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 

GAO-03-205 
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. 

San Mateo IT Center 

POSTAL SERVICE 

Employee Issues Associated with the 

Potential Closure of the San Mateo IT 

Center 

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. 

Highlights of GAO-03-205, a report to 

the Ranking Minority Member, 

House Committee on Government Reform 

and Other Requesters 

January 2003 

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. 

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. 
Page i GAO-03-205 Postal Service 

Letter 1

Results in Brief 3 

Background 7 

Scope and Methodology 11 

The Service Is Following Its Investment Review and Approval 

Process 14 

Relocation Experts Report that Negative Economic and Social 

Impacts Generally Accompany Plant and Facility Closures 21 

New York IT Center Employees Reported Economic and Social 

Impacts as a Result of the Closure 28 

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 36 

Conclusions 46 

Recommendations for Executive Action 47 

Agency Comments and Our Evaluation 47 

Appendix I Comparative Demographic Data and Options for 

San Mateo and Displaced New York IT Center 

Employees 50 

Appendix II Comments from the U.S. Postal Service 55 

Tables 

Table 1: Demographic Data for San Mateo Employees Compared 

with Displaced New York Employees’ Demographic Data 51 

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

Compared with Options/Opportunities that Were Available 

for Displaced New York IT Employees 52 

Figures 

Figure 1: The San Mateo IT Center 9 

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

Approval Process 18 

Figure 3: Options Selected by Displaced New York IT Center 

Employees in 1993 30 

Contents 
Page ii GAO-03-205 Postal Service 

Figure 4: Options San Mateo Employees Expect to Pursue if 

Staying in the Bay Area 40 

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 
Page 1 GAO-03-205 Postal Service 

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.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 

 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. 

United States General Accounting Office

Washington, DC 20548 
Page 2 GAO-03-205 Postal Service 

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.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 

 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. 
Page 3 GAO-03-205 Postal Service 

displaced by the 1993 closure of the New York IT Center. 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. 

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.4

 Additionally, the process requires 

that key senior postal executives approve the DAR. The IT Department 

 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. 

Results in Brief 
Page 4 GAO-03-205 Postal Service 

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. 
Page 5 GAO-03-205 Postal Service 

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, 
Page 6 GAO-03-205 Postal Service 

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 
Page 7 GAO-03-205 Postal Service 

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. 

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.5

 In 1993, the Service closed its IT 

 5

In 1998, IT functions performed at various sites in Minneapolis were consolidated and 

moved into a new postal IT center in Eagan. 

Background 
Page 8 GAO-03-205 Postal Service 

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.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. 

 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. 
Page 9 GAO-03-205 Postal Service 

Figure 1: The San Mateo IT Center

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. 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 

 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. 
Page 10 GAO-03-205 Postal Service 

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.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.9

Employees who do not relocate, retire, or find other employment on their 

own will likely be involuntarily separated from the Service. Employees 

 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. 
Page 11 GAO-03-205 Postal Service 

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. 

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 

Scope and 

Methodology 
Page 12 GAO-03-205 Postal Service 

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. 
Page 13 GAO-03-205 Postal Service 

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. 
Page 14 GAO-03-205 Postal Service 

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 Service Is 

Following Its 

Investment Review 

and Approval Process 
Page 15 GAO-03-205 Postal Service 

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 longterm 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. 

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 

The IT Department’s 

Proposal to Close the San 

Mateo IT Center 

Originated in 1996 

The Primary Document 

Supporting the Closure 

Proposal Is the DAR 
Page 16 GAO-03-205 Postal Service 

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 
Page 17 GAO-03-205 Postal Service 

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.10 The OIG 

has also reviewed the DAR. (See fig. 2 for an overview of the Service’s 

Investment Review and Approval Process.) 

 10The 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. 
Page 18 GAO-03-205 Postal Service 

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

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 

OIG Reviewed the IT 

Department’s Proposal and 

Concurred that Closing the 

San Mateo IT Center 

Would Save Money 
Page 19 GAO-03-205 Postal Service 

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. 

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.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 

 11BLS data. 

Economic and Other 

Conditions Have Changed 

Since the DAR Was 

Prepared in 2000 
Page 20 GAO-03-205 Postal Service 

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 
Page 21 GAO-03-205 Postal Service 

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 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. 

Relocation Experts 

Report that Negative 

Economic and Social 

Impacts Generally 

Accompany Plant and 

Facility Closures 
Page 22 GAO-03-205 Postal Service 

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.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.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 1998.14 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. 

