This is the accessible text file for GAO report number GAO-03-205 
entitled 'Postal Service: Employee Issues Associated with the Potential 
Closure of the San Mateo IT Center' which was released on March 03, 
2003.



This text file was formatted by the U.S. General Accounting Office 

(GAO) to be accessible to users with visual impairments, as part of a 

longer term project to improve GAO products’ accessibility. Every 

attempt has been made to maintain the structural and data integrity of 

the original printed product. Accessibility features, such as text 

descriptions of tables, consecutively numbered footnotes placed at the 

end of the file, and the text of agency comment letters, are provided 

but may not exactly duplicate the presentation or format of the printed 

version. The portable document format (PDF) file is an exact electronic 

replica of the printed version. We welcome your feedback. Please E-mail 

your comments regarding the contents or accessibility features of this 

document to Webmaster@gao.gov.



Report to Congressional Requesters:



United States General Accounting Office:



GAO:



January 2003:



Postal Service:



Employee Issues Associated with the Potential Closure of the San Mateo 

IT Center:



Postal Service:



GAO-03-205:



GAO Highlights:



Highlights of GAO-03-205, a report to  the Ranking Minority Member, 

House Committee on Government Reform and Other Requesters



Why GAO Did This Study:



While the U.S. Postal Service (USPS) rationalizes its infrastructure, 

it is weighing a proposal to close and sell its Information Technology 

(IT) center located in San Mateo, California. According to USPS, 

closing the IT center and selling the facility should save USPS about 

$74 million over the next 10 years and result in increased efficiency.  

All IT union employees and about half of IT management employees will 

be offered the opportunity to relocate with their jobs to other postal 

IT centers. The San Mateo IT Center also houses an Accounting Service 

Center whose functions and staff are to be moved into leased space in 

the San Francisco Bay Area. GAO undertook this study to, among other 

things, identify the process USPS is following in making its decision 

about closing the IT center and determine the impact such a closure 

would have on IT employees at the center.  



What GAO Found:



USPS is following its Investment Review and Approval Process in 

reaching a decision about closing the San Mateo IT Center. To support 

the investment needed to close the IT center, the process requires--

and USPS prepared—-analyses based on prevailing economic and other 

conditions. However, these conditions have changed since USPS prepared 

the analyses in 2000.  In 2001, USPS announced plans to automate and 

reengineer its field accounting activity, which will result in USPS 

closing its 85 district accounting offices and consolidating the 

residual activities into its 3 Accounting Service Centers. USPS has 

not updated its analyses to reflect the changed conditions, but 

said that it planned to do so. 



San Mateo IT employees anticipate mostly negative social impacts if 

they relocate and mostly negative economic impacts if they stay in 

the Bay Area. Of the 213 San Mateo IT employees who responded to 

our survey, 36 (17 percent) indicated they would likely relocate, 

although most would be offered jobs at other postal IT centers. In 

2000, USPS’ economic analyses included an assumption—and San Mateo 

IT employees believed—that local jobs would be available for those 

individuals who did not want to relocate. However, local postal jobs 

are no longer available, and nonpostal IT job opportunities have 

tightened considerably in the Bay Area.



GAO has previously noted that progressive organizations that are 

restructuring often provide job placement assistance to employees 

faced with losing their jobs. USPS plans to offer job assistance to 

management employees seeking nonpostal jobs.  However, USPS does not 

plan to offer job assistance to union employees because such assistance 

is not covered by their collective bargaining agreement. Because the 

employment outlook in the Bay Area has changed dramatically, union 

employees who decide not to relocate may encounter difficulty finding 

employment in the Bay Area.



[See PDF for figure]



[End of figure]



What GAO Recommends:



GAO recommends that USPS review and update, if appropriate, the 

analyses used in support of closing the San Mateo IT Center to better 

reflect current conditions before making its final decision about 

closing the center. GAO also recommends that if USPS decides to close 

the IT center, it should consider offering to help union employees 

find local jobs if they decide not to relocate. USPS did not comment 

on GAO’s findings, but it agreed with GAO’s recommendations.



www.gao.gov/cgi-bin/getrpt?GAO-03-205.



To view the full report, including the scope and methodology, click 

on the link above. For more information, contact Bernard L. Ungar 

on (202) 512-2834 or at ungarb@gao.gov.



[End of section]



Contents:



Letter:



Results in Brief:



Background:



Scope and Methodology:



The Service Is Following Its Investment Review and Approval Process:



Relocation Experts Report that Negative Economic and Social Impacts 

Generally Accompany Plant and Facility Closures:



New York IT Center Employees Reported Economic and Social Impacts as a 

Result of the Closure:



San Mateo IT Center Employees Anticipate Mostly Economic Impacts if 

they Opt to Stay in the Bay Area and Social Impacts if they Opt to 

Relocate to Another Postal IT Center:



Conclusions:



Recommendations for Executive Action:



Agency Comments and Our Evaluation:



Appendix I: Comparative Demographic Data and Options for 

San Mateo and Displaced New York IT Center 

Employees:



Appendix II: Comments from the U.S. Postal Service:



Tables:



Table 1: Demographic Data for San Mateo Employees Compared with 

Displaced New York Employees’ Demographic Data:



Table 2: Likely Options/Opportunities for San Mateo IT Employees 

Compared with Options/Opportunities that Were Available for Displaced 

New York IT Employees:



Figures:



Figure 1: The San Mateo IT Center:



Figure 2: Overview of Postal Service’s Investment Review and Approval 

Process:



Figure 3: Options Selected by Displaced New York IT Center Employees in 

1993:



Figure 4: Options San Mateo Employees Expect to Pursue if Staying in 

the Bay Area:



Abbreviations:



APWU: American Postal Workers Union

BLS: Bureau of Labor Statistics

CIC: Capital Investment Committee

COO: Chief Operating Officer

CPC: Capital Projects Committee

DAR: Decision Analysis Report

EAS: Executive and Administrative Schedule

ERC: Employee Relocation Council

HQ: Headquarters

IT: Information Technology

IT Department: Information Technology Department

NYC: New York City

OIG: Office of Inspector General

PCES: Postal Career Executive Service

PMG: Postmaster General

VP: Vice President:



United States General Accounting Office:



Washington, DC 20548:



January 31, 2003:



The Honorable Henry Waxman

Ranking Minority Member

Committee on Government Reform

House of Representatives:



The Honorable Chaka Fattah

The Honorable Tom Lantos

House of Representatives:



This report responds to your request for information about the U.S. 

Postal Service’s Department of Information Technology (IT Department) 

proposal to close its San Mateo, California, Information Service 

Center, including the social and economic impacts that the closure 

would have on affected postal employees and their families. As you 

know, the Service has experienced significant financial difficulties in 

the past few years, and the Service is in need of transformation. 

Rationalizing the Service’s vast infrastructure will be critical to its 

success in addressing its financial difficulties, which means the 

Service may have to close or consolidate certain postal facilities. 

Within this context, the Service is considering closing the San Mateo 

Information Technology (IT) Center.



In 2000, the Service’s IT Department proposed closing the San Mateo IT 

Center and transferring IT functions performed at the center to other 

postal IT centers in order to reduce costs and make operations more 

efficient. The proposed closure would affect about 240 employees--about 

170 bargaining unit and about 70 Executive and Administrative Schedule 

(EAS) employees.[Footnote 1] Closing and consolidating IT functions are 

not new activities for the Postal Service. For example, in 1993, the 

Service closed its New York IT Center and transferred functions 

performed at that center to other postal IT centers.



Under the IT Department’s closure proposal, most of the IT functions 

being performed by the San Mateo IT Center are to be transferred to the 

Service’s other Information Service Center located in Eagan, Minnesota. 

The remaining IT functions are to be transferred to the Service’s 

Integrated Business Systems Solutions Centers located in St. Louis, 

Missouri and Wilkes-Barre, Pennsylvania.[Footnote 2] The San Mateo IT 

Center also houses an Accounting Service Center whose functions and 

staff are to be moved into leased space in the San Francisco Bay Area 

(Bay Area) if the Service decides to close the IT center. Because 

closing postal facilities is controversial, the Service said it would 

postpone making a final decision regarding the closure of the San Mateo 

IT Center until after we have issued this report and postal management 

has had a chance to review the results of our study.



To provide you information on the impact that closing the San Mateo IT 

Center would have on postal employees working at that facility--and 

their families--we agreed with your offices to address the following 

objectives:



* Describe the process the Service is following in deciding whether to 

close the San Mateo IT Center and consolidate its functions into other 

postal IT centers.



* Determine experts’ views on the social and economic impacts that 

plant and facility consolidations and closures have on affected 

employees and their families.



* Determine the social and economic impacts that affected postal 

employees and their families encountered when the Service closed its 

New York IT Center in 1993.



* Determine affected postal employees’ views on the social and economic 

impacts that they and their families would likely encounter if the 

Service closes the San Mateo IT Center.



We also provide information on how selected organizations have assisted 

affected employees during downsizing.



To meet these objectives, among other things, we administered a 

questionnaire to 243 San Mateo IT Center employees and received 213 

responses, resulting in an 88 percent response rate. We also 

administered two separate questionnaires to 145 current postal 

employees who were displaced by the 1993 closure of the New York IT 

Center.[Footnote 3] One questionnaire was mailed to 66 displaced 

employees of the New York IT Center who had relocated to similar 

positions at other postal IT centers outside the New York City area. We 

received 49 responses from this group, resulting in a 74 percent 

response rate. Another questionnaire was mailed to 79 displaced 

employees who had transferred to other postal positions in the New York 

City area following the IT center’s 1993 closure. We received 46 

responses from this group, resulting in a 58 percent response rate. We 

did not attempt to locate displaced employees of the New York IT Center 

who no longer work for the Service.



Additionally, we identified and reviewed (1) the IT Department’s 

economic analyses and assumptions, (2) the U. S. Postal Service Office 

of Inspector General’s (OIG) November 2000 audit report on the IT 

Department’s proposal and economic analyses, (3) applicable Postal 

Service policies and procedures relating to facility closures and 

capital investments, (4) our prior reports on restructuring and 

downsizing, (5) available private sector relocation studies, and (6) 

applicable portions of the U.S. Code and the Service’s collective 

bargaining agreement with the American Postal Workers Union (APWU) to 

identify legal requirements and entitlements associated with a postal 

facility closure. We also interviewed key stakeholders familiar with 

the closure, including (1) various postal officials at Headquarters and 

at the San Mateo IT Center and (2) national and local representatives 

of the APWU. Finally, we interviewed eight experts familiar with 

relocations. We identified these experts from available studies, 

articles, and referrals.



Results in Brief:



The Postal Service is following its Investment Review and Approval 

Process in making its decision regarding the IT Department’s proposal 

to close the San Mateo IT Center, because the Service will need to make 

an investment of $8 million to support the closure. The Investment 

Review and Approval Process requires that a Decision Analysis Report 

(DAR) be prepared as support for the investment.[Footnote 4] 

Additionally, the process requires that key senior postal executives 

approve the DAR. The IT Department prepared a DAR for closing the San 

Mateo IT Center; and in early November 2000 the Finance Department 

validated the accuracy and integrity of the DAR’s assumptions and 

economic analyses, and the former vice president for IT approved the 

DAR. Separate from the Investment Review and Approval Process, the OIG 

reviewed the DAR in 2000 and concurred that the proposed closure would 

save the Service about $74 million over 10 years. The savings would 

accrue from the sale of the San Mateo facility, staffing reductions, 

and operating efficiencies. Approval by the Postmaster General (PMG) 

and the Service’s Capital Investment Committee--which reviews projects 

of $7.5 million or more in capital and expense investments--has not yet 

occurred. According to the Service, these approvals are the final steps 

in its Investment Review and Approval Process and will take place after 

our report is issued if the Service decides to pursue closing the San 

Mateo IT Center. The San Mateo DAR has not been updated since 2000, 

although economic conditions have changed since that time. In addition, 

the DAR does not reflect the impact that the Service’s 2001 announced 

plans to automate and reengineer its field accounting activity could 

have on projected savings associated with the closure proposal. Those 

plans involve closing the Service’s 85 district accounting offices and 

consolidating residual activity into its 3 Accounting Service Centers. 

However, postal officials said that the key assumptions used in 

preparing the DAR would be updated before the Service makes its closure 

decision.



Relocation experts we interviewed reported that plant and facility 

closures occur throughout the nation and generally result in negative 

economic and social impacts on employees and their families. They said 

that following a closure, displaced employees typically experience 

economic impacts, such as lost income, loss of retirement benefits, and 

lower income after finding a new job. Employees who relocate with their 

jobs are likely to encounter social impacts, such as marital stress, 

separations from family members, and the loss of social ties. The 

experts also noted that dual-income families who relocate can face 

negative economic impacts when trailing spouses have to give up their 

jobs in order to relocate. The experts further noted that closures tend 

to have a greater negative impact on older employees. Older employees 

are less likely than younger employees to be reemployed and are more 

prone to social difficulties if they relocate to a new area. The 

experts indicated, however, that some employees might view closures 

positively because closures can afford workers the opportunity to 

redirect their careers, develop new competencies, or leave unsatisfying 

jobs.



Employees affected by the New York IT Center closure in 1993 whom we 

surveyed reported that they experienced negative economic and social 

impacts from the closure. Our analysis of the salary data provided by 

the Service on employees displaced by the New York IT Center closure 

showed that employees who remained with the Service in the New York 

City area fared worse economically than those who relocated to other 

postal IT centers. According to the Service’s salary data, 9 years 

after the closure, the average salary of postal employees who relocated 

to other postal IT centers had increased about 11 percent (in constant 

2001 dollars), while the average salary of employees who remained with 

the Service in the New York City area had decreased about 1 percent (in 

constant 2001 dollars). However, survey respondents who relocated to 

other postal IT centers reported encountering more negative social 

impacts than respondents who remained with the Service in the New York 

City area. For example, 23 of the 49 relocated employees responding to 

our survey reported that they found it difficult (1) adjusting to the 

new geographic area, work environment, and local culture; (2) 

maintaining or establishing social, community, and cultural ties or 

finding supporting communities where they could get involved; and (3) 

being away from family and friends and missing out on important family 

events. Some relocated respondents also reported that since relocating, 

their spouses had found it very difficult to maintain or secure jobs, 

benefits, and retirement security.



San Mateo IT employees who responded to our survey anticipated mostly 

economic impacts if they opt to stay in the Bay Area and social impacts 

if they opt to relocate to another postal IT center. Respondents 

anticipated economic impacts, varying from retiring earlier than 

planned to being unemployed. They anticipated social impacts, varying 

from short-term to long-term family separations. Under the IT 

Department’s proposal to close the San Mateo IT Center, all bargaining 

unit and about half of the EAS employees would be offered the 

opportunity to relocate with their jobs to another postal IT center. 

However, only 36 (17 percent) of the 213 San Mateo employees responding 

to our survey indicated they would likely relocate. Of the remaining 

respondents, 167 (78 percent) indicated they would likely stay in the 

Bay Area; and 10 (5 percent) indicated they were unsure what they would 

do if the Service decided to close the IT center. However, the actual 

decisions of the San Mateo IT Center employees may be different from 

their responses to our survey because certain factors have changed 

since they responded to our survey. At the time the employees completed 

our survey, the Service anticipated that postal positions would be 

available in the Bay Area for bargaining unit employees who did not 

want to relocate. Since that time, conditions have changed, and the 

Service no longer anticipates that postal positions will be available 

in the Bay Area. Additionally, outside employment opportunities in the 

Bay Area for employees with IT skills have tightened considerably. To 

help minimize the potential impact a closure could have on EAS 

employees, the Service has said it will make available the services of 

a private job search firm.



