Postal Service Cut of 10,000 Jobs Sparks Talk of Privatization

The outgoing leader of the US Postal Service portrayed his deal with the Trump administration to cut 10,000 jobs as a stabilizing bid, but scholars and labor unions say it’s a step toward dismantling or privatizing the nation’s mail carriers.

US Postmaster General Louis DeJoy said the cuts—negotiated with the Department of Government Efficiency and announced last week—will help ensure a “financially viable” future for the service.

Skeptics note it came after President Donald Trump floated the idea  last month of bringing the postal service under the Department of Commerce, along with firing its board of governors and pushing a “merger” with private shippers.

The unions, which represent 91% of the postal service workforce, say such changes would violate standing law and harm America’s rural and under-served communities.

“The people of this country, no matter who they voted for, did not vote for the destruction of the postal service,” said Brian Renfroe, president of the National Association of Letter Carriers.

The USPS downsizing mirrors layoffs across federal agencies, as Trump attempts an unprecedented reshaping of the government.

Unlike many of those offices, the postal service has been a target of cost-cutters for decades, with debt swelling at the same time technology and private delivery services changed the way Americans get and use the mail.

Some scholars point to the agency’s ballooning deficits and say it could be bankrupt and needing a bailout in as little as two years.

“This is coming fast,” said Kevin Kosar, a senior fellow at the American Enterprise Institute, who has advocated for legislative reform for the postal service.

A Crisis Builds

Congress codified the USPS’s structure in the 1970 Postal Reorganization Act, after a massive strike by mail carriers. The act dictates the agency’s financial and operational independence as a so-called government corporation.

Its governors act like a corporate board, but are nominated by the president and confirmed by the Senate. It also has a regulatory commission that oversees the institution.

Despite its independence, the postal service is beholden to regulations, unlike other private shippers. It’s also long been the target of reform efforts, especially as modernization threatened its existence.

First-class mail deliveries have fallen more than 50% since 2000 while stamp rates have more than doubled. Its business model—once reliant on those first-class deliveries—has shifted to package transportation, business-to-business deals, and last-mile deliveries for other logistics companies.

According to USPS’s financial data, it’s run an operating deficit since 2006 even as its overall mail volume plunged. At the same time, its 533,000-person workforce last year was its largest since 2011.

The service’s dismal financial outlook is peaking concerns that a government bailout will be necessary to fulfill worker pensions and benefits, said Kosar.

“The root of the question is, do we want to go back to a pre-1970s postal service where every year our taxpayers put up a significant amount of money for it to operate?” he said. “That’s a public policy question that’s not going to be answered overnight.”

USPS said it hit its $15 billion statutory borrowing ceiling in fiscal year 2024, meaning it could run out of operating cash in around two years, Kosar said.

Trump appointed DeJoy in 2020, and the new postmaster general announced a 10-year “Delivering for America” reform plan that year. In last week’s letter to Congress, he noted changes he’s overseen, including trimming thousands of jobs, consolidating facilities, and raising the price of stamps. DeJoy has also indicated he will step down this year.

But the service still recorded a $9.5 billion loss in 2024.

Trump is unlikely to privatize USPS in one fell swoop because of economic and political considerations, but he could chip away at it and slowly cripple the agency, said Monique Morrissey, a senior economist at the pro-labor think tank Economic Policy Institute.

“This is going to backfire against him but the question is, ‘How much damage can he do in the meantime?’” she said. “They can scare everybody into thinking that full-frontal privatization is on the table so they’ll accept partial privatization that will be more on the fringes and less politically toxic.”

Labor, Political Crossfire

Along with organizational independence, the Postal Reorganization Act also guarantees USPS workers collective bargaining rights. Its heavy union presence contrasts with the rest of the government, where unionized workers make up an average 25.3% of the staff, according to the Bureau of Labor Statistics.

Any reforms that Trump might try will face stiff pushback, and possibly litigation, from organized labor. USPS labor disputes go through the National Labor Relations Board, making it unique among federal institutions.

The American Postal Workers’ Union president, Mark Dimondstein, called Trump’s talk of firing the governors and bringing the USPS under the Commerce Department “an outrageous, hostile and above all, unlawful takeover.”

NALC’s Renfroe said the 10,000 jobs cut in DeJoy’s pact with DOGE were negotiated by APWU and the National Postal Mail Handlers Union. The cuts will come from voluntary early retirement programs, like those being offered to other federal workers.

Reforms to meaningfully address USPS’s economic woes will have to go through Congress, industry observers say. But policymakers face a complex web of stakeholder interests.

Service cuts could face opposition from business groups that benefit from USPS’s cheap services. The public, particularly people in rural communities without many private delivery options, overwhelmingly support USPS, according to polls by Pew Research Center.

But big business interests assert they could run the postal service more efficiently. Those businesses likely have the ear of the president, Morrissey said. Elon Musk, whom Trump put in charge of DOGE, suggested at a Morgan Stanley technology conference this month that the government should privatize USPS.

“It’s clear that there are Wall Street influences pushing him towards privatization,” Morrissey said. ”The gloves are off now.”