 12Paul Attewell, The Annals of the American Academy of Political and Social Sciences, The 

Impact of Family on Job Displacement and Recovery, (Mar. 1999). 

13Michael Podgursky and Paul Swaim, Duration of Joblessness Following Displacement, 

Industrial Relations 26(3): pp. 213-226 (1987). 

14Jennifer 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). 

Displaced Employees 

Typically Face Economic 

Impacts 
Page 23 GAO-03-205 Postal Service 

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.15 For these reasons, trailing 

 15Lillian 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). 

Relocated Employees 

Typically Face Social and 

Economic Impacts 
Page 24 GAO-03-205 Postal Service 

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. 

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.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 

 16Older Workers: Demographic Trends Pose Challenges for Employers and Workers, 

GAO-02-85 (Washington, D.C.: Nov. 16, 2001). 

Older Employees Often 

Face Greater Economic 

and Social Impacts than 

Younger Employees 
Page 25 GAO-03-205 Postal Service 

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. 

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 2001.17 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 familyrelated considerations, such as elder care, child care, and schools played a 

crucial role in employees’ relocation decisions.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, 

 17Atlas 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. 

18Employee 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. 

Employees Decline 

Relocation Offers for 

Various Reasons 
Page 26 GAO-03-205 Postal Service 

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. 

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 2001.19 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. 

 19BLS 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. 

Business Closures Occur 

and Sometimes Create 

Opportunities for 

Employees to Make Life 

and Career Changes 
Page 27 GAO-03-205 Postal Service 

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. 
Page 28 GAO-03-205 Postal Service 

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. 

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 

New York IT Center 

Employees Reported 

Economic and Social 

Impacts as a Result of 

the Closure 

Postal Employees Had 

Several Options When the 

New York IT Center Closed 
Page 29 GAO-03-205 Postal Service 

(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.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. 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. 

 20Saved-pay allows an employee reassigned to a lower paying job to retain the pay of 

his/her former position. 

21A 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. 
Page 30 GAO-03-205 Postal Service 

Figure 3: Options Selected by Displaced New York IT Center Employees in 1993 

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 

Postal Employees Who 

Took Available Jobs with 

the Postal Service in the 

New York City Area Faced 

More Economic Impacts 

than Social Impacts 
Page 31 GAO-03-205 Postal Service 

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.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 

 22Typically, 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. 
Page 32 GAO-03-205 Postal Service 

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. 
Page 33 GAO-03-205 Postal Service 

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. 

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 

Postal Employees 

Relocating to Postal IT 

Centers in Other 

Geographic Areas Faced 

More Social Impacts than 

Economic Impacts 
Page 34 GAO-03-205 Postal Service 

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, 
Page 35 GAO-03-205 Postal Service 

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 wellbeing. 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 
Page 36 GAO-03-205 Postal Service 

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 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 

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 
Page 37 GAO-03-205 Postal Service 

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. 

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 nolayoff 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. 

Options Available to San 

Mateo IT Center 

Employees 
Page 38 GAO-03-205 Postal Service 

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. 

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 

San Mateo IT Center 

Employees Planning to 

Stay in the Bay Area 

Anticipate More Economic 

than Social Impacts 
Page 39 GAO-03-205 Postal Service 

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 
Page 40 GAO-03-205 Postal Service 

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 

Note: San Mateo IT Center employees who responded to GAO survey. 

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 
Page 41 GAO-03-205 Postal Service 

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 
Page 42 GAO-03-205 Postal Service 

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. 

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 

San Mateo IT Center 

Employees Who Are Likely 

to Relocate Anticipate 

Primarily Social Impacts, 

and Some with Trailing 

Spouses Also Anticipate 

Economic Impacts 
Page 43 GAO-03-205 Postal Service 

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 
Page 44 GAO-03-205 Postal Service 

costs and the loss of preferential property tax status would make it 

difficult for them to ever move back to the Bay Area. 

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.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. 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 

 23Workforce Reductions: Downsizing Strategies Used in Selected Organizations, 

GAO/GGD-95-54 (Washington, D.C.: Mar. 13, 1995). 

24Closing Maintenance Depots: Savings, Workload, and Redistribution Issues, 

GAO/NSIAD-96-29 (Washington, D.C.: Mar. 4, 1996). 

Experience Shows that 

Providing Job-Finding 

Assistance Is Beneficial to 

Employers and Employees 
Page 45 GAO-03-205 Postal Service 

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 dualincome 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 
Page 46 GAO-03-205 Postal Service 

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. 