One hundred thirty four of the 167 San Mateo respondents who indicated 

they would likely stay in the Bay Area provided reasons for not 

relocating. Of the respondents who provided reasons, 79 (59 percent) 

identified concerns with spouses’ careers as a primary motivator in 

their decision not to relocate. The Service has indicated that it will 

work with trailing spouses who are postal employees to find postal 

employment at the new location, but it does not anticipate providing 

assistance to trailing spouses who are not postal employees. Because 

the Service is not providing assistance to all trailing spouses, the 

Service may not have as many employees relocating as it anticipates. In 

preparing the DAR, the IT Department estimated that 33 percent of San 

Mateo IT employees would relocate to other postal IT centers. However, 

only 17 percent of survey respondents indicated they would likely 

relocate. Relocation experts have noted that employees who must make a 

relocation choice often base their decisions on whether their trailing 

spouses can find suitable employment at the new location. Given this 

dilemma, relocation experts report more companies are providing 

employment assistance to trailing spouses, such as assisting with 

finding employment. By providing trailing spouses assistance-such as 

resume preparation and review services--the Service may encourage more 

employees to relocate.



The employment outlook for San Mateo IT employees has diminished since 

2000. Postal positions are no longer expected to be available in the 

Bay Area, and nonpostal IT positions are significantly more limited 

than 2 years ago. To help employees through such difficult times, we 

have previously reported that employers and employees both benefit when 

the employer proactively works with employees to minimize the impacts 

of relocation or job loss. Employers frequently provide relocation 

assistance, employee and family counseling, and job placement 

assistance. To its credit, the Service plans to provide some assistance 

in these areas. However, the Service does not anticipate offering job 

placement assistance to bargaining unit employees who decide not to 

relocate, although bargaining unit employees will have the opportunity 

to relocate with their jobs to other postal IT centers because of the 

no-layoff provision in the collective bargaining agreement with APWU. 

Without the benefit of job placement assistance, bargaining unit 

employees who do not relocate might encounter difficulty in finding 

employment in the Bay Area. Should the Service decide to close the San 

Mateo IT Center, it could offer job placement assistance during closure 

discussions with the APWU. These discussions have historically resulted 

in additional provisions for affected bargaining unit employees.



We are recommending that before the Service makes its decision about 

closing the San Mateo IT Center, it should review and update, if 

appropriate, its economic analyses and assumptions. Should the Service 

decide to close the San Mateo IT Center, we are also recommending that 

it consider (1) offering to help bargaining unit employees find jobs if 

they decide to stay in the Bay Area and (2) providing some assistance-

-such as resume preparation and review services--to working spouses of 

employees who decide to relocate. In commenting on a draft of this 

report, the Service did not comment on our findings. However, the 

Service did indicate agreement with our recommendations. The Service 

said that before reaching a decision regarding the closure of the San 

Mateo IT Center, it would update the information that will be used in 

making its decision. The Service also indicated that it would adhere to 

the provisions of its bargaining unit agreements and will attempt to 

mitigate the negative impacts that relocations might have on employees 

and their families.



Background:



During the 1970s, the Postal Service invested in data centers and 

mainframe computers to support administrative functions, such as 

personnel, accounting, and payroll processing. During the 1980s, the 

Service expanded its IT technology network to cover essentially all 

facets of postal operations. However, as networking technology 

improved, the Service realized that it no longer needed to colocate 

some of its IT functions with the hardware processors. This presented 

the Service with the opportunity to reduce costs and improve 

efficiencies by consolidating some of its IT functions. The practice of 

consolidating IT functions is consistent with industry trends, as 

companies strive to utilize new technologies to improve operations at 

less cost.



Before 1993, the Service had six computer centers, each with a 

mainframe computer, located in New York City, New York; St. Louis, 

Missouri; Raleigh, North Carolina; Wilkes-Barre, Pennsylvania; San 

Mateo, California; and Minneapolis, Minneapolis.[Footnote 5] In 1993, 

the Service closed its IT center located in New York and transferred 

all functions performed at the center to its postal IT centers located 

in San Mateo and Eagan. Some employees affected by the New York IT 

Center closure relocated to San Mateo and now face the prospects of 

being affected by yet another postal IT center closure. Additionally, 

since 1993, the Service has transferred mainframe computer operations 

performed in St. Louis, Raleigh, and Wilkes-Barre to the San Mateo and 

Eagan IT Centers. Other IT functions continue to be performed at the 

Service’s IT centers located in St. Louis, Raleigh, and Wilkes-Barre.



The Service’s current IT structure includes two Information Service 

Centers located in Eagan and San Mateo. Each of these Information 

Service Centers houses a Computer Operations Service Center, a 

Management Support Center, an Accounting Service Center, and an 

Integrated Business Systems Solutions Center.[Footnote 6] The Computer 

Operations Service Centers operate the Service’s mainframe computers 

supporting various postal activities. The Integrated Business Systems 

Solutions Centers maintain and enhance software applications for postal 

business systems. The Management Support Service Centers provide 

facility support to the other centers. The Accounting Service Centers 

are operated by the Service’s Finance Department and provide national 

accounting services. The Accounting Service Centers are not included as 

part of the IT Department’s proposed consolidation of the San Mateo IT 

Center.



Figure 1 shows the San Mateo IT Center, which is located at 2700 Campus 

Drive, San Mateo, CA, in the Bay Area. The building is a three-story 

structure plus a basement, contains approximately 160,000 square feet 

of space, and is located on 12.4 acres. The building was constructed in 

1976 and was purchased by the Service in 1983 for about $13 million. 

After purchasing the building, the Service spent an additional $14 

million on renovations, and during the last 10 years has spent an 

additional $3.7 million on major upgrades.



Figure 1: The San Mateo IT Center:



[See PDF for image]



[End of figure]



The consolidation plan currently under consideration provides that San 

Mateo’s computer operations, management support functions, and some of 

its software functions would be transferred to Eagan, along with some 

employees. The plan further provides that San Mateo’s remaining 

software support functions would be transferred to postal IT centers 

located in St. Louis and Wilkes-Barre, along with some employees. As 

previously stated, the consolidation plan currently under consideration 

does not include transferring the accounting functions currently 

performed at San Mateo. Instead, the accounting functions, along with 

their complement of 102 employees, are to be relocated into leased 

space in the Bay Area.



In October 2000, San Mateo’s IT functions had an authorized complement 

of 282, comprising 80 EAS positions, 200 bargaining-unit positions, and 

2 Postal Career Executive Service (PCES) positions. [Footnote 7] 

Seventy-two EAS and 172 bargaining-unit positions were filled as of 

March 2002. Six of the IT bargaining unit employees are to be 

transferred to the Accounting Service Center and would not be 

immediately affected if the Service decides to close the San Mateo IT 

Center. The remaining 166 bargaining unit employees and all EAS 

employees would be directly affected by the closure. Under the proposed 

consolidation, all 166 bargaining unit employees would be offered 

relocation to another postal IT center, in keeping with the no-layoff 

clause in their collective bargaining agreement. About half of the EAS 

employees will be offered jobs at another postal IT center.



For the employees who relocate, the Service will cover basic relocation 

costs. However, covered costs differ for bargaining-unit and EAS 

employees. Relocation benefits for bargaining-unit employees are 

specified in the negotiated collective bargaining agreement between the 

Service and the APWU. Examples of covered expenses include the cost of 

one advance house-hunting trip, the movement and storage of household 

goods, and 30 days of temporary quarters. For EAS employees the Service 

covers the cost of 3 house-hunting trips, the movement and storage of 

household goods, and 60 days of temporary quarters. Additionally, the 

Service provides EAS employees a more generous expense allowance and 

assistance in selling and purchasing their homes.



Employees, who do not have the option of relocating or choose not to do 

so, may choose to retire, provided they meet the minimum age and 

service requirements for retirement.[Footnote 8] Additionally, postal 

officials have indicated that if the decision is made to close the San 

Mateo IT Center, the Service will seek early retirement authority from 

the Office of Personnel Management. If this authority is granted, the 

Service plans to make the option of voluntary early retirement 

available to all eligible employees.[Footnote 9] Employees who do not 

relocate, retire, or find other employment on their own will likely be 

involuntarily separated from the Service. Employees who are 

involuntarily separated from the Service will be eligible for severance 

pay.



The Service has experienced financial problems in recent years that 

have been exacerbated by the recent economic slowdown and the use of 

mail to transmit anthrax. In April 2001, we placed the Service’s 

transformation efforts and long-term outlook on our high-risk list. We 

included the Service on our high-risk list to focus attention on the 

dilemmas facing the Service before the situation escalates into a 

crisis in which the options for action may be more limited and costly. 

While the Service recently developed a transformation plan to address 

its financial difficulties and has been able to cut costs, it has a 

significant amount of fixed costs due to its vast infrastructure that 

are difficult to cut in the short term. Rationalizing the Service’s 

infrastructure will be key as it strives to ameliorate its fiscal 

situation. This means that the Service may have to close or consolidate 

certain retail, mail processing, and administrative facilities if 

necessary to cut costs and improve performance. These closures and 

consolidations will undoubtedly lead to public concerns about the 

economic effects such actions will have on communities and employees. 

The Service is weighing these difficult issues as it considers whether 

to close the San Mateo IT Center.



Scope and Methodology:



To describe the process that the Service is following to decide whether 

to close the San Mateo IT Center and consolidate its functions into 

other postal IT centers, we interviewed postal managers and reviewed 

available supporting reports and documents. We reviewed the Service’s 

investment policies and procedures manual, which provides guidance for 

preparing, reviewing, and approving a DAR. We also reviewed the 

Service’s DAR, prepared by the IT Department, which included economic 

analyses and justification of the proposal to close the San Mateo IT 

Center, as well as an alternative proposal that the IT Department 

considered and subsequently rejected. Further, we reviewed the OIG’s 

November 2000 audit report on the IT Department’s proposal and economic 

analysis. For contrast, we reviewed (1) the DAR the IT Department 

prepared in support of the decision to build a new IT facility in Eagan 

that would allow the Service to consolidate IT functions performed at 

various sites in the Minneapolis area and provide for future 

incorporation of IT functions and (2) documentation the Service used to 

support its decision to close the New York IT Center in 1993. We 

discussed the steps the Postal Service followed in preparing its 

proposal to close the San Mateo IT Center with the Service’s vice 

president, IT; discussed the Service’s management process for reviewing 

the proposal with the Service’s manager, Capital and Program 

Evaluation, and manager, Facilities, Headquarters; and met with 

representatives from the OIG to discuss the audit they did of the 

Service’s proposal and economic analyses. We also reviewed sections of 

the Postal Service’s Transformation Plan that discuss procedures the 

Service follows in closing postal facilities, and we explored those 

procedures in greater detail with postal officials.



To determine experts’ views on the social and economic impacts that 

corporate downsizing and reorganizations can have on employees and 

their families, we identified and interviewed eight relocation experts 

from our literature review and discussions with authors of articles on 

the impacts of closures and relocations on employees. These relocation 

experts provide a wide variety of relocation services to several 

hundred companies throughout the United States. We also interviewed two 

university researchers knowledgable of worksite closures and employee 

displacements, and we gathered available data from the Bureau of Labor 

Statistics (BLS) on nationwide and regional worksite closures and 

employee separations for calendar years 2001 and 2002. To further 

broaden our perspective on how closures and relocations typically 

affect employees and their families, we conducted Internet research to 

identify reports, studies, and other sources of information that 

examined the impacts of closing facilities similar to the San Mateo IT 

Center. We also conducted literature searches and gathered information 

on the social and economic impacts of facility closures and 

relocations.



To determine the social and economic impacts encountered by postal 

employees and their families who were affected by the Service’s closure 

of its New York IT Center in 1993, we interviewed postal officials as 

well as displaced New York IT Center employees who relocated to the San 

Mateo IT Center. We also obtained and analyzed salary data, for the 

period 1992 to 2001, on displaced New York IT Center employees who are 

still employed by the Service. We designed, pretested, and administered 

survey questionnaires to displaced New York IT Center employees (1) who 

relocated to other postal IT centers and (2) who continued employment 

with the Service in the New York City area. For those employees who 

relocated, we received responses from 49 of 66, for a 74 percent 

response rate. For those who stayed with the Service in the New York 

City area, we received responses from 46 of 79 for a 58 percent 

response rate. We analyzed the survey responses, including open-ended 

comments, and conducted a number of follow-up interviews. We did not 

gather data on displaced New York IT Center employees who left the 

Service following the center’s closure in 1993 because the Service was 

unable to provide recent mailing addresses for these employees.



To determine the social and economic impacts that the San Mateo IT 

Center postal employees and their families would likely encounter if 

the Service closes that center, we obtained and reviewed relevant 

Postal Service documents regarding personnel policies and consolidation 

plans. We also interviewed cognizant postal and APWU officials and 

various San Mateo employees regarding these policies and plans and 

their potential impacts on employees. We obtained and analyzed San 

Mateo employee personnel data; and, on the basis of information from 

closure/relocation studies and experts and our interviews with postal 

officials and employees, we designed, pretested and administered a 

survey questionnaire to obtain information about how closing the San 

Mateo IT Center would likely affect employees and their families. We 

received survey responses from 213 of 243 employees, for an 88 percent 

response rate. We analyzed the survey responses, including open-ended 

comments, and conducted follow-up interviews.



To provide information on how selected organizations, during 

downsizing, have assisted affected employees, we identified and 

reviewed our prior reports on restructuring and downsizing. We 

incorporated information on those organizations where appropriate.



Because our three surveys did not make use of probability sampling, 

there are no sampling errors. However, the practical difficulties of 

conducting any survey may introduce other types of errors, commonly 

referred to as nonsampling errors. For example, differences in how a 

particular question is interpreted, the sources of information 

available to respondents, or the types of people who do not respond can 

introduce unwanted variability into the survey results. We included 

steps in both the data collection and data analysis stages for the 

purpose of minimizing such nonsampling errors. For example, our data 

collection instruments were designed by survey specialists in 

combination with subject matter specialists and pretested to ensure 

that questions were clear and were understood by respondents. To 

increase our response rate, a follow-up mailing was made to those who 

did not respond in a reasonable time period.



We conducted our review at Postal Service Headquarters in Washington, 

D.C., and at the Service’s IT center located in San Mateo, CA, from 

August 2001 through October 2002, in accordance with generally accepted 

government auditing standards.



We requested comments on a draft of this report from the Postmaster 

General. The Service’s comments are discussed at the end of this letter 

and are reprinted in appendix II.



