USPS lost $9.3B in FY2025. Its inspector general shows why.

The Postal Service's FY2025 operating expenses of $89.8 billion outran its $80.5 billion in revenue by about $9.3 billion⧉ -- a $9.0 billion GAAP net loss, the second straight $9 billion-plus year.▸ The Postmaster General calls it a "systemic annual revenue and cost imbalance." Four of the Postal Service's own inspector-general audits, issued between November 2025 and July 2026, put specific, recomputable numbers on the imbalance: a workforce leg, a facility leg, and a billing leg.

In a July 27, 2026 audit of performance across postal regions⧉, the OIG estimated the Postal Service incurred nearly $437 million in annual questioned costs from facilities operating below the national efficiency average.▸ The basis is labor: if the low-performing facilities it reviewed had merely hit the national average productivity, USPS could have saved 8.7 million workhours in FY2025⧉ -- roughly $50 a workhour. That $437 million is about 4.7 percent of the whole operating gap, and labor is 76.4 percent of the Postal Service's expenses⧉, so where labor is spent inefficiently, the loss compounds.

A separate January 15, 2026 audit found the Postal Service paid more than $866 million in labor-grievance settlements from FY2022 through FY2024⧉, of which it flagged about $284 million as questioned costs -- $83 million tied to national-agreement violations and $201 million it could not verify for missing paperwork.▸ The facility audit corroborates the pattern from a different data pull: in FY2025 alone the Postal Service paid $200.8 million across 204,593 grievances⧉, and 248 filers -- about 2 percent -- drove 20.8 percent of the payouts⧉. More than $26 million came simply from managers skipping the overtime desired lists or splitting overtime unevenly⧉.

The same low-performing sites that generated those grievances also ran overtime at 14.0 percent of workhours against 11.8 percent at high-performing sites, and missed 33.4 percent of transportation departures against 17.5 percent⧉ -- the operational signature of the inefficiency the OIG priced at $437 million.

The Postal Service also loses revenue it is owed.▸ A July 29, 2026 management alert⧉ found that a routine software upgrade renamed the sorting machines producing most of USPS's trusted package weights, and the new name was never added to the Automated Package Verification system's trusted list. For three months the tool built to catch underpaid postage went blind; the OIG estimates the Postal Service failed to detect $22.6 million in underpaid postage from March through May 2026⧉, part of a $162 million total impact -- inside the same system that has collected an extra $1.1 billion since 2017⧉.

The audits differ in how the Postal Service answered them.▸ On the billing alert, management agreed with the finding, the monetary impact, and the fix⧉. On the facility audit, management disagreed with the findings, both recommendations, and the $437 million estimate⧉, calling the gaps "normal operational variation" and the national-average baseline impractical. The OIG deemed the response nonresponsive and is pursuing it through audit resolution, holding that the estimate -- which excluded manual operations -- was conservative. That disagreement is the open question: the inspector general has named the avoidable costs; management, so far, declines to concede they are avoidable.

The pressure is demographic.▸ The facility audit warns that in FY2026, nearly 37 percent of employees will be eligible to retire within four years, while about 269,039 -- 42 percent of the workforce -- have fewer than four years of service⧉. The disputed recommendations move through the formal audit-resolution process; the billing fix carries a monitoring-process deadline of January 31, 2027.