GAO could not substantiate about $1.7 billion of the $9.7 billion in savings that USPS claimed for the 2016-2018 period. Image: dennizn/Shutterstock.com

The Postal Service over-stated savings from shifting to lower-paid and less tenured employees and reducing services, and did not account for some side effects such as increased turnover, the GAO has said.

GAO said that it was able to substantiate about $8 billion of the $9.7 billion in savings that USPS has claimed for the 2016-2018 period. It said the agency’s own estimates “are likely overstated because they do not fully account for changes in work hours or tenure of employees. Also, USPS did not account for other costs such as increased turnover rates among lower-paid employees.”

“USPS lacks guidance on what factors to consider in its cost savings estimates, and as a result may make future changes to employee compensation based on incomplete information . . . saving depends on USPS overcoming challenges, such as potential increases in turnover and reduced productivity resulting from decreases in pay and benefits,” it said.

USPS and union officials told GAO that “the unpredictable non-career employee work schedules, as well as low unemployment rates, have created additional challenges for recruiting qualified non-career employees” resulting in increased recruitment costs into USPS careers. Meanwhile, turnover among non-career employees “was higher than expected” resulting in added costs for both recruitment and training of new employees.

It added that there is potential for savings from further service reductions, for example in delivery frequency, but the reductions already made “have not fully achieved planned work hour reductions due to, among other things, issues with management of work hours and lack of union agreement.

The report follows a similar recent one by the Postal Service IG that documented a decrease in labor costs over the last decade due to a decrease in overall employment — which has since leveled off — and the shift of tens of thousands of positions from career status to lower-paid non-career status.

See also, Drop in Postal Employment Slows, Shift Toward Non-Career

Meanwhile, that report said, clerk and mail handler overtime nearly doubled, and the number of grievances rose by 6 percent per year on average over that period.

See also, USPS Spending More to Deliver Less, Audit Finds

Update: USPS continues hiring however. The Postal Service is the second largest employer in the United States with specific programs for recent grads and skills matching for applicants with military experience. Postal jobs span mail carriers to corporate management, and feature benefits including the FERS retirement system, Thrift Savings Plan, vacation time and sick leave, and qualifying education assistance, and it continues to draw new applicants. And with the Coronavirus pandemic having generated a lot of churn in the labor market and sent unemployment sky rocketing, that could help recruitment goals for qualified non-career workers.

FERS Retirement Guide 2022