of the process.

Principle 2: Determine the critical skills and competencies that 

will be needed to achieve current and future programmatic 

results

Included in this principle are reshaping critical skills and 

competencies needed in a changing operational environment and 

linking those needs to the agency mission and strategic goals. 

Principle 3: Develop workforce strategies that are tailored to 

address gaps in number, deployment, and alignment of human 

capital approaches for enabling and sustaining the contributions 

of all critical skills and competencies

Included in this principle are developing programs, policies and 

processes that build and manage an agency’s workforce tailored to 

its unique needs by using flexibilities such as early separation and 

retirement incentives and recruitment of employees with critical 

skills.

Principle 4: Build the capability needed to address 

administrative, educational, and other requirements important to 

support workforce strategies

Included in this principle are the education of managers and 

employees, and building transparency and accountability into the 

system to effectively take advantage of existing and new human 

capital authorities and ensuring the use of flexibilities in an open, 

fair, and effective manner.

Principle 5: Monitor and evaluate the agency’s progress toward 

its human capital goals and the contribution that workforce 

strategy results have made toward achieving programmatic 

goals

Included in this principle are developing meaningful outcomeoriented performance goals, identifying performance measures, and 

collecting performance data to measure achievement of these 

goals.

Source: GAO | GAO-15-43

 

39GAO-04-39. 

Key Principles for Effective 

Strategic Workforce 

Planning
 

Page 24 GAO-15-43 USPS Workforce 

According to USPS officials, although USPS does not have a separate 

comprehensive strategic workforce plan,40 it has taken steps to implement 

workforce-planning initiatives and incorporated workforce planning efforts 

into its 5-Year Business Plan41 and its management process called 

Delivering Results, Innovation, Value, and Efficiency (DRIVE).42 In June 

2011, USPS created DRIVE, a portfolio of initiatives that are linked to the 

strategic initiatives in its business plan and intended to improve on its 

business strategy development and execution. For fiscal year 2014, 

DRIVE consists of 19 initiatives, all of which are active.43

 

40While federal agencies are required to maintain a human capital plan and submit to 

OPM an annual human capital accountability report, USPS is an independent 

establishment of the executive branch of government and therefore is not required to 

adhere to certain requirements such as these. See 5 C.F.R. § 250.203, 39 U.S.C. § 201, 

and 39 U.S.C. § 410.

USPS began 

developing a new DRIVE initiative–45. Building the Workforce of the 

Future Initiative––in October 2013 to address workforce planning in a 

comprehensive and coordinated manner across the Postal Service, 

according to USPS officials. The initiative is partly comprised of workforce 

related initiatives that USPS has implemented in previous fiscal years. 

The senior Postal Service official responsible for workforce planning told 

us that through this initiative USPS has taken a holistic approach towards 

workforce planning, addressing 11 workforce areas such as developing 

future union negotiation strategies, contract compliance and cost, health 

care solutions for career employees, and employee development, 

retention, recruitment, and safety. USPS did not specify when the DRIVE 

41USPS refers to its 5-Year Business Plan as its strategic plan. However, USPS’s 

business plan focuses on the agency’s financial condition while a traditional strategic plan 

is more comprehensive and is intended to address the agency’s overall mission, including 

human capital issues.

42In 2007, the USPS Office of Inspector General recommended that USPS develop 

guidance and procedures for creating a comprehensive strategic workforce plan to 

address current and future workforce requirements. At that time, USPS officials 

acknowledged the value of a comprehensive strategic workforce plan and also indicated 

that they had a workforce process represented in their organizational design and human 

resources job structure. Further, USPS officials noted that it is not feasible to have a 

comprehensive strategic workforce plan due to the bargaining workforce, mail volume 

fluctuations, and other contractual obligations that must be considered. See USPS Office 

of Inspector General, The Postal Service’s Comprehensive Strategic Workforce Plan, HMAR-07-004 (Arlington, VA: Sept. 26, 2007).

43USPS has reported that the portfolio of DRIVE initiatives is dynamic and changes as 

priorities and resources require, and as programs are completed or adjusted based on 

external events. United States Postal Service, United States Postal Service 2013 Annual 

Report to Congress, (Washington, D.C.: Jan. 28, 2013).