The Service Is Following Its Investment Review and Approval Process:



The Service is following its Investment Review and Approval Process in 

deciding whether or not to close the San Mateo IT Center, because it 

will require an investment of $8 million to support the closure. Events 

leading to the IT Department’s proposal to close the San Mateo IT 

Center began in 1996. At that time, the IT Department started making 

long-range plans to consolidate the San Mateo IT Center’s mainframe 

computer operations into a new IT center the Service was building in 

Eagan. Other IT functions performed at the San Mateo IT Center were to 

be unaffected by the consolidation plans under development at that 

time. However, in 2000, the PMG called on postal managers to find 

savings by eliminating work, working more efficiently, and 

consolidating functions. In response to that call, the IT Department 

proposed closing the San Mateo IT Center and transferring its IT 

functions to Eagan and other postal IT centers. That proposal has yet 

to be approved by the Service, and the PMG has said that such a 

decision will not be made until after we have issued our report.



As required by the Service’s Investment Review and Approval Process, 

the IT Department prepared a DAR in 2000 to support the $8 million 

investment needed for the proposed closure of the San Mateo IT Center. 

The Service’s Investment Review and Approval Process establishes the 

review/approval process, procedures, and responsibilities for capital 

investments made by the Service. Major capital investments, generally 

defined as $5 million or more, require a DAR, which is justification to 

recommend an investment for approval.



In 2000, OIG reviewed the San Mateo DAR and concurred with the IT 

Department’s analysis that money could be saved and efficiencies gained 

by closing the San Mateo IT Center and transferring its IT functions to 

the Eagan IT Center and other postal IT centers. However, since the DAR 

was prepared in 2000, some of the economic assumptions, which were 

based on the economic conditions at that time, have changed. 

Additionally, the Service recently announced plans to consolidate its 

accounting functions in 85 postal districts into the Service’s 3 

Accounting Service Centers located in Eagan, St. Louis, and San Mateo. 

Given this, before the Service makes its decision about closing the San 

Mateo IT Center, the IT Department’s DAR may need to be reviewed and 

updated, if appropriate, to better reflect current economic conditions 

and recent plans to consolidate accounting functions.



The IT Department’s Proposal to Close the San Mateo IT Center 

Originated in 1996:



Events leading to the IT Department’s proposal to close the San Mateo 

IT Center began in 1996 when the IT Department initiated development of 

a long-range plan to consolidate the San Mateo IT Center’s mainframe 

computer operations into a new IT center that the Service was building 

in Eagan. The IT Department’s proposal called for consolidating San 

Mateo’s mainframe computer operations into a new 352,000-square-foot 

postal IT center, located on 28 acres in Eagan. The new Eagan IT Center 

was to serve as the Service’s primary financial center, meet the 

Service’s long-term computer operational requirements, and have the 

flexibility to adjust to IT changes and provide room for growth. The 

Eagan IT Center was designed to absorb the San Mateo IT Center’s 

mainframe computer operations. At the time the IT Department was 

preparing its original consolidation proposal, it projected that the 

San Mateo IT Center’s mainframe computer operations could be 

consolidated into the new Eagan IT Center sometime around 2000. 

However, before that consolidation occurred, the PMG called on postal 

managers in 2000 to review their operations and find savings by 

eliminating work, working more efficiently, and consolidating 

functions. The PMG did this in response to the Service’s declining 

financial condition: shrinking net income, operating expense growth 

outpacing operating revenue growth, the threat of declining mail 

volumes, and stagnating productivity.



Heeding the PMG’s call to find savings, the IT Department decided to 

expand its plans for the San Mateo IT Center. Instead of just 

consolidating the San Mateo IT Center’s mainframe computer operations 

into the Eagan IT Center, the IT Department decided to propose closing 

and selling the San Mateo IT Center and consolidating all of its IT 

functions into other postal IT centers located in Eagan, St. Louis and 

Wilkes-Barre.



The Primary Document Supporting the Closure Proposal Is the DAR:



According to IT Department officials, once a decision was made in early 

2000 to propose closing the San Mateo IT Center, the proposal’s 

sponsoring unit (the IT Department), per the Service’s Investment 

Review and Approval Process, prepared a DAR in support of the closure 

proposal. The DAR details the economic analyses and assumptions, 

including costs and benefits, of the proposed investment and 

alternatives being considered so that approving authorities will have 

the information necessary to make informed decisions. The Service 

requires that a DAR be prepared, validated, and approved for planned 

capital and expense investments of $5 million or more. The IT 

Department provided us with copies of (1) documentation and an internal 

paper prepared in support of the proposal to consolidate the San Mateo 

IT Center’s mainframe computer operations into Eagan and (2) the DAR 

supporting the closure proposal. However, the IT Department was unable 

to provide us documentation explaining the basis for expanding the 

mainframe consolidation proposal into a proposal to close the San Mateo 

IT Center entirely and transfer all of its IT functions to other postal 

IT centers. Additionally, according to postal officials, the two 

individuals most familiar with the closure proposal, the vice 

president, Information Technology; and the manager, Information Systems 

Support, are no longer with the Service.



According to postal officials, there are no detailed policies or 

rigorous procedures that must be followed when a department proposes 

closing a postal facility other than a post office or mail processing 

facility. They said that references, in the Service’s Transformation 

Plan, to detailed procedures for closing facilities apply only to post 

offices and mail processing facilities, not to administrative offices 

such as the San Mateo IT Center. They said the DAR is the primary 

document being used to support the IT Department’s proposal to close 

the San Mateo IT Center.



The San Mateo DAR prepared by the IT Department included (1) the 

objectives, justification, and details of the proposed closure/

consolidation; (2) economic analyses and financial justification for 

the proposed closure; and (3) information on an alternative to the 

closure that was considered, analyzed, and eliminated. According to the 

DAR, closing the San Mateo IT Center and consolidating all of its IT 

functions at other postal IT centers would be justified because (1) 

consolidating IT and support operations would provide the Service 

savings, over a 10-year period, of approximately $25 million in 

staffing, utilities, maintenance, and contractor systems software 

support and (2) consolidating IT functions would allow the Service to 

sell the San Mateo facility for approximately $49 million. The DAR also 

noted that the San Mateo area had become one of the highest cost-of-

living areas in the nation, and the San Mateo IT Center was finding it 

increasingly difficult to retain its executives and the top technical 

staff needed to operate the center. The DAR further noted that the cost 

of contractors in the San Mateo area was higher than in other areas 

where postal IT centers were located.



Before finalizing the DAR to close the San Mateo IT Center, the IT 

Department considered one alternative proposal which, consisted of the 

Service selling the San Mateo facility and leasing it back from the new 

owner, with all of the postal functions remaining in the leased 

facility. The Service rejected that alternative for two reasons. The IT 

Department determined that (1) the annual lease cost would exceed the 

current depreciation cost of the San Mateo facility and (2) the Service 

would not realize the savings and operational efficiencies that would 

accrue from consolidating San Mateo IT functions at other postal IT 

centers.



According to postal officials, the IT Department--following the 

Service’s Investment Review and Approval Process--prepared the San 

Mateo DAR and forwarded it to the Service’s Finance Department for 

validation and to the Facilities Department for review and concurrence. 

By early November 2000, the Finance Department had completed its 

validation of the accuracy and integrity of the San Mateo DAR’s 

assumptions and economic analyses; the Facilities Department had 

concurred with the DAR; and the sponsoring vice president, IT, had 

signed the DAR. Next, the senior vice president/chief technology 

officer and the chief financial officer/executive vice president 

reviewed and approved the DAR. In late November 2000, the chief 

financial officer/executive vice president prepared and signed a 

validation memorandum and executive summary, which was forwarded to the 

PMG, stating that the DAR proposing to close the San Mateo IT Center 

had been reviewed and validated. According to postal officials, before 

the San Mateo IT Center can be closed, approval must be obtained from 

the Headquarters (HQ) Capital Investment Committee and the 

PMG.[Footnote 10] The OIG has also reviewed the DAR. (See fig. 2 for an 

overview of the Service’s Investment Review and Approval Process.):



Figure 2: Overview of Postal Service’s Investment Review and Approval 

Process:



[See PDF for image]



[End of figure]



OIG Reviewed the IT Department’s Proposal and Concurred that Closing 

the San Mateo IT Center Would Save Money:



Prior to our review, postal management asked the OIG to evaluate the 

potential benefits, costs, and operational issues surrounding the IT 

Department’s proposal to close the San Mateo IT Center and transfer its 

IT functions to other postal IT centers. The OIG did this evaluation 

between May and late November 2000. The OIG agreed with the IT 

Department that consolidating the San Mateo IT Center’s IT functions 

into the Eagan and other postal IT centers would produce savings in 

staffing, utilities, maintenance, and contractor systems software 

support. However, among other things, the OIG noted that the IT 

Department’s projected savings in the San Mateo DAR might be overstated 

by $4 to $8 million because the cost of leasing space for the 

Accounting Service Center in the Bay Area may have been underestimated. 

Also, the OIG questioned the Service’s support for $6.3 million in 

capital expenditures for hardware and software upgrades associated with 

the consolidation. The Service subsequently provided justification for 

the capital expenditures, which the OIG found to be generally 

responsive to its concerns.



According to the OIG’s November 24, 2000, report, postal management 

revised its lease cost estimates for the Accounting Service Center. 

This revision reduced estimated savings from $78 million to the current 

estimate of $74 million. The OIG concluded that this and other actions 

the Postal Service was planning were responsive to the OIG’s concerns 

and concurred with the IT Department’s analyses that consolidating the 

San Mateo IT Center’s IT functions into other postal IT centers would 

result in savings.



Economic and Other Conditions Have Changed Since the DAR Was Prepared 

in 2000:



In 2000, when the Service’s IT Department prepared the DAR to support 

its proposal to close the San Mateo IT Center, general economic 

conditions were noticeably better than they are currently; and the 

Service had not yet made plans to automate and reengineer its field 

accounting activity, which involves closing its 85 district accounting 

offices and consolidating residual activity into its 3 Accounting 

Service Centers. The IT Department’s proposal to close the San Mateo IT 

Center was based on several major economic assumptions that have since 

changed. First, when the IT Department prepared the San Mateo DAR, it 

noted that the job market in the Bay Area was very good and that 

employees with IT skills were in great demand, thereby making it 

difficult to recruit and retain IT employees at the San Mateo IT 

Center. Since then, however, the general job market has declined 

significantly. For example, in the Bay Area, from 2000 to 2002, the 

unemployment rate increased from 2.2 percent to 5.4 percent. Even more 

dramatic was the reversal in employment growth. From 1999 to 2000, the 

number of Bay Area employees grew by 3.8 percent.[Footnote 11] In 

contrast, the number of these employees contracted by 5.9 percent from 

2000 to 2002. Given the increase in unemployment and the shrinking 

employment growth in the Bay Area, current IT labor costs may not be as 

high as they were in 2000, thereby creating a more favorable recruiting 

environment for the Service.



Second, the IT Department received an appraisal in 2000, indicating 

that it could reasonably expect to sell its San Mateo facility within 6 

months for a minimum price of $49 million. However, according to real 

estate experts, office-building values in the San Mateo area are 

currently depressed. From the 4th quarter of 2000 to the 2nd quarter of 

2002, average asking rents fell by about 60 percent, and office vacancy 

rates increased nearly sixfold, from less than 4 percent to 22 percent. 

As a result of this depressed real estate market, the time and value 

estimates that the IT Department received in 2000 for the San Mateo 

facility may be out of date.



In view of what might be significant changes in some of the economic 

assumptions used in the San Mateo DAR, we asked the Service about 

updating (1) the estimate of the fair-market value of the San Mateo 

building and property and (2) the estimate of rental rates for office 

space in the Bay Area. The Service said that it was too costly to have 

a commercial real estate broker update this information before the 

Service was ready to make a decision about closing the San Mateo IT 

Center. However, the Service acknowledged that the commercial office 

market in the Bay Area has changed since the DAR was prepared in 2000. 

Postal officials said that the key assumptions used in preparing the 

DAR would be updated before the Service makes a decision about closing 

the San Mateo IT Center. Until these data are updated, it is uncertain 

how much the Service would save by closing the San Mateo IT Center.



Another significant change indicating the need to update the San Mateo 

DAR is the Service’s plans to revamp its accounting functions. In 2001, 

the Service announced plans to automate and reengineer its field 

accounting activity. These changes will result in the Service closing 

its 85 district accounting offices; eliminating 1,063 field accounting 

technicians in these offices; and consolidating the residual activities 

into its 3 Accounting Service Centers located in Eagan, St. Louis, and 

San Mateo. Postal officials stated that this would result in about 350 

more accounting technician and finance positions at these 3 centers. As 

noted earlier, the San Mateo DAR includes a plan to move the accounting 

functions and its 102 employees into leased space in the Bay Area. The 

DAR included $2.1 million as the 3-year estimated cost for this leased 

space. As a result of the planned consolidation of district accounting 

functions, the Service’s estimated cost of leased space may no longer 

be accurate for its accounting functions in the Bay Area and could 

affect projected savings associated with closing the San Mateo IT 

Center. Given this possibility, before the Service makes its decision 

about closing the San Mateo IT Center, the DAR may also need to be 

reviewed and updated, if appropriate, to reflect the cost associated 

with obtaining the leased space necessary to accommodate about 40 

additional accounting technician and finance positions.



Relocation Experts Report that Negative Economic and Social Impacts 

Generally Accompany Plant and Facility Closures:



Relocation experts we interviewed reported that plant and facility 

closings generally have negative economic and social impacts on 

displaced employees and their families. Typically, some employees 

experience negative economic impacts, others experience negative social 

impacts, and some experience both when the plant or facility where they 

work closes. The experts told us that employees who do not relocate 

with their jobs typically experience economic impacts, such as lost 

income, loss of retirement benefits, and lower paying jobs upon 

reemployment. Experts also noted that employees who relocate with their 

jobs are likely to encounter social impacts, such as marital stress, 

separations from family members, and the loss of social ties. In 

addition to the negative social impacts, the experts noted that dual-

income families who relocate may face negative economic impacts when 

the trailing spouse has to give up employment in order to relocate.



Experts’ opinion and research done on plant and facility closures 

indicate that such events have a greater negative impact on older 

employees than on younger employees. Older employees are less likely 

than younger employees to be reemployed and are more likely to 

experience social difficulties when relocating. Research also indicates 

that an increasing percentage of employees are declining relocation 

offers because they want to avoid the social and economic impacts 

associated with moving to a new geographic location, particularly the 

disruptions to family ties that often ensue. Research further shows 

that elder care is playing an increasingly important role in employee 

relocation decisions.



Notwithstanding the negative impacts closures can have on employees and 

their families, closures occur across the nation and are done for a 

variety of business reasons and purposes. Research also indicates that 

in the final analysis, all affected employees may not view plant and 

facility closures negatively. Some employees may actually come to view 

their experience with a plant or facility closure as positive because 

it affords them the opportunity to redirect their careers, develop new 

competencies, or leave unsatisfying jobs.



Displaced Employees Typically Face Economic Impacts:



According to the relocation experts we interviewed, studies have shown 

that the economic impacts on employees displaced by a plant or facility 

closure include the loss of earnings due to periods of unemployment, 

loss of retirement benefits, and lower wages upon reemployment. For 

example, a 1999 study on job displacement stated that about 20 percent 

of displaced employees who found employment did so at greatly reduced 

wages, earning one-half or less than they did previously.[Footnote 12] 

The study also found that between one-fourth and one-third of displaced 

employees remained unemployed a year or more after displacement. 

