USPS to Cut 10,000 Workers After Striking Deal with Elon Musk’s DOGE
Glenn Taylor
4 min read
Outgoing U.S. Postmaster General Louis DeJoy told Congress that the U.S. Postal Service (USPS) plans to reduce its workforce by 10,000 workers in the next month upon signing a cost-cutting deal with the Department of Government Efficiency (DOGE) and the General Service Administration (GSA).
The agreement comes amid a wave of uncertainty for the national courier ever since President Donald Trump took office for the second time in January, and follows a year in which the agency lost $9.5 billion and took a public lashing over late mail deliveries in multiple major metropolitan areas.
DeJoy, who last month announced he would be stepping down from his post at an undetermined date, said in his letter to Congress that the staff reduction will be carried out through a voluntary early retirement program. The agency has cut 30,000 employees since 2021.
Under the agreement, representatives from DOGE and the GSA would assist the Postal Service in “identifying and achieving further efficiencies.”
The Postmaster General cited various concerns including the management of retirement assets and its workers’ compensation program by other government agencies, unfunded mandates and “burdensome” regulatory requirements.
In a letter, DeJoy lamented that the Postal Service has a “broken business model that was not financially sustainable without critically necessary and core change.”
“Fixing a broken organization that had experienced close to $100 billion in losses and was projected to lose another $200 billion, without a bankruptcy proceeding, is a daunting task,” DeJoy wrote. “Fixing a heavily legislated and overly regulated organization as massive, important, cherished, misunderstood and debated as the United States Postal Service, with such a broken business model, is even more difficult.”
Operating as an independent government agency with 635,000 employees, the USPS had originally been exempt from the DOGE-directed federal employee reductions.
Spearheaded by President Trump’s senior advisor, Elon Musk, DOGE’s government staff cuts have effectively gutted multiple agencies, including the United States Agency for International Development (USAID) and the Consumer Financial Protection Bureau (CFPB), with the Department of Education parting ways with roughly half of its employees.
Trump has floated the idea of merging the USPS within the Department of Commerce as part of its shakeup, and has previously entertained that the agency could end up being privatized. Musk also has suggested the USPS should be privatized.
Under the Postal Reorganization Act of 1970, pulling the carrier within the Commerce Department would require the consent of Congress.
The USPS has sought a turnaround in its financial fortunes for years with the decline of first-class mail and an increasing focus on more costly parcel delivery services. DeJoy established the 10-year Delivering for America plan in 2021, but that blueprint failed to meet the courier’s breakeven goals for 2023 and 2024.
A large swath of the agency’s expenses—including a whopping $6.6 billion in 2024—still flood into the areas DeJoy mentioned like workers’ compensation and pension plans. This has further tied the hands of the agency as it tries to mitigate losses.
Early last year, the USPS established a $5 billion cost-cutting plan to avoid running out of cash, with the agency seeking to consolidate its network throughout 2024. But the consolidation efforts ended up resulting in delayed deliveries in areas where new regional processing and delivery centers were built, including Atlanta, Houston and Richmond, Va., as well as rural areas.
Months after DeJoy got lambasted for the performance in a Senate hearing, the USPS Office of Inspector General acknowledged in its audit report that the Local Transportation Optimization initiative negatively impacted service to customers.
The National Association of Letter Carriers (NALC), whose leadership had openly denounced the potential Commerce Department merger, agreed with some of the concerns DeJoy laid out in his letter.
“These include USPS’s misallocated pension liabilities, which have cost the agency tens of billions of dollars, and a new investment strategy for USPS’s three retirement funds, which are currently held in Treasury bonds, missing out on hundreds of millions in annual returns,” said NALC president Brian Renfroe in a statement. “These policy changes are needed to improve the Postal Service’s financial viability, and we welcome anyone’s help who can influence Congress and the Administration to finally enact them.”
Renfroe did not back down from his prior stance, saying that the above actions would improve the Postal Service’s finances, but “misguided ideas like privatization will not.”
Consumers could be in store for more price hikes soon enough as the agency seeks to put a cap on its losses.
At the Mailers Technical Advisory Committee meeting this week, the USPS predicted it will raise rates this July by 8 percent for First-Class Mail and 11.6 percent for Marketing Mail following rulings by the Postal Regulatory Commission (PRC). These hikes are well above February’s 2.9 percent Consumer Price Index, which measures year-over-year inflation.
According to the Alliance of Nonprofit Mailers, DeJoy said at that meeting that the PRC has impeded his attempts to run the agency as a successful business and urged that the regulator be abolished.