USPS Has Implemented 

Some Workforce-Planning 

Efforts
 

Page 25 GAO-15-43 USPS Workforce 

45 initiative would be fully implemented but did confirm that targets are 

through 2017. Because parts of the DRIVE initiative for workforce 

planning were still being developed, we could not fully assess the extent 

to which USPS’s workforce planning efforts aligned with the strategic 

workforce planning principles described above. However, as discussed 

below, we did find that USPS’s workforce planning efforts to date, 

including its DRIVE initiative, have incorporated these principles to some 

extent.

According to USPS officials, USPS took some steps to involve 

management and employee unions in workforce planning and

communicate the efforts to external stakeholders. USPS officials told us 

the executive leadership team and other officers were engaged in 

developing, communicating, and implementing strategic workforce 

planning through the DRIVE process and meetings with human 

resources, finance, and operations staff to discuss and monitor major 

operational initiatives, such as network consolidation. According to USPS 

officials they consulted with labor organizations and management 

associations in an effort to obtain some insight and input on workforce 

planning. For example, in April 2011, a USPS official testified that the 

recently negotiated collective bargaining agreement with APWU 

advanced USPS’s human capital goals by providing immediate cost 

control, greater workforce flexibility, and long-term structural changes that 

offered the most significant potential for lowering total labor costs.44 In 

addition, USPS officials provided documentation that showed its 

executives regularly communicate with members of Congress and their 

staff on workforce initiatives through mailings, presentations, 

informational handouts, congressional testimonies and meetings about 

workforce planning and impacts. USPS also provides summary 

information about some of its workforce initiatives to external 

stakeholders in multiple reports including its Annual Report to Congress 

and Comprehensive Statements and annual 10-K reports.45

 

44Are Postal Workforce Costs Sustainable? Hearing before the House Comm. on 

Oversight and Government Reform, 112th Cong., (2011) (Statement of Louis Giuliano, 

Chairman, Board of Governors, U.S. Postal Service).

USPS 

officials said management will continue to be involved in developing and 

implementing workforce initiatives associated with the new DRIVE 45 

Building the Workforce of the Future Initiative.

45A Form 10-K is an annual report required by the U.S. Securities Exchange Commission 

that gives a comprehensive summary of an organization’s financial performance. .

Involvement of Stakeholders in 

the Strategic WorkforcePlanning Process
 

Page 26 GAO-15-43 USPS Workforce 

USPS officials identified some steps USPS took to determine the critical 

skills and competencies needed to achieve its current and future 

programmatic goals. As previously discussed, USPS developed new noncareer positions to help address its changing operational environment 

and reduce costs. USPS also developed competency models and 

position descriptions that reflect the knowledge, skills, abilities, and other 

characteristics required for its current and future employees at all levels of 

the organization. According to USPS officials, USPS also built a learning 

curriculum that is linked to its competencies and position descriptions. 

They told us that this enables USPS to deliver training to employees 

based on their specific needs and role in the organization. Finally, as part 

of its DRIVE 45. Building the Workforce of the Future Initiative, USPS 

included an objective to attract, acquire, and retain diverse talent for 

emerging skill needs and hard-to fill positions that support critical 

business functions.

USPS identified some strategies it has used to build and manage a 

workforce tailored to its needs. USPS has leveraged the collective 

bargaining agreements with its unions to manage workforce flexibility in 

terms of employee category (career or non-career), work rules, and the 

ability to adjust duty assignments as needed to support operational 

changes. As previously discussed, USPS also obtained authority from 

OPM to offer voluntary early retirement to eligible employees in each year 

from 2010 through 2013. According to USPS officials, voluntary early 

retirements, in conjunction with limited area of consideration postings46

 

46A limited area of consideration is a method used by the Postal Service to make 

organizational changes by targeting specific areas that are considered for job postings. 