Similarly, another study of displaced employees found that about 30 

percent remained unemployed for a year or more.[Footnote 13] Studies 

also indicated that the longer displaced employees remained unemployed, 

the greater the drop in their wages when reemployed, with some 

displaced employees becoming so discouraged that they stop looking for 

work altogether.



Similar findings were echoed in a survey of employees displaced by a 

New York plant closure in 1998.[Footnote 14] Survey respondents 

reported several impacts they experienced as a result of the worksite 

closure, including earnings losses, declines in job quality, and 

financial difficulties. The survey disclosed that most displaced plant 

employees had held two or more jobs since the closure, with some 

holding as many as eight jobs in 3 years. The survey results, published 

in a 2001 report, indicated that as a result of the closure, employees 

experienced a 17 percent decline in median income and a 33 percent 

increase in commuting distances. The researcher also found precipitous 

declines in job quality, in terms of regular raises, sufficient income, 

promotions, and skill development. In addition, the report stated that 

many of the displaced employees experienced financial difficulties, 

such as having to sell their homes.



Relocated Employees Typically Face Social and Economic Impacts:



Relocation experts we interviewed told us that families commonly 

experience social difficulties when relocating, including disruptions 

of their children’s education and social well-being, increased marital 

stress, and a sense of loss caused by separations from family members. 

Relocation experts and available studies also point out that in 

addition to social adjustments, trailing spouses in dual-income 

households may face economic impacts due to the loss of employment and 

income. Research indicates that in over 50 percent of married 

households, both spouses are employed. This prevalence of dual-income 

households in the workforce is prompting companies to provide 

employment assistance to trailing spouses in order to reduce family 

stress during relocation transitions, according to studies and experts. 

For example, employers assist trailing spouses in a variety of ways, 

including paying a job-finders fee, assisting with finding employment 

either within or outside the company, and reimbursing the spouse for 

lost income while seeking employment at the new location. Examples of 

other types of assistance provided trailing spouses include resume 

preparation and review, development of job search strategies, and 

career counseling. According to the experts we interviewed, until and 

unless a trailing spouse finds comparable employment at the new 

location, a dual-income household might lose 30 percent to 50 percent 

of its income when it relocates.



The impacts of relocation on trailing spouses have also been known to 

include emotional and cultural adjustments. For example, relocation 

experts noted that trailing spouses might be natives of the originating 

city and could experience a sense of loss at the new location. 

According to experts, trailing spouses may experience difficulties in 

adjusting to less culturally diverse regions of the country where there 

may be fewer opportunities associated with their culture, religion, or 

language. Trailing spouses may also find it difficult to transition 

from large urban areas where they have access to ethnic activities, 

with which they have an affinity, to small rural areas where they may 

feel isolated. Experts also stated that career development for trailing 

spouses who worked may be negatively affected, and they might have 

difficulty finding comparable employment. In addition, according to a 

1998 study, relocation can lead to loss of continuity of training and 

skill development, as the new location may not have the same career 

opportunities.[Footnote 15] For these reasons, trailing spouses may be 

dissatisfied with their new jobs, according to experts. Experts also 

told us that the difficulty associated with finding comparable 

employment is compounded when people move from large urban areas, such 

as the Bay Area, to smaller communities that traditionally have fewer 

employment and career prospects.



Older Employees Often Face Greater Economic and Social Impacts than 

Younger Employees:



Research and relocation experts report that when a plant or facility 

closes, older employees tend to encounter greater economic and social 

difficulties than younger employees. While there is no consensus among 

studies and experts regarding the age at which individuals encounter 

greater difficulties due to job loss, there is general agreement that 

as workers age, the impacts of job displacement become increasingly 

severe. In particular, research and industry experts state that workers 

in their mid-40s begin to face economic impacts attributable to age 

because they face more obstacles than younger employees in obtaining 

new employment. Experts also noted that these older employees 

potentially experience greater economic losses as they are typically 

vested in their retirement systems and could potentially lose their 

retirement benefits due to job displacement. Additionally, according to 

relocation experts, workers in their mid-40s and older who relocate 

generally face greater social impacts than younger employees.



In November 2001, we reported that although employees age 55 and older 

are not more likely to lose their jobs than younger workers, a job loss 

for these older employees potentially has more severe 

consequences.[Footnote 16] For example, we noted that employees age 55 

and older may experience larger losses in earnings upon reemployment, 

compared with younger employees. We also reported that such employees 

were significantly less likely than younger employees to be reemployed. 

In addition, we stated that the potential loss of health care benefits 

following a job loss could be more problematic for employees who are 

age 55 and older because they tend to have more health problems than 

younger employees. Other studies on job loss reported similar findings 

regarding older workers.



Similar to the greater economic impacts older employees may experience 

due to job displacement, relocation experts we interviewed also told us 

that employees in their mid-40s and older are more likely to face 

greater social difficulties in relocating than younger individuals. For 

example, according to experts, employees in their mid 40s and older are 

more likely to have elderly parents, grandchildren, or existing health 

conditions. Experts also told us that these employees are more likely 

to have high school or college-aged children who are often reluctant to 

relocate. Moreover, employees who are in their mid-40s and older are 

typically less inclined to move than younger individuals. For example, 

one relocation expert we contacted noted that older employees feel that 

relocating to a new community requires that they sacrifice social 

networks, long-time friendships, and family relationships that took 

years to establish. In addition, experts pointed out that trailing 

spouses of older employees might also experience more difficulties in 

finding new jobs because of age discrimination.



Employees Decline Relocation Offers for Various Reasons:



Given the wide range of potential impacts from relocation, in 

particular the impacts on families, studies indicate that a growing 

number of employees are declining to relocate. According to survey 

results published by Atlas Van Lines in 2001, the number of companies 

reporting that employees rejected relocation offers increased from 39 

percent in 1999 to 50 percent in 2001.[Footnote 17] The most frequently 

cited reason for declining to relocate was “family ties” (81 percent). 

Other reasons cited included “personal reasons” (73 percent), “no 

desire to move” (67 percent), and “spouse employment” (48 percent).



The Employee Relocation Council (ERC) reported in 2001 that family-

related considerations, such as elder care, child care, and schools 

played a crucial role in employees’ relocation decisions.[Footnote 18] 

Elder care was specifically identified as an area of increasing 

importance in employees’ relocation decisions. The report estimates 

that 80 percent of elderly persons have lived alone or with a family 

member, rather than in nursing homes. As a result, according to ERC, 

more employees and their families will be increasingly responsible for 

helping elderly relatives who need assistance with the activities of 

daily living, including shopping, transportation, personal care, paying 

bills, preparing meals, walking, and house cleaning. The ERC report 

also noted that employers offer various types of elder care assistance, 

such as paying to move elderly relatives, providing lists of elder care 

facilities and programs, and providing written materials on elder care 

needs. ERC further reported that similar services are provided for 

relocating families needing child care services or help in finding 

schools for their children.



Business Closures Occur and Sometimes Create Opportunities for 

Employees to Make Life and Career Changes:



Plant and facility closures are the result of business decisions made 

for a variety of reasons and purposes. Notwithstanding their potential 

impact on employees and their families, business closures occur and 

affect thousands of employees annually. Research indicates that in the 

final analysis, not all affected employees view plant and facility 

closures negatively.



According to experts, closures, accompanied by employee displacements 

are largely fueled by corporate downsizing. For example, the BLS 

reported that there were 1,253 worksite closures that resulted in 

nearly 380,000 employee layoffs throughout the United States in 

calendar year 2001.[Footnote 19] BLS data also show that in the Bay 

Area, where the San Mateo IT Center is located, there were 22 worksite 

closures that resulted in over 5,800 employee layoffs in calendar year 

2001. According to studies and relocation experts, businesses make 

decisions to downsize, restructure, or close facilities for a wide 

variety of reasons, primarily driven by business needs. According to 

unemployment research, for example, plant relocations are 

organizational changes that are commonly taken to pursue company 

development or to solve financial and operational problems. Experts 

told us that companies often implement different reorganization 

strategies to increase profits and competitiveness and to respond to 

various business factors, such as the economy, the stock market, 

business competition, the availability of skilled workers, and the cost 

of labor. For example, according to one expert we contacted, companies 

typically move facilities to reduce costs, often relocating to regions 

of the country where labor costs are lower.



Recent Bay Area worksite closures have resulted in employee layoffs. 

While specific data on the number of employee layoffs by Bay Area 

companies are not available, media reports indicate that several 

thousand employees have lost their jobs over the past year. For 

example, in May 2002, it was reported that a San Francisco based 

financial services company implemented its first large-scale employee 

layoff since 1987, reducing its workforce by approximately 4,500 

employees in order to keep the company’s total complement under 20,000. 

In addition, another report indicated that as a result of a Bay Area 

based corporate merger in the technology sector, an estimated 15,000 

positions would be eliminated worldwide over the next 2 years, 

including many in the Bay Area. Another event that may affect the Bay 

Area economy was reported in June 2002, when a major air carrier 

announced that as a result of the September 11, 2001, terrorist 

attacks, it had applied for federal assistance to aid its recovery from 

these events. The air carrier also plans to increase its viability by 

reducing costs, such as through salary cuts from pilots, managers, and 

administrative employees. However, if these efforts are unsuccessful, 

the jobs of approximately 18,000 Bay Area employees may be affected.



Experts also told us that companies make decisions to displace or 

relocate employees according to, among other things, business needs, 

economic conditions, competition, company size, acquisitions and 

mergers, and the number of employees on the payroll. For example, a 

relocation expert we interviewed told us her company, which employs 

approximately 2,800 employees, recently downsized by closing two of its 

office locations. While some employees were retained and relocated, 

others lost their jobs and their employee benefits.



Despite the negative social and economic impacts that closures have on 

employees, unemployment researchers have suggested that a job loss 

sometimes creates opportunities for individuals to change careers and 

life directions. Additional research also indicates that after a period 

of time, some employees may actually come to view their experiences 

with a plant or facility closure as positive because it gave them the 

opportunity to redirect their careers, develop new competencies, or 

leave unsatisfying jobs. Research and relocation literature also 

indicates that families differ in their abilities to adapt to change. 

Moreover, relocation experts stated that in many cases, families adapt 

well and make very successful transitions.



New York IT Center Employees Reported Economic and Social Impacts as a 

Result of the Closure:



Ninety-five displaced New York IT Center employees responded to our 

survey and reported economic impacts, such as diminished earnings; and 

social impacts, such as broken family ties. Of these 95 respondents, 46 

remained with the Service in the New York City area and reported facing 

more economic impacts than social impacts. The remaining 49 employees 

relocated to postal IT centers in other geographic areas and reported 

more social impacts than economic impacts.



Several options were available to displaced New York IT Center 

employees, including working for the Postal Service in the New York 

City area--though most likely not in an IT job; relocating to another 

postal IT center; retiring with a buyout; or leaving the Service. 

Employees most concerned about social issues, such as maintaining close 

family ties, tended to remain in the New York City area and deal with 

the resulting economic impacts, such as diminished earnings. Our survey 

results indicate that employees most concerned about economic issues, 

such as maintaining their level of earnings and career potential, 

relocated to other postal IT centers and dealt with the ensuing social 

impacts, such as diminished ties with family and friends left behind in 

the New York City area. Still other employees opted to retire or leave 

Postal Service employment altogether. Retiring or leaving the Service 

at the time of the New York IT Center closure may have been 

particularly appealing to some employees because as part of a 

nationwide restructuring occurring at that time, the Service was 

offering a monetary incentive of 6 months’ pay to all eligible 

employees who opted to retire or take an early out. In total, 104 of 

the 283 displaced New York IT Center employees chose to remain with the 

Service in the New York City area; 82 relocated to postal IT centers in 

other geographic areas. The remaining 97 displaced employees retired, 

separated from the Service, or found other jobs with the Service 

outside the New York City area.



Postal Employees Had Several Options When the New York IT Center 

Closed:



From August to November of 1992, the PMG restructured the Service. To 

minimize the impact on employees, an early-out option was offered to 

permit most employees to retire at age 50 with 20 years of service or 

any age with 25 years of service. A monetary incentive was offered to 

encourage eligible employees to retire. This incentive was a lump-sum 

payment equal to 6 months’ pay. According to postal officials, when the 

Service closed its New York IT Center in 1993, the restructuring had 

resulted in numerous retirements and an abundance of non-IT jobs in the 

New York City area to offer displaced IT center employees. Postal 

officials said the Service was therefore in the position to offer 

displaced IT center employees--both EAS and bargaining unit--various 

options that included (1) taking an available Service job in the New 

York City area that had become vacant as a result of the restructuring, 

(2) relocating to another postal IT center in a different geographic 

area, or (3) retiring with a buyout--if eligible. Some employees chose 

none of these options and decided to independently find other Service 

employment outside the New York City area. Still others opted to leave 

Service employment altogether.



EAS employees who opted to relocate to other postal IT centers were 

able to continue working in the IT field at their same grade and pay. 

EAS employees who decided to stay in the New York City area were 

initially offered saved-pay for 2 years, but the Service later made 

saved-pay permanent for these employees.[Footnote 20] According to some 

EAS survey respondents, the Service made its offer of permanent saved-

pay for EAS employees after some EAS employees had already relocated to 

other postal IT centers. Some EAS survey respondents reported that they 

based their decisions to relocate on their belief that if they stayed 

in the New York City area in a lesser graded position, they would 

receive saved-pay for only 2 years. Some EAS survey respondents said 

that if they had known the Service would make saved-pay protection 

permanent, they would have taken a non-IT job and stayed in the New 

York City area. Bargaining unit employees who took lower paying Service 

jobs in the New York City area were to receive saved-pay protection for 

1 year. [Footnote 21] In many instances, however, the actual reduction 

in pay did not occur until about 2 years after the closure because the 

time that employees spent in a trial employment status did not count 

against the 1-year limit. Also, the Service experienced some delay in 

making the pay changes in its computerized payroll system. Figure 3 

shows the number and percent of displaced New York IT Center employees 

who chose each option.



Figure 3: Options Selected by Displaced New York IT Center Employees in 

1993:



[See PDF for image]



[End of figure]



Postal Employees Who Took Available Jobs with the Postal Service in the 

New York City Area Faced More Economic Impacts than Social Impacts:



For many displaced New York IT Center employees, the decision to accept 

other postal employment in the New York City area meant that they fared 

worse economically in the long run than those who chose to relocate to 

postal IT centers in other geographic areas. According to a postal 

official, when the Service closed the New York IT Center, the Service 

had numerous vacancies in the New York City area because it had 

recently gone through a major restructuring that saw many employees 

leave the Service through retirement or separation. As a result of the 

numerous vacancies in the New York City area, the Service was able to 

offer jobs to displaced New York IT Center employees who did not wish 

to relocate to postal IT centers in other geographic areas. However, 

the vacant postal jobs in the New York City area were frequently lower 

paying, non-IT positions.



Using salary data on the 147 displaced New York IT Center employees 

still employed by the Service at other postal IT centers or postal 

facilities in the New York City area, we determined that the 68 

employees who relocated (44 bargaining unit and 24 EAS employees) 

generally fared better economically than those who remained in the New 

York City area. Nine years after the closure, salary data provided by 

the Service showed that the average salary of employees who relocated 

had increased about 11 percent (in constant 2001 dollars); in 

comparison, the average salary of employees who remained with the 

Service in the New York City area had decreased about 1 percent (in 

constant 2001 dollars). The impact on salary between displaced 

employees who relocated and those who remained in the New York City 

area was greater for bargaining unit employees than for EAS employees. 