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 

Conclusions 
Page 47 GAO-03-205 Postal Service 

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. 

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. 

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 

Recommendations for 

Executive Action 

Agency Comments 

and Our Evaluation 
Page 48 GAO-03-205 Postal Service 

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. 
Page 49 GAO-03-205 Postal Service 

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 
Appendix I: Comparative Demographic Data 

and Options for San Mateo and Displaced New 

York IT Center Employees 

Page 50 GAO-03-205 Postal Service 

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, savedpay protections, and the availability of local postal and nonpostal jobs. 

Appendix I: Comparative Demographic Data 

and Options for San Mateo and Displaced 

New York IT Center Employees 
Appendix I: Comparative Demographic Data 

and Options for San Mateo and Displaced New 

York IT Center Employees 

Page 51 GAO-03-205 Postal Service 

Table 1: Demographic Data for San Mateo IT Employees Compared with Displaced New York IT Employees’ Demographic 

Data 

Demographic characteristics 

San Mateo IT Center 

employees 

Displaced New York IT Center 

employeesa

Employees indicating they would likely relocate or did relocate 

to another postal IT center 36 49 

Ages 45 to 49 8 (22%) 18 (37%)

Ages 50 to 54 10 (28%) 3 (6%)

Ages 55 or older 11 (31%) 2 (4%)

15 or more years of service 27 (75%) 16 (33%)

20 or more years of service 16 (44%) 7 (14%)

Living with spouse/partner 22 (61%) 39 (80%)

Living in dual-income household 14 (39%) 32 (65%)

School-ageb children living in household 18 (50%) 30 (61%)

Providing assistance to elderly parents/relatives in the area 22 (61%) 27 (55%)

Employees indicating they would likely not relocate or did not 

relocate 167 46

Ages 45 to 49 41 (25%) 11 (24%)

Ages 50 to 54 44 (26%) 8 (17%)

Age 55 or older 44 (26%) 2 (4%)

15 or more years of service 125 (75%) 30 (65%)

20 or more years of service 81 (49%) 10 (22%)

Living with spouse/partner 124 (74%) 36 (78%)

Living in dual-income household 99 (59%) 29 (63%)

School-age children living in household 78 (47%) 27 (59%)

Providing assistance to elderly parents/relatives in the area 93 (56%) 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. 
Appendix I: Comparative Demographic Data 

and Options for San Mateo and Displaced New 

York IT Center Employees 

Page 52 GAO-03-205 Postal Service 

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 

Options/opportunities likely available to San 

Mateo IT employees 

Options/opportunities that were available to 

New York IT employees 

Take early retirement 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. 

The Service offered early retirement to all eligible 

employees. 

Receive buy-out According to postal officials, the Service does 

not anticipate offering buy-outs. 

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. 

Relocate with job 

Bargaining unit 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. 

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. 

EAS 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. 

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. 

Assistance in helping trailing 

spouses find employment at 

new location 

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. 

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. 

 
Appendix I: Comparative Demographic Data 

and Options for San Mateo and Displaced New 

York IT Center Employees 

Page 53 GAO-03-205 Postal Service 

Option/opportunity 

Options/opportunities likely available to San 

Mateo IT employees 

Options/opportunities that were available to 

New York IT employees 

Continue employment with the 

Service in the same geographic 

area 

 

Bargaining unit 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 

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. 

 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. 

EAS 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. 

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. 

Other job opportunities 

Within the Service The Service is currently in a downsizing mode, 

and job opportunities are limited. 

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. 

Outside the Service 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. 

Data on the experience of New York 

ITemployees seeking nonpostal jobs in the New 

York City area at the time of closure are 

unknown. 

 
Appendix I: Comparative Demographic Data 

and Options for San Mateo and Displaced New 

York IT Center Employees 

Page 54 GAO-03-205 Postal Service 

Option/opportunity 

Options/opportunities likely available to San 

Mateo IT employees 

Options/opportunities that were available to 

New York IT employees 

Avoid reductions in pay 

Bargaining unit 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. 

 

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. 

EAS 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. 

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. 

Assistance in finding 

employment outside the Service 

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. 

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. 

Involuntary separations 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. 

According to postal officials, there were no 

involuntary separations associated with the New 

York IT Center closure. 

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

Service 

Page 55 GAO-03-205 Postal Service 

Appendix II: Comments from the U.S. Postal 

Service 

(393000) 
The General Accounting Office, the investigative arm of Congress, exists to 

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