For example, the consideration may be limited by one or more of the following: impacted 

and non-impacted employee status, geographic boundaries, functional areas or specific 

jobs. 

to 

impacted employees, are strategies to avoid reduction-in-force to 

minimize the impact to employees. USPS also had an employee 

development strategy as part of the fiscal year 2013 DRIVE initiatives, 

which included its corporate succession-planning program to identify and 

Identification of Critical Skills 

and Competencies to Achieve 

Results

Development of Workforce 

Strategies
 

Page 27 GAO-15-43 USPS Workforce 

develop top performing employees for new or expanded executive roles.47

USPS officials told us that USPS developed a strategic workforce 

planning and human resources team to carry out efforts addressing 

administrative, educational, and other requirements important to support 

workforce strategies. According to USPS officials, as they plan for the 

future operational structure of USPS, they will continue efforts to:

According to USPS officials, the DRIVE 45. Building the Workforce of the 

Future Initiative builds on USPS’s employee development and includes 

objectives related to succession planning and training and developmental 

training.

• assess USPS’s future workforce requirements to support expected 

operational and market place needs;

• develop tools and techniques to ensure that USPS’s transactional 

human resource functions –such as recruitment, hiring and retention 

of employees– are efficient, effective in the labor marketplace, and 

meet the needs of hiring managers;

• identify tools and training needed by its workforce to enable them to 

safely, efficiently, and effectively perform their duties; and

• enhance employee development and succession-planning programs 

to ensure that staff has the skills to successfully undertake new roles.

More recently, in the DRIVE 45. Building the Workforce of the Future 

Initiative, USPS has focused on using human resource analytical 

information to drive decision-making and in adjusting the workforce size 

and mix, according to USPS officials.

USPS officials reported monitoring progress and results of some 

workforce initiatives. For example, USPS uses two performance 

 

47USPS OIG has reported that USPS’s corporate succession planning program included 

many best practices such as receiving active support from top leadership, linking 

initiatives to strategic planning, identifying talent from multiple organizational levels, early 

in careers or with critical skills and addressing specific human capital challenges like 

diversity, leadership, and retention. However, it recommended USPS improve the program 

by enhancing controls to ensure potential successors’ developmental activities are 

approved in a timely manner. USPS OIG, Corporate Succession Planning Program: 

Management Advisory Report, report number HR-MA-14-006 (Arlington, VA: Apr. 23, 

2014).

Development of Capabilities to 

Support Workforce Strategies

Monitoring and Evaluating 

Progress and Results
 

Page 28 GAO-15-43 USPS Workforce 

indicators to evaluate progress in meeting its workplace environment 

goal.48 One indicator is the Occupational Safety and Health 

Administration49 Injuries and Illness rate, which measures improvements 

in safety. The second indicator is an employee survey that measures 

employee engagement and offers employees an opportunity to provide 

feedback on various areas of job satisfaction. USPS also included 

performance measures and targets for the objectives in its DRIVE 45. 

Building the Workforce of the Future Initiative (see table 4 for selected 

measures and targets). However, in its review of USPS’s performance 

goals and measures,50 the PRC noted that USPS’s documentation of its 

performance measures for DRIVE initiatives could be made more useful 

by providing consistency year-to-year, as all performance measures are 

not comparable across multiple fiscal years.51

 

48The Workplace Environment goal is one of four organizational Postal Service goals that 

centers around creating a motivated, productive and inclusive workforce that improves 

employee and workforce safety.

49The Occupational Safety and Health Administration is the main federal agency charged 

with the enforcement of safety and health legislation. Its mission is to ensure a safe and 

healthy workplace for employees by setting and enforcing standards and by providing 

training, outreach, education and assistance.

50See Postal Regulatory Commission, Review of Postal Service Fiscal Year 2013 

Performance Report and Fiscal Year 2014 Performance Plan (Washington, D.C.: July 7, 

2014). The PRC is responsible for annually evaluating the Postal Service’s performance 

goals and may provide recommendations to the Postal Service related to protecting or 

promoting public policy objectives described in title 39 of the United States Code. 39 

U.S.C. § 3653(d). 

5139 U.S.C. § 2804(c) states, in part, that: “all subsequent reports shall include actual 

results for the three preceding fiscal years.” 
 