Our analysis of the Service’s salary data shows that the 44 displaced 

bargaining unit employees who relocated to other postal IT centers 

were, 9 years later, earning salaries that averaged about 14 percent 

more (in constant 2001 dollars) than they had been earning when the New 

York IT Center closed. In contrast, the 43 displaced bargaining unit 

employees who remained in the New York City area were earning salaries 

that averaged about 6 percent less (in constant 2001 dollars) than the 

salaries they were earning at the time of closure. Almost all of the 43 

displaced bargaining unit employees who remained in the New York City 

area after the closure took lower paying mail clerk positions.



No EAS employees took pay cuts (in actual dollars) as a result of the 

closure.[Footnote 22] Nine years after the New York IT Center closed, 

the 36 displaced EAS employees working in the New York City area were 

earning an average of about 2 percent more (in constant 2001 dollars) 

than they had been at the time the center closed. In contrast, the 

salaries of the 24 displaced EAS employees who relocated to other 

postal IT centers saw their salaries increase an average of about 8 

percent (in constant 2001 dollars). Displaced EAS employees who 

relocated, however, fared worse, on average, than displaced bargaining 

unit employees who relocated.



Generally, survey respondents who took postal jobs in the New York City 

area indicated they did so because they were concerned about the social 

impacts they believed they would face if they left the New York City 

area. For example, 34 of the 46 survey respondents who remained in the 

New York City area believed it was very important to remain in the area 

in order to maintain family ties with parents and other relatives--ties 

that would otherwise be strained by relocating to a new geographic 

area. One respondent who took a postal job in the New York City area 

commented that he could not relocate because he was the only person 

able to provide care for his aged parents. Another respondent commented 

that she was unable to relocate to another postal IT center because her 

parents’ health was such that they would not be able to accompany her. 

A third respondent who took a postal job in the New York City area 

commented that she was unable to relocate for several reasons, one 

being that she could not relocate her mother, who lived close by and 

was about to undergo surgery. Respondents remaining in the New York 

City area were also concerned that relocating to another geographic 

area could alienate relationships with their children and 

grandchildren. Twenty-five of the 46 respondents remaining in the New 

York City area stated that it was very important that they remain in 

close proximity to their children and grandchildren.



Respondents who remained with the Service in the New York City area 

indicated that concerns related to their spouses weighed heavily in 

their decisions not to relocate. For example, 24 of the 46 respondents 

remaining in the New York City area said that a very important concern 

they had was that relocating would strain the relationship they had 

with their spouse. One EAS employee decided against relocating because 

his wife was pregnant at the time and did not want to sever the close 

relationship she had with her physician. Another EAS employee stated 

that he did not relocate primarily for family reasons--his spouse was 

working, and it would have been very hard to ask her to give up her job 

and pension and move across the country to a new location. Twenty-three 

of the 46 respondents remaining with the Service in the New York City 

area also indicated that in reaching their decisions not to relocate, 

it was very important to them not to lose social, community, and 

cultural ties to the New York City area.



Given that so many of the 46 survey respondents who remained with the 

Service in the New York City area did so to minimize the social impacts 

they believed relocating would involve, it is not surprising that most 

had strong family and cultural ties to the area. Forty-one of the 46 

respondents had parents, grandchildren, or relatives living in the New 

York City area. Thirty-six of the 46 respondents had a spouse/partner 

living with them, and 34 had children. Most of the respondents who 

remained in the New York City area also tended to be more senior 

employees with many years of postal service. Forty of the 46 

respondents were 40 years old or older, and 30 of the 46 respondents 

had over 15 years of postal service at the time the New York IT Center 

closed.



Several survey respondents who accepted postal jobs in the New York 

City area, rather than relocate, furnished written comments describing 

the economic impacts they experienced following the closure of the New 

York IT Center. In general, they believe that they suffered financially 

by staying with the Service in the New York City area. As indicated 

earlier, our analysis of the Service’s salary data confirmed that 

employees who relocated generally fared better economically than those 

who did not. Some said that their salaries would have been 

progressively higher; and their chances for advancement would have been 

better, if they had relocated to another postal IT center.



Postal Employees Relocating to Postal IT Centers in Other Geographic 

Areas Faced More Social Impacts than Economic Impacts:



For many displaced New York IT Center employees, the decision to move 

to another postal IT center in another geographic area was accompanied 

by more social impacts than economic impacts. When the Service closed 

the New York IT Center in 1993, it offered displaced employees the 

opportunity to relocate to other postal IT centers, such as Eagan and 

San Mateo. By relocating to other postal IT centers, employees were 

able to continue working in the IT field with no pay cut. Eighty-two of 

the 283 displaced New York IT Center employees chose to relocate to a 

postal IT center in another geographic area.



Survey respondents who relocated to postal IT centers in other 

geographic areas often reported encountering very significant social 

impacts as a result of their moves. For example, 23 of the 49 relocated 

postal employees who responded to our survey reported that they had 

found it very difficult to adjust to the new geographic area, work 

environment, and local culture. The same number of respondents also 

reported finding it very difficult to maintain or establish social, 

community, and cultural ties or find supporting communities where they 

could get involved. One respondent who relocated to the Eagan IT Center 

reported that her family, coming from New York City, found it difficult 

to assimilate into the midwestern culture. Another respondent found it 

difficult being away from family and friends and missing out on 

important family events. She noted that relocating had strained her 

marriage and forced her to give up a private business she had been 

running in New York City.



Many survey respondents who relocated reported that they had been 

greatly affected by concerns related to their spouse/partner. For 

example, 18 of the 49 respondents reported that since relocating, their 

spouse/partner had found it very difficult to maintain or secure a job/

career, benefits, and retirement security. Nineteen respondents also 

indicated that the relocation had been very difficult because of the 

strains it had placed on relationships with spouses/partners. One 

respondent who relocated commented that it had been emotionally 

difficult for his wife to relocate and leave her family behind.



Twenty-two of the 49 relocated respondents reported that relocating 

from the New York City area to another geographic area had put strains 

on family relationships; and 20 respondents reported that as a result 

of the relocation, it had been very difficult to keep their families 

together. One respondent noted that it had been difficult for him and 

his wife to leave the New York City area because they had children 

working and going to school there, and they were also leaving elderly 

parents behind.



Twenty-three of the 49 respondents who relocated stated that as a 

result of their relocation, they had a very difficult time maintaining 

social ties with parents and other relatives. One respondent commented 

that the relocation meant not being there for his mother when she 

passed away and not being able to be with his relatives. Twenty-two 

respondents stated that as a result of relocating to another geographic 

area, they had a very difficult time assisting with the physical care 

of their parents or other relatives. One employee commented that 

relocating had placed tremendous stress on him as well as his wife, 

children, parents, and other relatives.



Finally, survey respondents who relocated typically reported that they 

had experienced significant social impacts associated with the 

relocation itself. Twenty of the 49 relocated respondents reported that 

they had experienced a very difficult time dealing with the cost, time, 

and energy involved in relocating from the New York City area to their 

new homes in another geographic area. Fourteen respondents also noted 

that they had a very difficult time selling their homes in the New York 

City area or buying homes in their new geographic area. One respondent 

who was a bargaining unit employee stated that the Service did not help 

him sell his house in the New York City area or assist with the costs 

associated with the sale. Another survey respondent stated that he lost 

money relocating because he had just refinanced his home in the New 

York City area when the Service announced the closure of the New York 

IT Center. He believed it would have been better if postal officials 

had given employees more lead time to plan their affairs before the 

Service closed the New York IT Center. Another respondent believed that 

relocating workers needed more time than the Service provided to 

research housing options, schools, and medical facilities. He believed 

that because employees had insufficient time to research these things, 

it created a social hardship on them and their families that could have 

been avoided. According to postal officials, the Service provides 

bargaining unit employees about 7 months’ notice of planned closures.



Most survey respondents who relocated to other postal IT centers 

indicated that they did so because they were concerned about the 

economic impacts they believed they would face if they remained in the 

New York City area. Forty-four of the 49 respondents who relocated 

reported that keeping their jobs for economic/financial well-being had 

been very important to them when deciding whether or not to relocate to 

another postal IT center. Forty of the 49 respondents said that 

concerns about maintaining their pension plan and retirement security 

had been a very important factor in deciding to relocate. One 

respondent indicated that he and his colleagues who relocated to Eagan 

felt that they had no real choice but to relocate if they wanted to 

maintain their financial well-being. He stated that the only option the 

Service offered him besides relocating to another postal IT center was 

to remain in the New York City area as a mail clerk or letter carrier 

with temporary saved-pay. Another respondent who relocated also stated 

that she didn’t believe she had any other viable choice besides 

relocating. She stated that she was too old to look for a nonpostal job 

and didn’t believe she could afford to remain with the Service in the 

New York City area in a non-IT position and take a reduction in pay 

when her saved pay expired. As previously noted, our analysis of the 

Service’s salary data for displaced New York IT Center employees 

confirmed that employees who relocated generally fared better 

economically than those who remained in the New York City area.



Twenty-two of the 49 relocated survey respondents also reported that in 

deciding to relocate, they had considered it very important that they 

keep their IT jobs for career advancement purposes. Twenty respondents 

also reported that they had been very concerned that as older workers, 

they would have found it very difficult to find satisfactory jobs if 

they had not relocated to other postal IT centers and kept their IT 

jobs. A respondent who relocated to another postal IT center stated 

that he had no other choice but to relocate if he wanted to continue 

working with the Service in an IT position.



Most of the 49 survey respondents who relocated to postal IT centers in 

other geographic areas tended to have fewer years of service than the 

46 respondents who remained in the New York City area. Only 16 of the 

49 respondents who relocated to another postal IT center had 15 years 

or more service, whereas 30 of the 46 respondents who stayed with the 

Service in the New York City area had 15 years of service or more. 

Otherwise, the demographics of those who relocated to a postal IT 

center in another geographic area were similar to those of the 

respondents who stayed in the New York City area. Thirty-eight of the 

49 relocated survey respondents were 40 years of age or older at the 

time the New York IT Center closed; 42 had parents, grandchildren, or 

relatives living in the New York City area; and 39 had a spouse/partner 

living with them. In contrast, 40 of the 46 respondents who remained 

with the Service in the New York City area were 40 years of age or 

older at the time the New York IT Center closed; 41 had parents, 

grandchildren, or relatives living in the New York City area; and 36 

had a spouse/partner living with them.



San Mateo IT Center Employees Anticipate Mostly Economic Impacts if 

they Opt to Stay in the Bay Area and Social Impacts if they Opt to 

Relocate to Another Postal IT Center:



San Mateo IT Center employees responding to our survey anticipate more 

economic impacts than social impacts if they choose to remain in the 

Bay Area and more social impacts if they relocate with the Service to 

another postal IT center. If the Service closes the San Mateo IT 

Center, the options available to San Mateo IT employees to minimize 

their economic and social impacts vary, depending on individual 

circumstances and job status. Some affected employees will likely seek 

other employment in the Bay Area, some will likely retire, and others 

will likely relocate to another postal IT center in order to keep their 

IT jobs.



On the basis of the best information they had available at the time, 

167 (78 percent) of the 213 San Mateo IT employees responding to our 

survey indicated that they would likely stay in the Bay Area if the 

Postal Service closes the San Mateo IT Center. Under such 

circumstances, they said they would expect to face more economic 

impacts than social impacts. Many anticipate that their decision to 

stay in the Bay Area could result in them losing their Postal Service 

jobs. According to postal officials, affected San Mateo IT employees 

will be able to apply for vacant postal positions, provided they meet 

the minimum qualifications; however, the Service does not anticipate 

holding open vacant positions in the Bay Area for these employees. 

Furthermore, the Service no longer anticipates that it will have many 

job vacancies in the Bay Area.



Thirty-six (17 percent) of the employees responding to our survey 

indicated that if the San Mateo IT Center closes, they would probably 

relocate to another postal IT center. Moreover, they anticipate facing 

more social impacts than economic impacts from their decisions. Survey 

respondents indicating they would likely relocate reported that they 

were doing so primarily for their financial well-being and retirement 

security. Many provided narrative comments in their survey responses 

describing how relocations would probably lead to family separations 

for at least a few years. Some of the married respondents indicated 

they would probably experience some economic impacts from their 

relocation decision because they would have trailing spouses who would 

be leaving their jobs in the Bay Area. The remaining 10 survey 

respondents (5 percent) indicated they were unsure what they would do 

if the Service closed the San Mateo IT Center.



Options Available to San Mateo IT Center Employees:



All San Mateo IT Center employees meeting the minimum age and service 

requirements have the option of retiring. According to postal 

officials, the Service anticipates offering early retirements to all 

eligible employees provided that the Office of Personnel Management 

approves the Service’s request, but the Service does not anticipate 

offering buy-outs. Other options available to San Mateo IT Center 

employees depend, in part, on whether they are bargaining unit or EAS 

employees. Bargaining unit employees are covered by a collective 

bargaining agreement with a no-layoff provision and are therefore 

guaranteed a job at another postal IT center. EAS employees are not 

guaranteed a job at another postal IT center. According to postal 

officials, about half of the EAS employees will be offered jobs at 

other postal IT centers. Bargaining unit and EAS employees who do not 

retire, relocate to another postal IT center, or find another postal 

job on their own will likely be separated from the Service.



Two years ago, when the IT Department first announced its proposal to 

close the San Mateo IT Center, postal officials indicated that the 

Service could likely find postal jobs for bargaining unit employees who 

wanted to stay in the Bay Area rather than relocate to another postal 

IT center. For most bargaining unit employees, this would have involved 

a downgrade to a mail clerk position. However, according to postal 

officials, most affected employees would have retained their IT pay for 

up to 2 years, after which their pay would have been reduced to the pay 

of their new positions. However, in July 2002, postal officials told us 

that conditions had changed and that the Service was no longer in a 

position to accommodate bargaining unit employees who want to stay in 

the Bay Area. San Mateo IT Center employees can still apply for any 

postal job vacancies, provided they meet the minimum qualifications; 

however, few vacancies are anticipated for the Bay Area. Postal 

officials said that because of recent drops in mail volumes and 

advances in automated mail processing, the Service now has an excess of 

mail clerks in the Bay Area. Nevertheless, postal officials indicated 

that in keeping with the Service’s collective bargaining agreement with 

APWU, all bargaining unit employees would be offered jobs in one of its 

other postal IT centers--although most of the job offers would probably 

be for positions in its Eagan IT Center.



The Service has indicated that it also plans to make available to all 

EAS employees the services of a private job search firm to help them 

find employment outside the Service. However, according to postal 

officials, the Service has no plans at this time to extend these 

services to its bargaining unit employees because of their no-layoff 

clause, which EAS employees do not have. Postal officials said that the 

benefits provided San Mateo bargaining unit employees are specifically 

governed by its collective bargaining agreement with the APWU. In 

appendix I, we present (1) demographic data for San Mateo IT Center 

employees and displaced New York IT Center employees who responded to 

our survey and (2) the likely options/opportunities for San Mateo 

employees and options/opportunities that were available for displaced 

New York employees.