Page 29 GAO-15-43 USPS Workforce 

Table 4. Selected Objectives, Measures, and Targets for USPS’s Workforce of the 

Future Initiative for Fiscal Years 2013–2014

Objectives

Performance 

measures

Fiscal year 

2013 actual

Fiscal year 

2014 targetsa

Execute a cost-effective training 

and development program to 

make USPS learning more 

accessible to employees and 

aligned with future skill needs of 

the workforce

Average training 

hours per employee

12 8 

Attract, acquire, and retain 

diverse talent for emerging skill 

needs and hard-to-fill positions 

that support critical business 

functions

Average annual 

turnover rate for 

non-career 

employees

14% 14%

Average annual 

turnover rate of 

external hires

16% 14%

Source: USPS. | GAO-15-43

a

USPS did not provide targets beyond fiscal year 2014. We did not assess the reasonableness of the measures and targets.

According to USPS, the DRIVE 45. Building the Workforce of the Future 

Initiative aims to achieve, among other things, the following goals by 

2017:

• fully implement health care plan for non-career employees in 

compliance with the Affordable Care Act,

• obtain legislation that addresses USPS’s unfunded retiree healthbenefits liability by integrating postal health care plans with Medicare,

• reduce the total workforce from fiscal year 2012 by 184,000 full-time 

equivalents.52

 

52The Postal Service indicated in the 2013 5-Year Business Plan that its goal was to 

reduce the total career and non-career full-time equivalent employees by about 146,000 

through fiscal year 2017. During the time of this review, an update of the 5-Year Business 

Plan was not provided, however other current documentation indicated that the Postal 

Service projected a total workforce reduction of 184,000 by fiscal year 2017.
 

Page 30 GAO-15-43 USPS Workforce 

USPS has been able to reduce the size of its workforce to meet 

decreasing mail volumes largely without having to lay off its employees. 

However, USPS has increasingly limited options to achieve substantial 

reductions in the size and cost of its workforce over the next few years 

without congressional action, while still fulfilling its important role of 

delivering the mail to 153 million households and businesses. USPS has 

implemented some key principles for workforce planning by, for example, 

communicating its plans to stakeholders through various reports and 

briefings, and, more recently, by developing performance measures for 

workforce planning. USPS is in an unsustainable financial position and is 

requesting congressional action for several initiatives related to its 

workforce to be implemented. Therefore, the efforts USPS has begun to 

link its workforce initiatives with near-term goals and measure progress in 

meeting these goals could benefit the agency. As PRC recently reported, 

USPS has changed some initiatives and performance measures from 

year to year, making it difficult to track and evaluate what progress it has 

achieved over time. Incorporating key principles for workforce planning, 

such as developing performance measures, is important for USPS to 

demonstrate to Congress and other stakeholders how USPS’s current, 

planned, and proposed workforce initiatives will achieve its targets and 

goals, and to help it move toward a point where it can be self-sustaining.

We provided a draft of this report to USPS for review and comment. 

USPS had no formal comments, but provided technical clarifications, 

which we incorporated into the report as appropriate.

If you or your staff have any questions about this report, please contact 

me at 202-512-2834 or rectanusr@gao.gov. Contact points for our Offices 

of Congressional Relations and Public Affairs may be found on the last 

page of this report. GAO staff making key contributions to this report are 

listed in appendix II.

Sincerely yours,

Lori Rectanus

Director

Physical Infrastructure Issues

Concluding 

Observations

Agency Comments
Appendix I: Objectives, Scope, and 

Methodology

Page 31 GAO-15-43 USPS Workforce 

This report addresses (1) the actions USPS has taken since 2006 to 

reduce the size and cost of its workforce, (2) the status of other options 

USPS identified to reduce workforce costs, and (3) the steps that USPS 

has taken to implement workforce planning.