San Mateo IT Center Employees Planning to Stay in the Bay Area 

Anticipate More Economic than Social Impacts:



Essentially all of the 167 San Mateo survey respondents who indicated 

that they would likely stay in the Bay Area reported that they 

anticipate their decisions will result in more economic impacts than 

social impacts. According to postal officials, those staying in the Bay 

Area will likely lose their postal IT jobs and will not likely find 

other jobs with the Postal Service because of its efforts to downsize. 

Further, the respondents were concerned that because of the tight job 

market in the technology sector, they might be unable to find nonpostal 

IT jobs in the Bay Area. Of the 167 respondents, 140 (84 percent) 

anticipated difficulty finding jobs to adequately support their 

families. Finally, respondents said they were concerned that if they 

could not find satisfactory jobs with the Postal Service or the federal 

government, they would lose their ties to the federal retirement and 

health care systems. Respondents planning to stay in the Bay Area 

generally anticipate a range of outcomes that include retiring earlier 

than planned to adjusting to a reduced standard of living.



San Mateo respondents who indicated that they planned to stay in the 

Bay Area cited a number of reasons for their decisions, including age, 

longevity in the Bay Area, extensive family and social ties in the 

area, and working spouses with substantial time invested in their 

careers. Three-fourths of the respondents planning to stay are over 45 

years old; have lived in the Bay Area for more than 20 years; and 

indicated that they have extensive family ties, social ties, and other 

responsibilities in the area. These older respondents also typically 

have working spouses who are reluctant to leave their jobs and lose 

their pension benefits. For example, 79 of the 134 respondents (59 

percent) who provided reasons for not relocating identified concerns 

with spouses’ careers as a primary motivator in their decision not to 

relocate. This is not surprising since 49 of the 79 respondents (62 

percent) reported that their spouses contributed at least 50 percent to 

the household income.



San Mateo respondents who indicated they would not likely relocate also 

reported having high school and college age children reluctant or 

unwilling to relocate and aging parents in need of assistance who would 

be left behind. Of the 60 respondents with high school and college age 

students, 58 (97 percent) said keeping their family together was a very 

important factor in deciding not to relocate. In addition, 78 percent 

of those deciding not to relocate cited maintaining social and 

community ties as an important factor in their decision. Over 70 

percent also cited health issues and a reluctance to sell their homes 

as factors in deciding not to relocate. A similar percentage were also 

concerned that maintaining their health care coverage might become 

difficult should they lose their postal IT jobs-a particular concern if 

family members have serious health conditions and continuity of care 

and coverage for preexisting conditions becomes critical.



Under the Service’s collective bargaining agreement with APWU, San 

Mateo IT Center bargaining unit employees are guaranteed jobs at other 

postal IT centers. Thus, these employees have the option of relocating 

with their jobs to other postal IT centers and continuing employment 

with the Service. Conversely, EAS employees are not guaranteed jobs, 

and some San Mateo EAS employees will likely not have the option of 

relocating and continuing employment with the Service. According to the 

Service, the option to relocate will likely be extended to about half 

of the EAS employees. One respondent who was an EAS employee, age 49 

with 15 years of service, commented that not having the assurance of 

being able to relocate to another postal IT center has increased his 

anxiety about the potential closure. He reported that he is not 

eligible for retirement and doubts that he will be offered other 

employment with the Service. He indicated that he essentially has no 

option but to find a nonpostal job because he is the primary 

breadwinner and has many years to go on his mortgage payments. He 

indicated that the Service will pay him severance pay equal to 4 or 5 

months’ salary, but he anticipates much difficulty finding another IT 

job in the Bay Area because of the tight labor market for technology 

positions.



The majority of the 167 San Mateo respondents who anticipate staying in 

the Bay Area reported that they will likely seek whatever postal 

employment that may be available in the Bay Area, although many 

indicated in their narrative responses that such job prospects do not 

look good. The remaining respondents who anticipate staying in the Bay 

Area reported that they would likely retire or seek nonpostal 

employment in the Bay Area. (See fig. 4 for details.):



Figure 4: Options San Mateo Employees Expect to Pursue if Staying in 

the Bay Area:



[See PDF for image]



Note: San Mateo IT Center employees who responded to GAO survey.



[End of figure]



San Mateo respondents indicating that they would likely seek other 

employment in the Bay Area were skeptical about finding such 

employment. According to postal officials, finding other postal 

employment is unlikely because of Servicewide downsizing. Some 

respondents thought they might qualify for other postal management or 

administrative positions, but they were not optimistic about the 

availability of such positions. Both EAS and bargaining unit 

respondents seeking nonpostal employment anticipated difficulties 

because of the current slump in IT employment and the added difficulty 

faced by older workers in finding new employment. Additionally, those 

anticipating seeking new employment were concerned that their earnings 

would likely be less and that they would lose current health and 

retirement benefits.



Some San Mateo respondents indicated they would be willing to take a 

non-IT job if it would mean continued employment with the Service in 

the Bay Area. For example, one younger respondent said she would be 

willing to transfer from her computer programmer/analyst job to other 

kinds of postal work in order to stay in the Bay Area because both her 

and her husband’s families live nearby, her mother cares for her baby 

while she is at work, and her husband’s parents are in frail health and 

need constant assistance. Other respondents indicated they wanted to 

stay in the Bay Area but did not want to take a non-IT job. For 

example, one senior systems analyst, making $67,000 per year, said he 

would rather take early retirement and try to find a nonpostal job in 

his field than take a mail clerk job at $40,000 per year.



According to postal officials, employment opportunities may not be very 

good for individuals wishing to stay in the Bay Area. Postal officials 

said in July 2002 that the job market for IT positions in the Bay Area 

had changed significantly in the last 2 years. They said that 2 years 

ago, IT jobs were plentiful in the Bay Area and that the Service had 

difficulty attracting and keeping IT personnel. More recently, however, 

they reported that those conditions had changed. They said that in the 

current economic environment, IT positions in the Bay Area have become 

difficult to find. Additionally, postal officials indicated that they 

could no longer accommodate San Mateo bargaining unit employees who 

might want to stay in the Bay Area as mail clerks because the Service 

now has excess employees in the Bay Area.



Fifty-two of the 167 San Mateo respondents who did not anticipate 

relocating to another postal IT center reported that that they would 

likely exercise their option to retire. Forty-five of those respondents 

said their retirement would be earlier than planned, and 39 said they 

would face financial difficulties in retirement. Of the respondents 

indicating that they would likely retire, 22 said it would be very 

difficult to maintain or find adequate housing on their reduced 

incomes. For example, one respondent said that her reduced income would 

be insufficient to cover her health benefits, mortgage payments, and 

other expenses and that finding supplementary employment would be 

difficult at her age.



One respondent who was an EAS employee, age 50 with 25 years of 

service, said he would likely take early retirement because he does not 

think that the Service will offer him another job. He indicated that he 

must stay in the Bay Area because his wife will not be eligible to 

retire for 5 years, his daughter attends a local college, and his aging 

parents need regular assistance. Because retirement would considerably 

reduce his income, he said he would have to find other work in order to 

meet his mortgage payments and other expenses.



In discussions of the survey results with postal officials, they 

expressed surprise that such a large percentage of affected San Mateo 

IT Center employees had indicated they would likely stay in the Bay 

Area and compete for jobs in a tight labor market, rather than relocate 

and continue their employment with the Postal Service. The officials 

said they expected that more affected IT employees would eventually 

decide to relocate when they encountered difficulty finding other 

suitable jobs in the Bay Area. The officials also said that based on 

past experience, about one-third of all employees would likely relocate 

if the Service closes the San Mateo IT Center. As previously noted, the 

Service plans to offer all EAS employees the services of a private job 

search firm to help them find nonpostal jobs if they decide to seek 

outside employment. However, the Service has no current plans to extend 

these services to bargaining unit employees because they are guaranteed 

jobs at another postal IT center.



San Mateo IT Center Employees Who Are Likely to Relocate Anticipate 

Primarily Social Impacts, and Some with Trailing Spouses Also 

Anticipate Economic Impacts:



Nearly all of the 36 San Mateo survey respondents who indicated that 

they would likely relocate to another postal IT center anticipate 

social impacts if they relocate. As a group, these respondents were 

most concerned about the impact that relocating would have on their 

spouses and/or other family members.



Twenty-nine of the 36 San Mateo respondents (81 percent) who said they 

intend to relocate to other postal IT centers are over age 45, and many 

are concerned that the relocation would split up their families. 

Twenty-two of the 36 respondents have spouses; and 9 said that if they 

relocated, their spouses would probably not relocate with them. The 

nine respondents reported several reasons why they did not believe 

their spouses would relocate:



* spouse has lived in the Bay Area for 30 or more years,



* spouse has aging parents in the Bay Area who need care,



* spouse has children who would not be relocating, and:



* spouse’s job pays well (about half the family income).



Twelve of the 18 San Mateo respondents who had children and/or 

grandchildren living in their households reported that at least 1 

family member would be left behind. One respondent commented that 

leaving his 7-year-old son with no father present could have a life-

long negative impact. Another said relocation would separate him from 

his wife and three children for 5 to 6 years until he was eligible to 

retire. He stated that the economic impacts for him would be (1) the 

cost of maintaining two households, (2) travel costs between the Bay 

Area and his new job for family visits, and (3) a more expensive 

telephone bill. Additionally, 30 of the 36 respondents reported having 

aging parents or relatives in the Bay Area, and 25 said relocation 

would make current or future care for them difficult. In some cases, 

the respondents reported that their parents relied on them to assist 

with doctors’ appointments, aid their limited English language skills, 

and be available in case of emergencies.



San Mateo respondents likely to relocate also reported concerns with 

losing community and social ties and with adjusting to new communities, 

cultures, and work environments. These concerns were particularly 

reported among ethnic minority respondents, who accounted for more than 

half of those likely to relocate. They expressed concerns about leaving 

their important cultural ties in the Asian and Hispanic communities of 

the Bay Area. For example, one respondent commented that his wife, of 

Asian descent and with limited English language skills, would have a 

difficult time leaving the Bay Area.



Three-fourths of San Mateo respondents who anticipated relocating to 

another postal IT center reported that the relocation would strain 

their family relationships, and one commented that it would likely lead 

to divorce. Although respondents anticipated strained family 

relationships, several saw the relocation as temporary, until they were 

eligible to retire.



Other San Mateo respondents who said they would likely relocate 

reported concerns about anticipated economic impacts associated with 

trailing spouses. Some reported concerns about the possible loss of 

spousal income and benefits if their working spouses were to relocate 

and be unable to find employment at the new location. For example, 

eight respondents reported having a trailing spouse who would be 

looking for employment after relocation, and seven of those thought 

employment would be difficult for their spouses to find. One respondent 

commented that relocating her spouse would be a major problem because 

her husband is a journalist and has already learned that prospects for 

such jobs at the new location are poor. Postal officials indicated that 

in cases where the trailing spouse is also a postal employee, the 

Service would work with the trailing spouse to find suitable postal 

employment at the new location. However, officials did not anticipate 

that the Postal Service would offer employment services to trailing 

spouses who are not postal employees.



Nearly all of the 36 San Mateo respondents who indicated that they 

would likely relocate reported that the cost, time, and energy involved 

in moving would be difficult for them. Twenty-three respondents 

reported being homeowners who will face the prospect of selling and 

buying homes. While relocating to a lower housing cost area could 

provide them some financial advantage, several respondents commented 

that the differential costs and the loss of preferential property tax 

status would make it difficult for them to ever move back to the Bay 

Area.



Experience Shows that Providing Job-Finding Assistance Is Beneficial to 

Employers and Employees:



We have previously reported that when employees lose their jobs it can 

be a traumatic experience; therefore, progressive organizations often 

work with employees to help them through such difficult times.[Footnote 

23] We reported that not only does job loss disrupt employees’ personal 

lives and plans, but it can also cause stressful concerns about finding 

another job. Of 25 organizations we surveyed for our 1995 report on job 

loss issues, 23 had devised programs to help employees who lost their 

jobs. These programs included job placement assistance, employee and 

family counseling, relocation assistance, and training. Some of the 

organizations surveyed provided self-administered job placement 

assistance while others used outside job assistance companies. Also, we 

have previously reported that the Department of Defense was very 

successful in minimizing the impacts of maintenance depot closures on 

employees, primarily through a comprehensive outplacement effort. 

[Footnote 24]



Our prior work on job loss issues further showed that, in general, 

organizations that offer job placement assistance to displaced 

employees also benefit. Providing job placement assistance helped 

sponsoring organizations (1) avoid lawsuits by displaced employees, (2) 

reduce unemployment costs, and (3) enhance their reputations in the 

community by demonstrating that they cared about their employees. 

Similar to other organizations that have helped displaced employees, 

the Service has indicated that it plans to provide assistance to San 

Mateo IT Center employees to minimize the impact, if it decides to 

close the center. In addition to providing the relocation and 

separation benefits mentioned earlier, the Service has indicated that 

it plans to hold a series of meetings with affected San Mateo employees 

and their families to provide them with needed information on available 

options and opportunities and to address employees’ questions about the 

closure. Additionally, as noted earlier, the Service plans to provide 

the services of a job search firm to San Mateo EAS employees, although 

bargaining unit employees will not receive similar services because 

such services are not provided for by the collective bargaining 

agreement that governs IT bargaining unit employees’ benefits. 

According to postal officials, services to be provided by the job 

search firm are to include, among other things, seminars on change 

management, skills development, resume writing, negotiation skills, how 

to network, how to find a job on the Internet, and group counseling and 

coaching.



In 2000, when the IT Department proposed closing the San Mateo IT 

Center, it estimated that 33 percent of affected employees would likely 

relocate to other postal IT centers and possibly need some relocation 

assistance. The IT Department acknowledged that because it expected 

that only 33 percent of affected employees would relocate, it would 

need to rely on contractor support to cover for the loss of 

knowledgable employees who would not be relocating from the San Mateo 

IT Center to other postal IT centers. Our survey of San Mateo 

employees, however, indicates that the IT Department’s estimate of 

relocating employees may be overstated; and its need for contractor 

support could, therefore, be greater than planned. According to our 

survey results, only 17 percent of San Mateo employees currently 

anticipate that they would likely relocate to another postal IT center 

if the Service closes the San Mateo IT Center. Fifty-nine percent of 

the respondents (who indicated they would likely stay in the Bay Area 

and provided reasons for not relocating) identified concerns with their 

spouses’ careers as a primary motivator in their decision not to 

relocate. Further, seven of the eight respondents relocating with 

trailing spouses who would be looking for jobs at the new location 

expressed concern that the spouses would have difficulty finding 

suitable employment.



Relocation experts have noted that because of the prevalence of dual-

income households in the workforce, employees who must make a 

relocation choice often base their decision on whether or not their 

trailing spouses can find suitable employment at the new location. 

Given this, relocation experts report more companies are providing 

employment assistance to trailing spouses, such as resume preparation 

and review, paying job finders-fees, assisting with finding employment, 

and reimbursing trailing spouses for lost income while they seek 

employment at the new location.



When the IT Department first proposed closing the San Mateo IT Center 

in 2000, economic conditions and the employment outlook in the Bay Area 

were noticeably better than they are today; so much so that the Service 

anticipated that postal positions would be available in the Bay Area 

for many displaced employees who did not relocate. However, because of 

changed economic conditions, recent drops in mail volumes, and advances 

in automated mail processing, the Service no longer expects that it 

will have job openings to accommodate employees who do not relocate. As 

noted earlier, although the Service has indicated that it plans to make 

the services of a private job search firm available to San Mateo EAS 

employees, the Service has no plans at this time to extend similar 

services to San Mateo IT Center bargaining unit employees because their 

benefits are governed by the Service’s collective bargaining agreement 

with the APWU. Consequently, many bargaining unit employees will face a 

dilemma if the Service closes the San Mateo IT Center. If bargaining 

unit employees do not relocate, they will likely lose their postal 

employment and would not have the services of a private job search firm 

to help them find other employment. Additionally, bargaining unit and 

EAS employees with working spouses who are not postal employees face a 

dilemma concerning the impact a relocation would have on their trailing 

spouses’ careers and their families’ household incomes. That is, if 

these employees relocate, will their trailing spouses be able to find 

suitable employment at the new location or will household incomes and 

spouses’ careers suffer?



By not addressing employees’ concerns about trailing spouses, the 

Service may be missing an opportunity to entice more of its San Mateo 

IT Center employees to relocate to other postal IT centers, thereby 

exposing itself to higher than necessary contractor costs. If the 

Service decides to close the San Mateo IT Center, it is required under 

its agreement with APWU to notify the union of its decision and offer 

to meet with national level officials to discuss the closure’s impact 

on affected employees. Historically, discussions preceding previous 

closures have resulted in additional provisions for affected bargaining 

unit employees, which were specified in Memorandums of Understanding 

that modified existing collective bargaining agreements. According to 

postal officials, the Service expects that if it decides to close the 

San Mateo IT Center, the APWU will request a meeting to discuss, among 

other things, additional benefits for affected bargaining unit 

employees.



Conclusions:



The Service is following its Investment Review and Approval Process as 

it moves toward a decision about closing the San Mateo IT Center. 

However, economic conditions have changed significantly since 2000 when 

the IT Department prepared the DAR in support of closing the San Mateo 

IT Center. Also, the DAR does not reflect the impact that the Service’s 

announced plans to automate and reengineer its field accounting 

activity--which involves closing its 85 district accounting offices and 

consolidating the residual activities into its 3 Accounting Service 

Centers--could have on projected savings associated with the proposal 

to close the San Mateo IT Center. Therefore, the Service may be using 

dated information as it goes about making its closure decision 

regarding the San Mateo IT Center. Finally, the employment outlook is 

not nearly as encouraging now as it was in 2000 when employment 

conditions in the Bay Area were better and the Service indicated it 

would have postal positions available for bargaining unit employees who 

did not want to relocate. Given these changed conditions, bargaining 

unit employees who do not relocate might encounter difficulty in 

finding employment in the Bay Area. Further, some San Mateo IT 

employees may be reluctant to relocate because of concerns that their 

trailing spouses might have difficulty finding jobs at the new 

location.



Recommendations for Executive Action:



We recommend that before the Service makes its decision regarding 

whether to close the San Mateo IT Center, the PMG should direct the IT 

Department to review and update the economic assumptions and analyses 

used in the San Mateo DAR and make revisions, if appropriate, to better 

reflect current economic conditions and recent plans to automate and 

reengineer its field accounting activity.



If the Service decides to close the San Mateo IT Center, we recommend 

that the PMG consider:



* During discussions with APWU regarding the IT center’s closure, 

offering to help bargaining unit employees find jobs if they decide to 

remain in the Bay Area.



* During discussions with APWU regarding the IT center’s closure, 

offering some assistance--such as resume preparation and review 

services--to the trailing spouses of bargaining unit employees who 

decide to relocate to another postal IT center.



* Providing some assistance-such as resume preparation and review 

services--to the trailing spouses of EAS employees who decide to 

relocate to another postal IT center.



Agency Comments and Our Evaluation:



The Postal Service provided comments on a draft of this report in a 

letter from the chief financial officer and executive vice president 

dated December 19, 2002. These comments are summarized below and are 

reprinted in appendix II. Postal officials also provided technical and 

clarifying comments, which we have incorporated into the report where 

appropriate.



Although the Service did not comment on our findings, it did agree with 

our recommendations. The Service reiterated that it has not yet made a 

decision regarding the proposed closure of the San Mateo IT Center and 

will reevaluate the proposed closure as part of its overall strategy to 

rationalize its administrative infrastructure and meet its data 

processing needs with the appropriate facilities, technologies, and 

staff. The Service indicated that it would implement our recommendation 

that the DAR be reviewed and updated before a decision is made about 

closing the San Mateo IT Center. Specifically, the Service said that 

before making any decisions regarding possible disposition of the 

building and property, it would update the information in the DAR. The 

Service further stated that it was aware that conditions in the 

commercial building market in the Bay Area have changed since the San 

Mateo DAR was submitted. The Service stated that it might need to 

revisit the proposal to sell the building in light of an updated 

assessment of the building’s fair market value, the viability of 

potential outlease or leaseback options, and the space needs of the 

expanded Accounting Service Center.



In response to our other recommendations that the Service consider 

offering to (1) help bargaining unit employees find jobs if they remain 

in the Bay Area and (2) provide some assistance to help the trailing 

spouses of employees who relocate find jobs, the Service indicated that 

it would try to minimize the negative effects of relocation. The 

Service said that if it determines that closing the San Mateo IT Center 

and relocating its functions to other postal IT centers are still 

critical to the Service’s IT strategy, the Service will adhere to the 

provisions of its bargaining unit agreements. The Service further 

stated that to the extent possible, consistent with those agreements, 

it will attempt to mitigate the negative impacts that relocation may 

have on employees and their families.



As agreed with your offices, unless you publicly announce its contents 

earlier, we plan no further distribution of this report for 30 days 

after the date of this letter. At that time, we will send copies of 

this report to the Chairmen and Ranking Minority Members, Senate 

Committee on Governmental Affairs and its Subcommittee on International 

Security, Proliferation, and Federal Services; and to the Chairman, 

House Committee on Government Reform. We will also send copies of this 

report to the Postmaster General and Chief Executive Officer, U.S. 

Postal Service, and the President of the American Postal Workers Union. 

In addition this report will be available at our Web site at http://

www.gao.gov.



Major contributors to this report included Gerald P. Barnes, Isidro L. 

Gomez, Stuart M. Kaufman, Roger L. Lively, Donald J. Porteous, and 

Charles F. Wicker. If you have any questions about this letter or the 

appendixes, please contact me or Mr. Barnes on (202) 512-2834 or at 

ungarb@gao.gov or barnesgp@gao.gov.





Bernard L. Ungar

Director, Physical Infrastructure Issues:



Signed by Bernard L. Ungar



[End of section]



Appendix I: Comparative Demographic Data and Options for San Mateo and 

Displaced New York IT Center Employees:



According to the responses to our survey, San Mateo IT employees, on 

average, are older and have more years of service than displaced New 

York IT Center employees at the time of the center’s closure. The 

demographics of San Mateo IT Center employees indicating they would not 

likely relocate and displaced New York IT Center employees who did not 

relocate were more similar than the demographics of San Mateo IT Center 

employees who indicated they would likely relocate and displaced New 

York IT employees who relocated. Table 1 provides comparative 

demographic data for San Mateo and displaced New York IT employees. 

Data are shown for employees who relocated (or are likely to relocate 

in the case of San Mateo employees) and those who did not relocate (or 

are likely not to relocate in the case of San Mateo employees). Because 

our data for New York IT Center employees do not include all displaced 

New York employees, the data may not be totally representative. For 

example, during the 9 years since the New York IT Center closed, some 

of its displaced employees may have retired and are therefore not 

reflected in our data. If data were available for this group, it would 

have tended to increase the average age and years of service of 

displaced New York IT Center employees at the time of closure.



Additionally, displaced New York IT Center employees had more favorable 

options/opportunities to lessen the impact of the closure than San 

Mateo IT Center employees are likely to have. For example, all 

displaced New York IT Center employees had the option of relocating 

with their jobs to another postal IT center or continuing to work for 

the Service in the same geographic area (though not necessarily in an 

IT position), whereas San Mateo IT Center employees likely will not 

have this option. Table 2 displays the range of options/opportunities 

likely to be available to San Mateo IT Center employees and options/

opportunities that were available to displaced New York IT Center 

employees. Options/opportunities are similar for early retirements, 

assistance programs to help EAS employees find employment outside the 

Service, and help for trailing spouses who are postal employees and 

need to find suitable employment at the new location. Options/

opportunities are not similar with regard to buy-outs, ability to 

continue employment with the Service in some capacity, saved-pay 

protections, and the availability of local postal and nonpostal jobs.



Table 1: Demographic Data for San Mateo IT Employees Compared with 

Displaced New York IT Employees’ Demographic Data:



Demographic characteristics: Employees indicating they would likely 

relocate or did relocate to another postal IT center; San Mateo IT 

Center employees: 36; Displaced New York IT Center employees[A]: 49.



Demographic characteristics: Ages 45 to 49; San Mateo IT Center 

employees: 8 (22%); Displaced New York IT Center employees[A]: 18 

(37%).



Demographic characteristics: Ages 50 to 54; San Mateo IT Center 

employees: 10 (28%); Displaced New York IT Center employees[A]: 3 (6%).



Demographic characteristics: Ages 55 or older; San Mateo IT Center 

employees: 11 (31%); Displaced New York IT Center employees[A]: 2 (4%).



Demographic characteristics: 15 or more years of service; San Mateo IT 

Center employees: 27 (75%); Displaced New York IT Center employees[A]: 

16 (33%).



Demographic characteristics: 20 or more years of service; San Mateo IT 

Center employees: 16 (44%); Displaced New York IT Center employees[A]: 

7 (14%).



Demographic characteristics: Living with spouse/partner; San Mateo IT 

Center employees: 22 (61%); Displaced New York IT Center employees[A]: 

39 (80%).



Demographic characteristics: Living in dual-income household; San Mateo 

IT Center employees: 14 (39%); Displaced New York IT Center 

employees[A]: 32 (65%).



Demographic characteristics: School-age[B] children living in 

household; San Mateo IT Center employees: 18 (50%); Displaced New York 

IT Center employees[A]: 30 (61%).



Demographic characteristics: Providing assistance to elderly parents/

relatives in the area; San Mateo IT Center employees: 22 (61%); 

Displaced New York IT Center employees[A]: 27 (55%).



Demographic characteristics: Employees indicating they would likely not 

relocate or did not relocate; San Mateo IT Center employees: 167; 

Displaced New York IT Center employees[A]: 46.



Demographic characteristics: Ages 45 to 49; San Mateo IT Center 

employees: 41 (25%); Displaced New York IT Center employees[A]: 11 

(24%).



Demographic characteristics: Ages 50 to 54; San Mateo IT Center 

employees: 44 (26%); Displaced New York IT Center employees[A]: 8 

(17%).



Demographic characteristics: Age 55 or older; San Mateo IT Center 

employees: 44 (26%); Displaced New York IT Center employees[A]: 2 (4%).



Demographic characteristics: 15 or more years of service; San Mateo IT 

Center employees: 125 (75%); Displaced New York IT Center employees[A]: 

30 (65%).



Demographic characteristics: 20 or more years of service; San Mateo IT 

Center employees: 81 (49%); Displaced New York IT Center employees[A]: 

10 (22%).



Demographic characteristics: Living with spouse/partner; San Mateo IT 

Center employees: 124 (74%); Displaced New York IT Center employees[A]: 

36 (78%).



Demographic characteristics: Living in dual-income household; San Mateo 

IT Center employees: 99 (59%); Displaced New York IT Center 

employees[A]: 29 (63%).



Demographic characteristics: School-age children living in household; 

San Mateo IT Center employees: 78 (47%); Displaced New York IT Center 

employees[A]: 27 (59%).



Demographic characteristics: Providing assistance to elderly parents/

relatives in the area; San Mateo IT Center employees: 93 (56%); 

Displaced New York IT Center employees[A]: 22 (48%).



Source: GAO.



Note: San Mateo IT Center and displaced New York IT Center employees 

who responded to GAO survey.



[A] Responses reflect employees’ recollections of circumstances at the 

time the New York IT Center closed.



[B] School age was defined as ages 5 to 22.



[End of table]



Table 2: Likely Options/Opportunities for San Mateo IT Employees 

Compared with Options/Opportunities that Were Available for Displaced 

New York IT Employees:



Option/opportunity: Take early retirement; Options/opportunities 

likely available to San Mateo IT employees: According to postal 

officials, if the Service decides to close the San Mateo IT Center it 

will offer early retirement to all eligible employees provided the 

Office of Personnel Management grants the Service such authority.; 

Options/opportunities that were available to New York IT employees: The 

Service offered early retirement to all eligible employees..



Option/opportunity: Receive buy-out; Options/opportunities likely 

available to San Mateo IT employees: According to postal officials, the 

Service does not anticipate offering buy-outs.; Options/opportunities 

that were available to New York IT employees: At the time of the New 

York IT Center closure, the Service was offering, as part of a 

nationwide restructuring, a monetary incentive of 6 months’ pay to all 

eligible employees who opted to retire or take an early-out..



Option/opportunity: Relocate with job; Options/opportunities likely 

available to San Mateo IT employees: [Empty]; Options/opportunities 

that were available to New York IT employees: [Empty].



Option/opportunity: Bargaining unit employees; Options/opportunities 

likely available to San Mateo IT employees: San Mateo bargaining unit 

employees are covered by a collective bargaining agreement with a no-

layoff provision and are guaranteed the option of relocating with their 

jobs to other postal IT centers.; Options/opportunities that were 

available to New York IT employees: New York bargaining unit employees 

were covered by a collective bargaining agreement with a no-layoff 

provision and were therefore guaranteed jobs at other postal IT 

centers. Additionally, a Memorandum of Understanding between the 

Service and APWU concerning the closure provided that bargaining unit 

employees who wanted to continue employment with the Service in the New 

York City area (though not necessarily in IT jobs) could do so..



Option/opportunity: EAS employees; Options/opportunities likely 

available to San Mateo IT employees: The Service anticipates offering 

only about half of its 72 EAS employees the opportunity to relocate 

with their jobs to other postal IT centers.; Options/opportunities that 

were available to New York IT employees: All EAS employees had the 

option of continuing employment with the Service. EAS employees who did 

not want to relocate with their jobs could continue employment with the 

Service in the New York City area, although not necessarily in an IT 

position..



Option/opportunity: Assistance in helping trailing spouses find 

employment at new location; Options/opportunities likely available to 

San Mateo IT employees: According to postal officials, the Service will 

work with trailing spouses who are postal employees to find suitable 

postal employment at the new location. No special assistance is planned 

for trailing spouses who are not postal employees.; Options/

opportunities that were available to New York IT employees: According 

to postal officials, the Service worked with trailing spouses who were 

postal employees to find suitable postal employment at the new 

location. No special assistance was provided to trailing spouses who 

were not postal employees..



Option/opportunity: Continue employment with the Service in the same 

geographic area; Options/opportunities likely available to San Mateo IT 

employees: [Empty]; Options/opportunities that were available to New 

York IT employees: [Empty].