To describe the actions that the U.S. Postal Service (USPS) has taken 

since 2006 to reduce the size and cost of its workforce and the result of 

those actions, we interviewed USPS officials and reviewed USPS 

testimonies and documents including its Annual 10-K reports, Annual 

Reports to Congress, and the 2013 5-Year Business Plan. We also 

reviewed Postal Regulatory Commission (PRC) documents including, 

reports and its advisory opinions on proposed USPS actions. To 

determine the historical trends and future projections of USPS workforce 

levels, we obtained relevant USPS data and documentation. For our 

analysis of historical trends, we reviewed USPS data that included fiscal 

year 2006 through fiscal year 2013, and, for our analysis of future 

projections, we examined USPS documents projecting results for fiscal 

year 2014 through fiscal year 2017. We discussed the reliability of the 

data on mail revenue, volume, number of employees, and financial 

savings with USPS and PRC officials and determined that these data 

were sufficiently reliable to discuss historical and future trends of the 

postal workforce. We interviewed USPS officials to identify their 

assumptions and methodology for past, current, and planned actions to 

manage the size and cost of the workforce, specifically on projected 

changes in the number of employees, work hours, composition of career 

and non-career employees, key initiatives, and potential cost-savings for 

fiscal years 2014 through 2017. We did not validate USPS’s projections. 

We reviewed postal labor agreements and testimonies from postal 

stakeholders to obtain their views on USPS workforce reductions, actions 

taken, costs, and savings. We interviewed officials or received written 

responses from four major postal labor organizations, including the 

American Postal Workers Union, the National Association of Letter 

Carriers, the National Rural Letter Carriers Association, the National 

Postal Mail Handlers Union, and two postal management associations 

including the National Association of Postal Supervisors and the National 

League of Postmasters of the United States to discuss their viewpoints on 

USPS initiatives, options, and associated challenges. We also 

interviewed representatives from three mailing industry organizations 

including the Association of Postal Commerce, the National Postal Policy 

Council, and the Parcel Shippers Association to obtain their views on 

these subjects.

Appendix I: Objectives, Scope, and

Methodology
Appendix I: Objectives, Scope, and 

Methodology

Page 32 GAO-15-43 USPS Workforce 

To describe the status of other options USPS identified to reduce 

workforce costs, we reviewed USPS documentation and testimonies, and 

PRC advisory opinions on USPS’s projected cost-savings from workforce 

initiatives. We did not assess the validity of USPS cost-savings estimates. 

We reviewed relevant laws and collective-bargaining agreements to 

understand the limitations and challenges in making workforce reductions 

to manage costs. We interviewed officials from USPS, postal labor 

organizations and management associations, and mailing industry 

organizations to discuss their viewpoints on USPS initiatives, options, and 

associated challenges.

To describe the steps that USPS has taken to implement workforce 

planning, we reviewed key principles related to strategic workforce 

planning and effective strategic human-capital management identified in 

previous GAO reports and the Office of Personnel and Management’s 

Human Capital Assessment and Accountability Framework. We reviewed 

past reports from GAO, Congressional Research Service, and the 

USPS’s Office of Inspector General to understand USPS human capital 

and workforce planning challenges. We interviewed USPS officials and 

obtained documentation to understand the steps that the Postal Service 

has taken to address strategic workforce planning to meet workforce 

reduction goals and how USPS incorporated workforce planning into its 

fiscal year 2013 5-Year Business Plan. We reviewed recent USPS 

workforce-planning documentation on the Delivering Results, Innovation, 

Value and Efficiency (DRIVE) initiatives related to workforce planning and 

how it addressed performance measures and tracked progress towards 

meeting strategic goals. We could not fully assess the extent to which 

USPS’s workforce-planning efforts aligned to the strategic workforceplanning principles because parts of the DRIVE initiative for workforce 

planning are still being developed. We also reviewed a PRC report on 

USPS performance and USPS Office of Inspector General reports on 

DRIVE that addressed Postal Service priorities and performance 

measures.

We conducted this performance audit from November 2013 to November 

2014 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives.
Appendix II: GAO Contact and Staff 

Acknowledgments

Page 33 GAO-15-43 USPS Workforce 

Lori Rectanus, (202) 512-2834 or rectanusl@gao.gov

In addition to the individual named above, key contributors to this report 

were Lorelei St. James (Director); Derrick Collins (Assistant Director); 

Ken Bombara; Aisha Cabrer; Colin Fallon; Tom Gilbert; Kenneth John; 

Cheryl Peterson; Stephanie Purcell; and Kelly Rubin.

Appendix II: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments

(544201)
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