Option/opportunity: Bargaining unit employees; Options/opportunities 

likely available to San Mateo IT employees: Initially, the Service 

anticipated that it would be able to accommodate bargaining unit 

employees who wanted to remain in the Bay Area in non-IT positions. 

More recently, it reported that because of recent drops in mail volumes 

and advances in automated mail processing, it now has excess mail 

clerks in the Bay Area. Accordingly, the Service does not anticipate 

that it will be able to accommodate; bargaining unit employees who want 

to remain; Options/opportunities that were available to New York IT 

employees: A Memorandum of Understanding between the Service and APWU 

concerning the New York closure provided that bargaining unit employees 

who wanted to continue employment with the Service in the New York City 

area (though not necessarily in IT jobs) could do so..



Options/opportunities likely available to San Mateo IT employees: 

Option/opportunityEAS employees: in the Bay Area. Nevertheless, if the 

Service decides to close the San Mateo IT Center, this issue will 

likely be a part of the discussions between the Service and the APWU on 

the impact that the closure would have on employees.; Options/

opportunities that were available to New York IT employees: Option/

opportunityEAS employees: [Empty].



Option/opportunity: EAS employees; Options/opportunities likely 

available to San Mateo IT employees: According to postal officials, 

very few EAS employees will likely be able to continue employment with 

the Service in the Bay Area. Employees can apply for jobs in the Bay 

Area provided they meet the minimum qualifications for the job; 

however, the Service does not anticipate that it will have many vacancy 

announcements in the Bay Area. According to postal officials, the 

Service currently has excess employees in the Bay Area.; Options/

opportunities that were available to New York IT employees: All EAS 

employees who wanted to continue employment with the Service could do 

so. EAS employees not wanting to relocate to other postal IT centers 

had the option of continuing employment with the Service in non-IT 

positions in the New York City area..



Option/opportunity: Other job opportunities; Options/opportunities 

likely available to San Mateo IT employees: [Empty]; Options/

opportunities that were available to New York IT employees: [Empty].



Option/opportunity: Within the Service; Options/opportunities likely 

available to San Mateo IT employees: The Service is currently in a 

downsizing mode, and job opportunities are limited.; Options/

opportunities that were available to New York IT employees: The 

Service, just prior to the closure, had undergone a major 

restructuring, resulting in numerous vacant positions and job 

opportunities for employees affected by the New York IT Center’s 

closure..



Option/opportunity: Outside the Service; Options/opportunities likely 

available to San Mateo IT employees: According to postal officials, job 

opportunities for nonpostal IT positions are very limited in the Bay 

Area, unlike 2 years ago when IT positions were readily available. San 

Mateo IT employees responding to our survey also indicated that, 

overall, job opportunities in the Bay Area were tight.; Options/

opportunities that were available to New York IT employees: Data on the 

experience of New York ITemployees seeking nonpostal jobs in the New 

York City area at the time of closure are unknown..



Option/opportunity: Avoid reductions in pay; Options/opportunities 

likely available to San Mateo IT employees: [Empty]; Options/

opportunities that were available to New York IT employees: [Empty].



Option/opportunity: Bargaining unit employees; Options/opportunities 

likely available to San Mateo IT employees: According to postal 

officials, bargaining unit employees at the San Mateo IT Center will 

not likely have the option of continuing employment with the Postal 

Service in the Bay Area, even in non-IT positions. However, should 

these employees find other postal employment, the Service anticipates 

that such employees would likely receive saved-pay protection for up to 

2 years.; Options/opportunities that were available to New York IT 

employees: Employees who wanted to stay in the New York City area and 

voluntarily transferred to lower paid positions received saved-pay 

protection for 1 year. This was provided for in the Memorandum of 

Understanding agreed to by the Service and the APWU concerning the New 

York IT Center’s closure..



Option/opportunity: EAS employees; Options/opportunities likely 

available to San Mateo IT employees: According to postal officials, EAS 

employees at the San Mateo IT Center will not likely have the option of 

continuing employment with the Postal Service in the Bay Area, even in 

non-IT positions. However, should these employees be reassigned to 

lower paying positions, they would, in general, receive saved-pay for 2 

years.; Options/opportunities that were available to New York IT 

employees: Initially, EAS employees who stayed in the New York City 

area and took lower paid positions as a result of the closure believed 

they would have saved-pay protection for 2 years. However, the Service 

later announced that EAS employees taking lower paid positions as a 

result of the closure would receive permanent saved-pay protection..



Option/opportunity: Assistance in finding employment outside the 

Service; Options/opportunities likely available to San Mateo IT 

employees: According to postal officials, should the Service decide to 

close the San Mateo IT Center, it will offer EAS employees the services 

of a private job search firm to help them find nonpostal employment. 

Currently, the Service has no plans for extending these services to its 

bargaining unit employees whose terms of employment are specifically 

provided for under the Service’s collective bargaining agreement with 

the APWU.; Options/opportunities that were available to New York IT 

employees: The Service made available the services of a private job 

search firm to any EAS employee who wanted to find nonpostal 

employment. Bargaining unit employees were not offered such services, 

as they were not provided for under the contract or Memorandum of 

Understanding between the Service and APWU concerning the closure..



Option/opportunity: Involuntary separations; Options/opportunities 

likely available to San Mateo IT employees: According to postal 

officials, EAS and bargaining unit employees who do not to relocate, 

retire, or find other postal employment on their own will likely be 

separated from the Service.; Options/opportunities that were available 

to New York IT employees: According to postal officials, there were no 

involuntary separations associated with the New York IT Center 

closure..



Source: U.S. Postal Service.



[End of table]



[End of section]



Appendix II: Comments from the U.S. Postal Service:



RICHARD J. STRASSER, JR. CHIEF FINANCIAL OFFICER, 

EXECUTIVE VICE PRESIDENT:



UNITED STATES POSTAL SERVICE:



December 19, 2002:



Mr. Bernard L. Ungar:



Director, Physical Infrastructure Issues 

United States General 

Accounting Office Washington, DC 20548-0001:



Dear Mr. Ungar:



Thank you for providing the Postal Service the opportunity to review 

and comment on the GAO draft report, U.S. Postal Service: Employee 

Issues Associated With the Potential Closure of the San Mateo IT 

Center.



During the approximately two years that the proposal to close San Mateo 

has been on hold, pending the report’s issuance, we have, of necessity, 

continued to pursue strategies that will provide cost effective and 

efficient information services for our operations and administrative 

functions. At this time we have not made a decision concerning San 

Mateo. We will reevaluate our proposed closure as part of our overall 

strategy to rationalize our administrative infrastructure, meeting the 

Postal Service’s data processing needs with the appropriate facilities, 

technologies and staff.



If we determine that continuing to own and maintain the San Mateo 

building no longer fits within our Information Technology (IT) 

strategy, we will, as a matter of prudent decision making and as the 

report recommends, update the information in the Decision Analysis 

Report (DAR) before we make any decisions regarding possible 

disposition of the building. We also realize that the conditions in the 

commercial building market in the San Francisco Bay area have changed 

since the DAR was submitted. The proposal to sell the building may need 

to be revisited in light of an updated assessment of the building’s 

fair market value, the viability of potential outlease or leaseback 

options and the space needs of the expanded Accounting Service Center. 

If we determine that closing San Mateo and relocating its functions to 

other centers is still critical to our IT strategy, we will adhere to 

the provisions of our bargaining unit agreements, and to the extent 

possible consistent with those agreements, we will attempt to mitigate 

the negative impacts that relocation may have.



If you or your staff would like to discuss any of these comments, I am 

available at your convenience.



Sincerely, 

Richard J. Strasser, Jr.



Signed by Richard J. Strasser, Jr.



475 -’ENFANT PLAZA SW WASHINGTON DC 20260-5000 202-268-5272:



FAX: 202-268-4364 www.usps.com:



[End of section]



FOOTNOTES



[1] Generally, at the San Mateo IT Center, bargaining unit employees 

are computer operations and programming employees who are represented 

by the American Postal Workers Union, which bargains collectively with 

postal management over pay and conditions of employment. EAS employees 

are nonbargaining employees, which include employees such as 

supervisors, mangers, and professional and technical specialists. 



[2] Henceforth, for simplicity and readability, we refer to the IT 

Department’s Information Service Centers and its Integrated Business 

Systems Solutions Centers as IT centers. 



[3] The Bureau of Labor Statistics defines displaced employees as 

persons who lost or left jobs because their plant or company closed or 

moved, there was insufficient work, or their position or shift was 

abolished. 



[4] A DAR details the economic analyses, including costs and benefits, 

of the proposed investment and alternatives being considered.



[5] In 1998, IT functions performed at various sites in Minneapolis 

were consolidated and moved into a new postal IT center in Eagan. 



[6] The Service also has three other Integrated Business Systems 

Solutions Centers, located in Raleigh, St. Louis, and Wilkes-Barre. 

Raleigh also serves as the Service’s disaster recovery center. 



[7] PCES employees are senior-level officers and executives in such 

postal positions as area vice presidents and IT center managers. The 

PCES is comparable with the Civil Service’s Senior Executive Service. 

EAS employees are paid under the Service’s Executive and Administrative 

Schedule. IT bargaining unit employees’ pay and benefits are 

established by a collective bargaining agreement between the Postal 

Service and the APWU.



[8] The minimum age and service requirements for retirement under the 

Civil Service Retirement System are age 55 with 30 years of service, 

age 60 with 20 years of service, or age 62 with 5 years of service. The 

minimum requirements for retirement under the Federal Employees’ 

Retirement System are “minimum retirement age” with 30 years of 

service, age 60 with 20 years of service, age 62 with 5 years of 

service, or “minimum retirement age” with 10 years of service. An 

employee’s minimum retirement age is based on his/her date of birth and 

ranges between 55 and 57 years.



[9] Early retirement allows eligible employees to retire with immediate 

annuities before meeting the age and service requirements for regular 

retirement. The minimum requirements for early retirement under the 

Civil Service Retirement System are age 50 with 20 years of service, or 

any age with 25 years of service. The annuity is reduced by 2 percent 

for each year that the employee is under age 55. The Federal Employees’ 

Retirement System has the same minimum requirements for early 

retirement as the Civil Service Retirement System. However, annuities 

for employees retiring under the early retirement provisions of the 

Federal Employees’ Retirement System are not reduced.



[10] The Capital Investment Committee voting members include the deputy 

postmaster general; chief operating officer and executive vice 

president; senior vice president and general counsel; chief marketing 

officer and senior vice president; senior vice president, chief 

technology officer; senior vice president, Operations; vice president, 

Strategic Initiatives; and chief financial officer and senior vice 

president (chair). The Committee’s nonvoting members include the vice 

president, Engineering; vice president, Finance; controller; vice 

president, Purchasing and Materials; and vice president, Facilities.



[11] BLS data.



[12] Paul Attewell, The Annals of the American Academy of Political and 

Social Sciences, The Impact of Family on Job Displacement and Recovery, 

(Mar. 1999). 



[13] Michael Podgursky and Paul Swaim, Duration of Joblessness 

Following Displacement, Industrial Relations 26(3): pp. 213-226 (1987).



[14] Jennifer S. Tiffany, Insights from a Plant Closing: Dislocated 

Workers and Economic Development Planning, Planners Network, Hunter 

College Dept. of Urban Planning No. 148, (July/August 2001).



[15] Lillian T. Eby and Tammy D. Allen, Perceptions of Relocation 

Services in Relocation Decision Making: An Exploratory Field Study, 

Group and Organizational Management, Vol. 23 No. 4 (Dec. 1998).



[16] Older Workers: Demographic Trends Pose Challenges for Employers 

and Workers, GAO-02-85 (Washington, D.C.: Nov. 16, 2001).



[17] Atlas Van lines, Inc., Corporate Relocation Survey 2001, 34th 

Annual Results, (Memphis, TN: Apr. 2001). Atlas Van Lines, Inc., is a 

nationwide motor carrier that provides relocation services and 

publishes relocation-related publications, including its Survey of 

Corporate Relocation Policies document.



[18] Employee Relocation Council, Family Issues Research Report, 

(2001). The Employee Relocation Council is a professional membership 

association that conducts research on emerging trends in employee 

relocation assistance.



[19] BLS defines “worksite closures” as the full closure of either 

multiunit or single-unit establishments or the partial closure of a 

multiunit establishment where entire worksites affected by layoffs are 

closed or planned to be closed. 



[20] Saved-pay allows an employee reassigned to a lower paying job to 

retain the pay of his/her former position.



[21] A Memorandum of Understanding between the Postal Service and the 

APWU provided that bargaining unit employees relocating to lower paying 

postal jobs in the New York City area would have saved-pay protection 

for 1 year. 



[22] Typically, displaced EAS employees took non-IT management 

positions in such areas as customer service, maintenance, financial 

services, purchasing, and human resources. Two displaced EAS employees 

took jobs as local postmasters. 



[23] Workforce Reductions: Downsizing Strategies Used in Selected 

Organizations, GAO/GGD-95-54 (Washington, D.C.: Mar. 13, 1995).



[24] Closing Maintenance Depots: Savings, Workload, and Redistribution 

Issues, GAO/NSIAD-96-29 (Washington, D.C.: Mar. 4, 1996). 



GAO’s Mission:



The General Accounting Office, the investigative arm of Congress, 

exists to support Congress in meeting its constitutional 

responsibilities and to help improve the performance and accountability 

of the federal government for the American people. GAO examines the use 

of public funds; evaluates federal programs and policies; and provides 

analyses, recommendations, and other assistance to help Congress make 

informed oversight, policy, and funding decisions. GAO’s commitment to 

good government is reflected in its core values of accountability, 

integrity, and reliability.



Obtaining Copies of GAO Reports and Testimony:



The fastest and easiest way to obtain copies of GAO documents at no 

cost is through the Internet. GAO’s Web site ( www.gao.gov ) contains 

abstracts and full-text files of current reports and testimony and an 

expanding archive of older products. The Web site features a search 

engine to help you locate documents using key words and phrases. You 

can print these documents in their entirety, including charts and other 

graphics.



Each day, GAO issues a list of newly released reports, testimony, and 

correspondence. GAO posts this list, known as “Today’s Reports,” on its 

Web site daily. The list contains links to the full-text document 

files. To have GAO e-mail this list to you every afternoon, go to 

www.gao.gov and select “Subscribe to daily E-mail alert for newly 

released products” under the GAO Reports heading.



Order by Mail or Phone:



The first copy of each printed report is free. Additional copies are $2 

each. A check or money order should be made out to the Superintendent 

of Documents. GAO also accepts VISA and Mastercard. Orders for 100 or 

more copies mailed to a single address are discounted 25 percent. 

Orders should be sent to:



U.S. General Accounting Office



441 G Street NW,



Room LM Washington,



D.C. 20548:



To order by Phone: 	



	Voice: (202) 512-6000:



	TDD: (202) 512-2537:



	Fax: (202) 512-6061:



To Report Fraud, Waste, and Abuse in Federal Programs:



Contact:



Web site: www.gao.gov/fraudnet/fraudnet.htm E-mail: fraudnet@gao.gov



Automated answering system: (800) 424-5454 or (202) 512-7470:



Public Affairs:



Jeff Nelligan, managing director, NelliganJ@gao.gov (202) 512-4800 U.S.



General Accounting Office, 441 G Street NW, Room 7149 Washington, D.C.



20548: