Postal Service: Employee Issues Associated with the Potential Closure of the San Mateo IT Center
Published: 2003-01-31T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: 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.
section_title: What GAO Found
paragraphs: 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.

section_title: Letter
paragraphs: 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. Closing and consolidating IT functions are not new  activities for the Postal Service. For example, in 1993, the Service closed  its New York IT Center and transferred functions performed at that center  to other postal IT centers.
Under the IT Department’s closure proposal, most of the IT functions  being performed by the San Mateo IT Center are to be transferred to the  Service’s other Information Service Center located in Eagan, Minnesota.  The remaining IT functions are to be transferred to the Service’s  Integrated Business Systems Solutions Centers located in St. Louis,  Missouri and Wilkes-Barre, Pennsylvania. The San Mateo IT Center also  houses an Accounting Service Center whose functions and staff are to be  moved into leased space in the San Francisco Bay Area (Bay Area) if the  Service decides to close the IT center. Because closing postal facilities is  controversial, the Service said it would postpone making a final decision  regarding the closure of the San Mateo IT Center until after we have issued  this report and postal management has had a chance to review the results  of our study.
To provide you information on the impact that closing the San Mateo IT  Center would have on postal employees working at that facility—and their  families—we agreed with your offices to address the following objectives:    Describe the process the Service is following in deciding whether to close  the San Mateo IT Center and consolidate its functions into other postal IT  centers.
Determine experts’ views on the social and economic impacts that plant  and facility consolidations and closures have on affected employees and  their families.
Determine the social and economic impacts that affected postal  employees and their families encountered when the Service closed its New  York IT Center in 1993.
Determine affected postal employees’ views on the social and economic  impacts that they and their families would likely encounter if the Service  closes the San Mateo IT Center.
We also provide information on how selected organizations have assisted  affected employees during downsizing.
To meet these objectives, among other things, we administered a  questionnaire to 243 San Mateo IT Center employees and received 213  responses, resulting in an 88 percent response rate. We also administered  two separate questionnaires to 145 current postal employees who were  displaced by the 1993 closure of the New York IT Center. 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.
subsections: section_title: Background
paragraphs: 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. In 1993, the Service closed its IT  center located in New York and transferred all functions performed at the  center to its postal IT centers located in San Mateo and Eagan. Some  employees affected by the New York IT Center closure relocated to San  Mateo and now face the prospects of being affected by yet another postal  IT center closure. Additionally, since 1993, the Service has transferred  mainframe computer operations performed in St. Louis, Raleigh, and  Wilkes-Barre to the San Mateo and Eagan IT Centers. Other IT functions  continue to be performed at the Service’s IT centers located in St. Louis,  Raleigh, and Wilkes-Barre.
The Service’s current IT structure includes two Information Service  Centers located in Eagan and San Mateo. Each of these Information  Service Centers houses a Computer Operations Service Center, a  Management Support Center, an Accounting Service Center, and an  Integrated Business Systems Solutions Center. 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.
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.  Seventy-two EAS and  172 bargaining-unit positions were filled as of March 2002. Six of the IT  bargaining unit employees are to be transferred to the Accounting Service  Center and would not be immediately affected if the Service decides to  close the San Mateo IT Center. The remaining 166 bargaining unit  employees and all EAS employees would be directly affected by the  closure. Under the proposed consolidation, all 166 bargaining unit  employees would be offered relocation to another postal IT center, in  keeping with the no-layoff clause in their collective bargaining agreement.  About half of the EAS employees will be offered jobs at another postal IT  center.
For the employees who relocate, the Service will cover basic relocation  costs. However, covered costs differ for bargaining-unit and EAS  employees. Relocation benefits for bargaining-unit employees are  specified in the negotiated collective bargaining agreement between the  Service and the APWU. Examples of covered expenses include the cost of  one advance house-hunting trip, the movement and storage of household  goods, and 30 days of temporary quarters. For EAS employees the Service  covers the cost of 3 house-hunting trips, the movement and storage of  household goods, and 60 days of temporary quarters. Additionally, the  Service provides EAS employees a more generous expense allowance and  assistance in selling and purchasing their homes.
Employees, who do not have the option of relocating or choose not to do  so, may choose to retire, provided they meet the minimum age and service  requirements for retirement. 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.  Employees who do not relocate, retire, or find other employment on their  own will likely be involuntarily separated from the Service. Employees  who are involuntarily separated from the Service will be eligible for  severance pay.
The Service has experienced financial problems in recent years that have  been exacerbated by the recent economic slowdown and the use of mail to  transmit anthrax. In April 2001, we placed the Service’s transformation  efforts and long-term outlook on our high-risk list. We included the Service  on our high-risk list to focus attention on the dilemmas facing the Service  before the situation escalates into a crisis in which the options for action  may be more limited and costly. While the Service recently developed a  transformation plan to address its financial difficulties and has been able  to cut costs, it has a significant amount of fixed costs due to its vast  infrastructure that are difficult to cut in the short term. Rationalizing the  Service’s infrastructure will be key as it strives to ameliorate its fiscal  situation. This means that the Service may have to close or consolidate  certain retail, mail processing, and administrative facilities if necessary to  cut costs and improve performance. These closures and consolidations  will undoubtedly lead to public concerns about the economic effects such  actions will have on communities and employees. The Service is weighing  these difficult issues as it considers whether to close the San Mateo IT  Center.
section_title: Scope and Methodology
paragraphs: To describe the process that the Service is following to decide whether to  close the San Mateo IT Center and consolidate its functions into other  postal IT centers, we interviewed postal managers and reviewed available  supporting reports and documents. We reviewed the Service’s investment  policies and procedures manual, which provides guidance for preparing,  reviewing, and approving a DAR. We also reviewed the Service’s DAR,  prepared by the IT Department, which included economic analyses and  justification of the proposal to close the San Mateo IT Center, as well as an  alternative proposal that the IT Department considered and subsequently  rejected. Further, we reviewed the OIG’s November 2000 audit report on  the IT Department’s proposal and economic analysis. For contrast, we  reviewed (1) the DAR the IT Department prepared in support of the  decision to build a new IT facility in Eagan that would allow the Service to  consolidate IT functions performed at various sites in the Minneapolis area  and provide for future incorporation of IT functions and (2)  documentation the Service used to support its decision to close the New  York IT Center in 1993. We discussed the steps the Postal Service followed  in preparing its proposal to close the San Mateo IT Center with the  Service’s vice president, IT; discussed the Service’s management process  for reviewing the proposal with the Service’s manager, Capital and  Program Evaluation, and manager, Facilities, Headquarters; and met with  representatives from the OIG to discuss the audit they did of the Service’s  proposal and economic analyses. We also reviewed sections of the Postal  Service’s Transformation Plan that discuss procedures the Service follows  in closing postal facilities, and we explored those procedures in greater  detail with postal officials.
To determine experts’ views on the social and economic impacts that  corporate downsizing and reorganizations can have on employees and  their families, we identified and interviewed eight relocation experts from  our literature review and discussions with authors of articles on the  impacts of closures and relocations on employees. These relocation  experts provide a wide variety of relocation services to several hundred  companies throughout the United States. We also interviewed two  university researchers knowledgable of worksite closures and employee  displacements, and we gathered available data from the Bureau of Labor  Statistics (BLS) on nationwide and regional worksite closures and  employee separations for calendar years 2001 and 2002. To further  broaden our perspective on how closures and relocations typically affect  employees and their families, we conducted Internet research to identify  reports, studies, and other sources of information that examined the  impacts of closing facilities similar to the San Mateo IT Center. We also  conducted literature searches and gathered information on the social and  economic impacts of facility closures and relocations.
To determine the social and economic impacts encountered by postal  employees and their families who were affected by the Service’s closure of  its New York IT Center in 1993, we interviewed postal officials as well as  displaced New York IT Center employees who relocated to the San Mateo  IT Center. We also obtained and analyzed salary data, for the period 1992  to 2001, on displaced New York IT Center employees who are still  employed by the Service. We designed, pretested, and administered survey  questionnaires to displaced New York IT Center employees (1) who  relocated to other postal IT centers and (2) who continued employment  with the Service in the New York City area. For those employees who  relocated, we received responses from 49 of 66, for a 74 percent response  rate. For those who stayed with the Service in the New York City area, we  received responses from 46 of 79 for a 58 percent response rate. We  analyzed the survey responses, including open-ended comments, and  conducted a number of follow-up interviews. We did not gather data on  displaced New York IT Center employees who left the Service following  the center’s closure in 1993 because the Service was unable to provide  recent mailing addresses for these employees.
To determine the social and economic impacts that the San Mateo IT  Center postal employees and their families would likely encounter if the  Service closes that center, we obtained and reviewed relevant Postal  Service documents regarding personnel policies and consolidation plans.  We also interviewed cognizant postal and APWU officials and various San  Mateo employees regarding these policies and plans and their potential  impacts on employees. We obtained and analyzed San Mateo employee  personnel data; and, on the basis of information from closure/relocation  studies and experts and our interviews with postal officials and  employees, we designed, pretested and administered a survey  questionnaire to obtain information about how closing the San Mateo IT  Center would likely affect employees and their families. We received  survey responses from 213 of 243 employees, for an 88 percent response  rate. We analyzed the survey responses, including open-ended comments,  and conducted follow-up interviews.
To provide information on how selected organizations, during downsizing,  have assisted affected employees, we identified and reviewed our prior  reports on restructuring and downsizing. We incorporated information on  those organizations where appropriate.
Because our three surveys did not make use of probability sampling, there  are no sampling errors. However, the practical difficulties of conducting  any survey may introduce other types of errors, commonly referred to as  nonsampling errors. For example, differences in how a particular question  is interpreted, the sources of information available to respondents, or the  types of people who do not respond can introduce unwanted variability  into the survey results. We included steps in both the data collection and  data analysis stages for the purpose of minimizing such nonsampling  errors. For example, our data collection instruments were designed by  survey specialists in combination with subject matter specialists and  pretested to ensure that questions were clear and were understood by  respondents. To increase our response rate, a follow-up mailing was made  to those who did not respond in a reasonable time period.
We conducted our review at Postal Service Headquarters in Washington,  D.C., and at the Service’s IT center located in San Mateo, CA, from August  2001 through October 2002, in accordance with generally accepted  government auditing standards.
We requested comments on a draft of this report from the Postmaster  General. The Service’s comments are discussed at the end of this letter  and are reprinted in appendix II.
section_title: The Service Is Following Its Investment Review and Approval Process
paragraphs: 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.
subsections: section_title: The IT Department’s Proposal to Close the San Mateo IT Center Originated in 1996
paragraphs: Events leading to the IT Department’s proposal to close the San Mateo IT  Center began in 1996 when the IT Department initiated development of a  long-range plan to consolidate the San Mateo IT Center’s mainframe  computer operations into a new IT center that the Service was building in  Eagan. The IT Department’s proposal called for consolidating San Mateo’s  mainframe computer operations into a new 352,000-square-foot postal IT  center, located on 28 acres in Eagan. The new Eagan IT Center was to  serve as the Service’s primary financial center, meet the Service’s long- term computer operational requirements, and have the flexibility to adjust  to IT changes and provide room for growth. The Eagan IT Center was  designed to absorb the San Mateo IT Center’s mainframe computer  operations. At the time the IT Department was preparing its original  consolidation proposal, it projected that the San Mateo IT Center’s  mainframe computer operations could be consolidated into the new Eagan  IT Center sometime around 2000. However, before that consolidation  occurred, the PMG called on postal managers in 2000 to review their  operations and find savings by eliminating work, working more efficiently,  and consolidating functions. The PMG did this in response to the Service’s  declining financial condition: shrinking net income, operating expense  growth outpacing operating revenue growth, the threat of declining mail  volumes, and stagnating productivity.
Heeding the PMG’s call to find savings, the IT Department decided to  expand its plans for the San Mateo IT Center. Instead of just consolidating  the San Mateo IT Center’s mainframe computer operations into the Eagan  IT Center, the IT Department decided to propose closing and selling the  San Mateo IT Center and consolidating all of its IT functions into other  postal IT centers located in Eagan, St. Louis and Wilkes-Barre.
section_title: The Primary Document Supporting the Closure Proposal Is the DAR
paragraphs: According to IT Department officials, once a decision was made in early  2000 to propose closing the San Mateo IT Center, the proposal’s  sponsoring unit (the IT Department), per the Service’s Investment Review  and Approval Process, prepared a DAR in support of the closure proposal.  The DAR details the economic analyses and assumptions, including costs  and benefits, of the proposed investment and alternatives being  considered so that approving authorities will have the information  necessary to make informed decisions. The Service requires that a DAR be  prepared, validated, and approved for planned capital and expense  investments of $5 million or more. The IT Department provided us with  copies of (1) documentation and an internal paper prepared in support of  the proposal to consolidate the San Mateo IT Center’s mainframe  computer operations into Eagan and (2) the DAR supporting the closure  proposal. However, the IT Department was unable to provide us  documentation explaining the basis for expanding the mainframe  consolidation proposal into a proposal to close the San Mateo IT Center  entirely and transfer all of its IT functions to other postal IT centers.  Additionally, according to postal officials, the two individuals most  familiar with the closure proposal, the vice president, Information  Technology; and the manager, Information Systems Support, are no longer  with the Service.
According to postal officials, there are no detailed policies or rigorous  procedures that must be followed when a department proposes closing a  postal facility other than a post office or mail processing facility. They said  that references, in the Service’s Transformation Plan, to detailed  procedures for closing facilities apply only to post offices and mail  processing facilities, not to administrative offices such as the San Mateo IT  Center. They said the DAR is the primary document being used to support  the IT Department’s proposal to close the San Mateo IT Center.
The San Mateo DAR prepared by the IT Department included (1) the  objectives, justification, and details of the proposed closure/consolidation;  (2) economic analyses and financial justification for the proposed closure;  and (3) information on an alternative to the closure that was considered,  analyzed, and eliminated. According to the DAR, closing the San Mateo IT  Center and consolidating all of its IT functions at other postal IT centers  would be justified because (1) consolidating IT and support operations  would provide the Service savings, over a 10-year period, of approximately  $25 million in staffing, utilities, maintenance, and contractor systems  software support and (2) consolidating IT functions would allow the  Service to sell the San Mateo facility for approximately $49 million. The  DAR also noted that the San Mateo area had become one of the highest  cost-of-living areas in the nation, and the San Mateo IT Center was finding  it increasingly difficult to retain its executives and the top technical staff  needed to operate the center. The DAR further noted that the cost of  contractors in the San Mateo area was higher than in other areas where  postal IT centers were located.
Before finalizing the DAR to close the San Mateo IT Center, the IT  Department considered one alternative proposal which, consisted of the  Service selling the San Mateo facility and leasing it back from the new  owner, with all of the postal functions remaining in the leased facility. The  Service rejected that alternative for two reasons. The IT Department  determined that (1) the annual lease cost would exceed the current  depreciation cost of the San Mateo facility and (2) the Service would not  realize the savings and operational efficiencies that would accrue from  consolidating San Mateo IT functions at other postal IT centers.
According to postal officials, the IT Department—following the Service’s  Investment Review and Approval Process—prepared the San Mateo DAR  and forwarded it to the Service’s Finance Department for validation and to  the Facilities Department for review and concurrence. By early November  2000, the Finance Department had completed its validation of the accuracy  and integrity of the San Mateo DAR’s assumptions and economic analyses;  the Facilities Department had concurred with the DAR; and the sponsoring  vice president, IT, had signed the DAR. Next, the senior vice  president/chief technology officer and the chief financial officer/executive  vice president reviewed and approved the DAR. In late November 2000,  the chief financial officer/executive vice president prepared and signed a  validation memorandum and executive summary, which was forwarded to  the PMG, stating that the DAR proposing to close the San Mateo IT Center  had been reviewed and validated. According to postal officials, before the  San Mateo IT Center can be closed, approval must be obtained from the  Headquarters (HQ) Capital Investment Committee and the PMG. The OIG  has also reviewed the DAR. (See fig. 2 for an overview of the Service’s  Investment Review and Approval Process.)
section_title: OIG Reviewed the IT Department’s Proposal and Concurred that Closing the San Mateo IT Center Would Save Money
paragraphs: Prior to our review, postal management asked the OIG to evaluate the  potential benefits, costs, and operational issues surrounding the IT  Department’s proposal to close the San Mateo IT Center and transfer its IT  functions to other postal IT centers. The OIG did this evaluation between  May and late November 2000. The OIG agreed with the IT Department that  consolidating the San Mateo IT Center’s IT functions into the Eagan and  other postal IT centers would produce savings in staffing, utilities,  maintenance, and contractor systems software support. However, among  other things, the OIG noted that the IT Department’s projected savings in  the San Mateo DAR might be overstated by $4 to $8 million because the  cost of leasing space for the Accounting Service Center in the Bay Area  may have been underestimated. Also, the OIG questioned the Service’s  support for $6.3 million in capital expenditures for hardware and software  upgrades associated with the consolidation. The Service subsequently  provided justification for the capital expenditures, which the OIG found to  be generally responsive to its concerns.
According to the OIG’s November 24, 2000, report, postal management  revised its lease cost estimates for the Accounting Service Center. This  revision reduced estimated savings from $78 million to the current  estimate of $74 million. The OIG concluded that this and other actions the  Postal Service was planning were responsive to the OIG’s concerns and  concurred with the IT Department’s analyses that consolidating the San  Mateo IT Center’s IT functions into other postal IT centers would result in  savings.
section_title: Economic and Other Conditions Have Changed Since the DAR Was Prepared in 2000
paragraphs: 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. In contrast, the number of these employees contracted by 5.9  percent from 2000 to 2002. Given the increase in unemployment and the  shrinking employment growth in the Bay Area, current IT labor costs may  not be as high as they were in 2000, thereby creating a more favorable  recruiting environment for the Service.
Second, the IT Department received an appraisal in 2000, indicating that it  could reasonably expect to sell its San Mateo facility within 6 months for a  minimum price of $49 million. However, according to real estate experts,  office-building values in the San Mateo area are currently depressed. From  the 4th quarter of 2000 to the 2nd quarter of 2002, average asking rents fell  by about 60 percent, and office vacancy rates increased nearly sixfold,  from less than 4 percent to 22 percent. As a result of this depressed real  estate market, the time and value estimates that the IT Department  received in 2000 for the San Mateo facility may be out of date.
In view of what might be significant changes in some of the economic  assumptions used in the San Mateo DAR, we asked the Service about  updating (1) the estimate of the fair-market value of the San Mateo  building and property and (2) the estimate of rental rates for office space  in the Bay Area. The Service said that it was too costly to have a  commercial real estate broker update this information before the Service  was ready to make a decision about closing the San Mateo IT Center.  However, the Service acknowledged that the commercial office market in  the Bay Area has changed since the DAR was prepared in 2000. Postal  officials said that the key assumptions used in preparing the DAR would  be updated before the Service makes a decision about closing the San  Mateo IT Center. Until these data are updated, it is uncertain how much  the Service would save by closing the San Mateo IT Center.
Another significant change indicating the need to update the San Mateo  DAR is the Service’s plans to revamp its accounting functions. In 2001, the  Service announced plans to automate and reengineer its field accounting  activity. These changes will result in the Service closing its 85 district  accounting offices; eliminating 1,063 field accounting technicians in these  offices; and consolidating the residual activities into its 3 Accounting  Service Centers located in Eagan, St. Louis, and San Mateo. Postal officials  stated that this would result in about 350 more accounting technician and  finance positions at these 3 centers. As noted earlier, the San Mateo DAR  includes a plan to move the accounting functions and its 102 employees  into leased space in the Bay Area. The DAR included $2.1 million as the 3- year estimated cost for this leased space. As a result of the planned  consolidation of district accounting functions, the Service’s estimated cost  of leased space may no longer be accurate for its accounting functions in  the Bay Area and could affect projected savings associated with closing  the San Mateo IT Center. Given this possibility, before the Service makes  its decision about closing the San Mateo IT Center, the DAR may also need  to be reviewed and updated, if appropriate, to reflect the cost associated  with obtaining the leased space necessary to accommodate about 40  additional accounting technician and finance positions.
section_title: Relocation Experts Report that Negative Economic and Social Impacts Generally Accompany Plant and Facility Closures
paragraphs: 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.
subsections: section_title: Displaced Employees Typically Face Economic Impacts
paragraphs: 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. 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. 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. 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.
section_title: Relocated Employees Typically Face Social and Economic Impacts
paragraphs: 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. For these reasons, trailing  spouses may be dissatisfied with their new jobs, according to experts.  Experts also told us that the difficulty associated with finding comparable  employment is compounded when people move from large urban areas,  such as the Bay Area, to smaller communities that traditionally have fewer  employment and career prospects.
section_title: Older Employees Often Face Greater Economic and Social Impacts than Younger Employees
paragraphs: 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. For  example, we noted that employees age 55 and older may experience larger  losses in earnings upon reemployment, compared with younger  employees. We also reported that such employees were significantly less  likely than younger employees to be reemployed. In addition, we stated  that the potential loss of health care benefits following a job loss could be  more problematic for employees who are age 55 and older because they  tend to have more health problems than younger employees. Other studies  on job loss reported similar findings regarding older workers.
Similar to the greater economic impacts older employees may experience  due to job displacement, relocation experts we interviewed also told us  that employees in their mid-40s and older are more likely to face greater  social difficulties in relocating than younger individuals. For example,  according to experts, employees in their mid 40s and older are more likely  to have elderly parents, grandchildren, or existing health conditions.  Experts also told us that these employees are more likely to have high  school or college-aged children who are often reluctant to relocate.  Moreover, employees who are in their mid-40s and older are typically less  inclined to move than younger individuals. For example, one relocation  expert we contacted noted that older employees feel that relocating to a  new community requires that they sacrifice social networks, long-time  friendships, and family relationships that took years to establish. In  addition, experts pointed out that trailing spouses of older employees  might also experience more difficulties in finding new jobs because of age  discrimination.
section_title: Employees Decline Relocation Offers for Various Reasons
paragraphs: 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. The most frequently cited reason for declining to  relocate was “family ties” (81 percent). Other reasons cited included  “personal reasons” (73 percent), “no desire to move” (67 percent), and  “spouse employment” (48 percent).
The Employee Relocation Council (ERC) reported in 2001 that family- related considerations, such as elder care, child care, and schools played a  crucial role in employees’ relocation decisions. Elder care was  specifically identified as an area of increasing importance in employees’  relocation decisions. The report estimates that 80 percent of elderly  persons have lived alone or with a family member, rather than in nursing  homes. As a result, according to ERC, more employees and their families  will be increasingly responsible for helping elderly relatives who need  assistance with the activities of daily living, including shopping,  transportation, personal care, paying bills, preparing meals, walking, and  house cleaning. The ERC report also noted that employers offer various  types of elder care assistance, such as paying to move elderly relatives,  providing lists of elder care facilities and programs, and providing written  materials on elder care needs. ERC further reported that similar services  are provided for relocating families needing child care services or help in  finding schools for their children.
section_title: Business Closures Occur and Sometimes Create Opportunities for Employees to Make Life and Career Changes
paragraphs: 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. BLS  data also show that in the Bay Area, where the San Mateo IT Center is  located, there were 22 worksite closures that resulted in over 5,800  employee layoffs in calendar year 2001. According to studies and  relocation experts, businesses make decisions to downsize, restructure, or  close facilities for a wide variety of reasons, primarily driven by business  needs. According to unemployment research, for example, plant  relocations are organizational changes that are commonly taken to pursue  company development or to solve financial and operational problems.  Experts told us that companies often implement different reorganization  strategies to increase profits and competitiveness and to respond to  various business factors, such as the economy, the stock market, business  competition, the availability of skilled workers, and the cost of labor. For  example, according to one expert we contacted, companies typically move  facilities to reduce costs, often relocating to regions of the country where  labor costs are lower.
Recent Bay Area worksite closures have resulted in employee layoffs.  While specific data on the number of employee layoffs by Bay Area  companies are not available, media reports indicate that several thousand  employees have lost their jobs over the past year. For example, in May  2002, it was reported that a San Francisco based financial services  company implemented its first large-scale employee layoff since 1987,  reducing its workforce by approximately 4,500 employees in order to keep  the company’s total complement under 20,000. In addition, another report  indicated that as a result of a Bay Area based corporate merger in the  technology sector, an estimated 15,000 positions would be eliminated  worldwide over the next 2 years, including many in the Bay Area. Another  event that may affect the Bay Area economy was reported in June 2002,  when a major air carrier announced that as a result of the September 11,  2001, terrorist attacks, it had applied for federal assistance to aid its  recovery from these events. The air carrier also plans to increase its  viability by reducing costs, such as through salary cuts from pilots,  managers, and administrative employees. However, if these efforts are  unsuccessful, the jobs of approximately 18,000 Bay Area employees may  be affected.
Experts also told us that companies make decisions to displace or relocate  employees according to, among other things, business needs, economic  conditions, competition, company size, acquisitions and mergers, and the  number of employees on the payroll. For example, a relocation expert we  interviewed told us her company, which employs approximately 2,800  employees, recently downsized by closing two of its office locations. While  some employees were retained and relocated, others lost their jobs and  their employee benefits.
Despite the negative social and economic impacts that closures have on  employees, unemployment researchers have suggested that a job loss  sometimes creates opportunities for individuals to change careers and life  directions. Additional research also indicates that after a period of time,  some employees may actually come to view their experiences with a plant  or facility closure as positive because it gave them the opportunity to  redirect their careers, develop new competencies, or leave unsatisfying  jobs. Research and relocation literature also indicates that families differ  in their abilities to adapt to change. Moreover, relocation experts stated  that in many cases, families adapt well and make very successful  transitions.
section_title: New York IT Center Employees Reported Economic and Social Impacts as a Result of the Closure
paragraphs: 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.
subsections: section_title: Postal Employees Had Several Options When the New York IT Center Closed
paragraphs: From August to November of 1992, the PMG restructured the Service. To  minimize the impact on employees, an early-out option was offered to  permit most employees to retire at age 50 with 20 years of service or any  age with 25 years of service. A monetary incentive was offered to  encourage eligible employees to retire. This incentive was a lump-sum  payment equal to 6 months’ pay. According to postal officials, when the  Service closed its New York IT Center in 1993, the restructuring had  resulted in numerous retirements and an abundance of non-IT jobs in the  New York City area to offer displaced IT center employees. Postal officials  said the Service was therefore in the position to offer displaced IT center  employees—both EAS and bargaining unit—various options that included  (1) taking an available Service job in the New York City area that had  become vacant as a result of the restructuring, (2) relocating to another  postal IT center in a different geographic area, or (3) retiring with a  buyout—if eligible. Some employees chose none of these options and  decided to independently find other Service employment outside the New  York City area. Still others opted to leave Service employment altogether.
EAS employees who opted to relocate to other postal IT centers were able  to continue working in the IT field at their same grade and pay. EAS  employees who decided to stay in the New York City area were initially  offered saved-pay for 2 years, but the Service later made saved-pay  permanent for these employees. 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.  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.
section_title: Postal Employees Who Took Available Jobs with the Postal Service in the New York City Area Faced More Economic Impacts than Social Impacts
paragraphs: For many displaced New York IT Center employees, the decision to accept  other postal employment in the New York City area meant that they fared  worse economically in the long run than those who chose to relocate to  postal IT centers in other geographic areas. According to a postal official,  when the Service closed the New York IT Center, the Service had  numerous vacancies in the New York City area because it had recently  gone through a major restructuring that saw many employees leave the  Service through retirement or separation. As a result of the numerous  vacancies in the New York City area, the Service was able to offer jobs to  displaced New York IT Center employees who did not wish to relocate to  postal IT centers in other geographic areas. However, the vacant postal  jobs in the New York City area were frequently lower paying, non-IT  positions.
Using salary data on the 147 displaced New York IT Center employees still  employed by the Service at other postal IT centers or postal facilities in  the New York City area, we determined that the 68 employees who  relocated (44 bargaining unit and 24 EAS employees) generally fared  better economically than those who remained in the New York City area.  Nine years after the closure, salary data provided by the Service showed  that the average salary of employees who relocated had increased about  11 percent (in constant 2001 dollars); in comparison, the average salary of  employees who remained with the Service in the New York City area had  decreased about 1 percent (in constant 2001 dollars). The impact on salary  between displaced employees who relocated and those who remained in  the New York City area was greater for bargaining unit employees than for  EAS employees. Our analysis of the Service’s salary data shows that the 44  displaced bargaining unit employees who relocated to other postal IT  centers were, 9 years later, earning salaries that averaged about 14 percent  more (in constant 2001 dollars) than they had been earning when the New  York IT Center closed. In contrast, the 43 displaced bargaining unit  employees who remained in the New York City area were earning salaries  that averaged about 6 percent less (in constant 2001 dollars) than the  salaries they were earning at the time of closure. Almost all of the 43  displaced bargaining unit employees who remained in the New York City  area after the closure took lower paying mail clerk positions.
No EAS employees took pay cuts (in actual dollars) as a result of the  closure. Nine years after the New York IT Center closed, the 36 displaced  EAS employees working in the New York City area were earning an  average of about 2 percent more (in constant 2001 dollars) than they had  been at the time the center closed. In contrast, the salaries of the 24  displaced EAS employees who relocated to other postal IT centers saw  their salaries increase an average of about 8 percent (in constant 2001  dollars). Displaced EAS employees who relocated, however, fared worse,  on average, than displaced bargaining unit employees who relocated.
Generally, survey respondents who took postal jobs in the New York City  area indicated they did so because they were concerned about the social  impacts they believed they would face if they left the New York City area.  For example, 34 of the 46 survey respondents who remained in the New  York City area believed it was very important to remain in the area in  order to maintain family ties with parents and other relatives—ties that  would otherwise be strained by relocating to a new geographic area. One  respondent who took a postal job in the New York City area commented  that he could not relocate because he was the only person able to provide  care for his aged parents. Another respondent commented that she was  unable to relocate to another postal IT center because her parents’ health  was such that they would not be able to accompany her. A third   respondent who took a postal job in the New York City area commented  that she was unable to relocate for several reasons, one being that she  could not relocate her mother, who lived close by and was about to  undergo surgery. Respondents remaining in the New York City area were  also concerned that relocating to another geographic area could alienate  relationships with their children and grandchildren. Twenty-five of the 46  respondents remaining in the New York City area stated that it was very  important that they remain in close proximity to their children and  grandchildren.
Respondents who remained with the Service in the New York City area  indicated that concerns related to their spouses weighed heavily in their  decisions not to relocate. For example, 24 of the 46 respondents remaining  in the New York City area said that a very important concern they had was  that relocating would strain the relationship they had with their spouse.  One EAS employee decided against relocating because his wife was  pregnant at the time and did not want to sever the close relationship she  had with her physician. Another EAS employee stated that he did not  relocate primarily for family reasons—his spouse was working, and it  would have been very hard to ask her to give up her job and pension and  move across the country to a new location. Twenty-three of the 46  respondents remaining with the Service in the New York City area also  indicated that in reaching their decisions not to relocate, it was very  important to them not to lose social, community, and cultural ties to the  New York City area.
Given that so many of the 46 survey respondents who remained with the  Service in the New York City area did so to minimize the social impacts  they believed relocating would involve, it is not surprising that most had  strong family and cultural ties to the area. Forty-one of the 46 respondents  had parents, grandchildren, or relatives living in the New York City area.  Thirty-six of the 46 respondents had a spouse/partner living with them,  and 34 had children. Most of the respondents who remained in the New  York City area also tended to be more senior employees with many years  of postal service. Forty of the 46 respondents were 40 years old or older,  and 30 of the 46 respondents had over 15 years of postal service at the  time the New York IT Center closed.
Several survey respondents who accepted postal jobs in the New York City  area, rather than relocate, furnished written comments describing the  economic impacts they experienced following the closure of the New York  IT Center. In general, they believe that they suffered financially by staying  with the Service in the New York City area. As indicated earlier, our  analysis of the Service’s salary data confirmed that employees who  relocated generally fared better economically than those who did not.  Some said that their salaries would have been progressively higher; and  their chances for advancement would have been better, if they had  relocated to another postal IT center.
section_title: Postal Employees Relocating to Postal IT Centers in Other Geographic Areas Faced More Social Impacts than Economic Impacts
paragraphs: For many displaced New York IT Center employees, the decision to move  to another postal IT center in another geographic area was accompanied  by more social impacts than economic impacts. When the Service closed  the New York IT Center in 1993, it offered displaced employees the  opportunity to relocate to other postal IT centers, such as Eagan and San  Mateo. By relocating to other postal IT centers, employees were able to  continue working in the IT field with no pay cut. Eighty-two of the 283  displaced New York IT Center employees chose to relocate to a postal IT  center in another geographic area.
Survey respondents who relocated to postal IT centers in other geographic  areas often reported encountering very significant social impacts as a  result of their moves. For example, 23 of the 49 relocated postal  employees who responded to our survey reported that they had found it  very difficult to adjust to the new geographic area, work environment, and  local culture. The same number of respondents also reported finding it  very difficult to maintain or establish social, community, and cultural ties  or find supporting communities where they could get involved. One  respondent who relocated to the Eagan IT Center reported that her family,  coming from New York City, found it difficult to assimilate into the  midwestern culture. Another respondent found it difficult being away from  family and friends and missing out on important family events. She noted  that relocating had strained her marriage and forced her to give up a  private business she had been running in New York City.
Many survey respondents who relocated reported that they had been  greatly affected by concerns related to their spouse/partner. For example,  18 of the 49 respondents reported that since relocating, their  spouse/partner had found it very difficult to maintain or secure a  job/career, benefits, and retirement security. Nineteen respondents also  indicated that the relocation had been very difficult because of the strains  it had placed on relationships with spouses/partners. One respondent who  relocated commented that it had been emotionally difficult for his wife to  relocate and leave her family behind.
Twenty-two of the 49 relocated respondents reported that relocating from  the New York City area to another geographic area had put strains on  family relationships; and 20 respondents reported that as a result of the  relocation, it had been very difficult to keep their families together. One  respondent noted that it had been difficult for him and his wife to leave  the New York City area because they had children working and going to  school there, and they were also leaving elderly parents behind.
Twenty-three of the 49 respondents who relocated stated that as a result of  their relocation, they had a very difficult time maintaining social ties with  parents and other relatives. One respondent commented that the  relocation meant not being there for his mother when she passed away  and not being able to be with his relatives. Twenty-two respondents stated  that as a result of relocating to another geographic area, they had a very  difficult time assisting with the physical care of their parents or other  relatives. One employee commented that relocating had placed  tremendous stress on him as well as his wife, children, parents, and other  relatives.
Finally, survey respondents who relocated typically reported that they had  experienced significant social impacts associated with the relocation  itself. Twenty of the 49 relocated respondents reported that they had  experienced a very difficult time dealing with the cost, time, and energy  involved in relocating from the New York City area to their new homes in  another geographic area. Fourteen respondents also noted that they had a  very difficult time selling their homes in the New York City area or buying  homes in their new geographic area. One respondent who was a  bargaining unit employee stated that the Service did not help him sell his  house in the New York City area or assist with the costs associated with  the sale. Another survey respondent stated that he lost money relocating  because he had just refinanced his home in the New York City area when  the Service announced the closure of the New York IT Center. He believed  it would have been better if postal officials had given employees more lead  time to plan their affairs before the Service closed the New York IT Center.  Another respondent believed that relocating workers needed more time  than the Service provided to research housing options, schools, and  medical facilities. He believed that because employees had insufficient  time to research these things, it created a social hardship on them and  their families that could have been avoided. According to postal officials,  the Service provides bargaining unit employees about 7 months’ notice of  planned closures.
Most survey respondents who relocated to other postal IT centers  indicated that they did so because they were concerned about the  economic impacts they believed they would face if they remained in the  New York City area. Forty-four of the 49 respondents who relocated  reported that keeping their jobs for economic/financial well-being had  been very important to them when deciding whether or not to relocate to  another postal IT center. Forty of the 49 respondents said that concerns  about maintaining their pension plan and retirement security had been a  very important factor in deciding to relocate. One respondent indicated  that he and his colleagues who relocated to Eagan felt that they had no  real choice but to relocate if they wanted to maintain their financial well- being. He stated that the only option the Service offered him besides  relocating to another postal IT center was to remain in the New York City  area as a mail clerk or letter carrier with temporary saved-pay. Another  respondent who relocated also stated that she didn’t believe she had any  other viable choice besides relocating. She stated that she was too old to  look for a nonpostal job and didn’t believe she could afford to remain with  the Service in the New York City area in a non-IT position and take a  reduction in pay when her saved pay expired. As previously noted, our  analysis of the Service’s salary data for displaced New York IT Center  employees confirmed that employees who relocated generally fared better  economically than those who remained in the New York City area.
Twenty-two of the 49 relocated survey respondents also reported that in  deciding to relocate, they had considered it very important that they keep  their IT jobs for career advancement purposes. Twenty respondents also  reported that they had been very concerned that as older workers, they  would have found it very difficult to find satisfactory jobs if they had not  relocated to other postal IT centers and kept their IT jobs. A respondent  who relocated to another postal IT center stated that he had no other  choice but to relocate if he wanted to continue working with the Service in  an IT position.
Most of the 49 survey respondents who relocated to postal IT centers in  other geographic areas tended to have fewer years of service than the 46  respondents who remained in the New York City area. Only 16 of the 49  respondents who relocated to another postal IT center had 15 years or  more service, whereas 30 of the 46 respondents who stayed with the  Service in the New York City area had 15 years of service or more.  Otherwise, the demographics of those who relocated to a postal IT center  in another geographic area were similar to those of the respondents who  stayed in the New York City area. Thirty-eight of the 49 relocated survey  respondents were 40 years of age or older at the time the New York IT  Center closed; 42 had parents, grandchildren, or relatives living in the New  York City area; and 39 had a spouse/partner living with them. In contrast,  40 of the 46 respondents who remained with the Service in the New York  City area were 40 years of age or older at the time the New York IT Center  closed; 41 had parents, grandchildren, or relatives living in the New York  City area; and 36 had a spouse/partner living with them.
section_title: 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
paragraphs: San Mateo IT Center employees responding to our survey anticipate more  economic impacts than social impacts if they choose to remain in the Bay  Area and more social impacts if they relocate with the Service to another  postal IT center. If the Service closes the San Mateo IT Center, the options  available to San Mateo IT employees to minimize their economic and  social impacts vary, depending on individual circumstances and job status.  Some affected employees will likely seek other employment in the Bay  Area, some will likely retire, and others will likely relocate to another  postal IT center in order to keep their IT jobs.
On the basis of the best information they had available at the time, 167 (78  percent) of the 213 San Mateo IT employees responding to our survey  indicated that they would likely stay in the Bay Area if the Postal Service  closes the San Mateo IT Center. Under such circumstances, they said they  would expect to face more economic impacts than social impacts. Many  anticipate that their decision to stay in the Bay Area could result in them  losing their Postal Service jobs. According to postal officials, affected San  Mateo IT employees will be able to apply for vacant postal positions,  provided they meet the minimum qualifications; however, the Service does  not anticipate holding open vacant positions in the Bay Area for these  employees. Furthermore, the Service no longer anticipates that it will have  many job vacancies in the Bay Area.
Thirty-six (17 percent) of the employees responding to our survey  indicated that if the San Mateo IT Center closes, they would probably  relocate to another postal IT center. Moreover, they anticipate facing more  social impacts than economic impacts from their decisions. Survey  respondents indicating they would likely relocate reported that they were  doing so primarily for their financial well-being and retirement security.  Many provided narrative comments in their survey responses describing  how relocations would probably lead to family separations for at least a  few years. Some of the married respondents indicated they would  probably experience some economic impacts from their relocation  decision because they would have trailing spouses who would be leaving  their jobs in the Bay Area. The remaining 10 survey respondents (5  percent) indicated they were unsure what they would do if the Service  closed the San Mateo IT Center.
subsections: section_title: Options Available to San Mateo IT Center Employees
paragraphs: All San Mateo IT Center employees meeting the minimum age and service  requirements have the option of retiring. According to postal officials, the  Service anticipates offering early retirements to all eligible employees  provided that the Office of Personnel Management approves the Service’s  request, but the Service does not anticipate offering buy-outs. Other  options available to San Mateo IT Center employees depend, in part, on  whether they are bargaining unit or EAS employees. Bargaining unit  employees are covered by a collective bargaining agreement with a no- layoff provision and are therefore guaranteed a job at another postal IT  center. EAS employees are not guaranteed a job at another postal IT  center. According to postal officials, about half of the EAS employees will  be offered jobs at other postal IT centers. Bargaining unit and EAS  employees who do not retire, relocate to another postal IT center, or find  another postal job on their own will likely be separated from the Service.
Two years ago, when the IT Department first announced its proposal to  close the San Mateo IT Center, postal officials indicated that the Service  could likely find postal jobs for bargaining unit employees who wanted to  stay in the Bay Area rather than relocate to another postal IT center. For  most bargaining unit employees, this would have involved a downgrade to  a mail clerk position. However, according to postal officials, most affected  employees would have retained their IT pay for up to 2 years, after which  their pay would have been reduced to the pay of their new positions.  However, in July 2002, postal officials told us that conditions had changed  and that the Service was no longer in a position to accommodate  bargaining unit employees who want to stay in the Bay Area. San Mateo IT  Center employees can still apply for any postal job vacancies, provided  they meet the minimum qualifications; however, few vacancies are  anticipated for the Bay Area. Postal officials said that because of recent  drops in mail volumes and advances in automated mail processing, the  Service now has an excess of mail clerks in the Bay Area. Nevertheless,  postal officials indicated that in keeping with the Service’s collective  bargaining agreement with APWU, all bargaining unit employees would be  offered jobs in one of its other postal IT centers—although most of the job  offers would probably be for positions in its Eagan IT Center.
The Service has indicated that it also plans to make available to all EAS  employees the services of a private job search firm to help them find  employment outside the Service. However, according to postal officials,  the Service has no plans at this time to extend these services to its  bargaining unit employees because of their no-layoff clause, which EAS  employees do not have. Postal officials said that the benefits provided San  Mateo bargaining unit employees are specifically governed by its collective  bargaining agreement with the APWU. In appendix I, we present (1)  demographic data for San Mateo IT Center employees and displaced New  York IT Center employees who responded to our survey and (2) the likely  options/opportunities for San Mateo employees and options/opportunities  that were available for displaced New York employees.
section_title: San Mateo IT Center Employees Planning to Stay in the Bay Area Anticipate More Economic than Social Impacts
paragraphs: Essentially all of the 167 San Mateo survey respondents who indicated that  they would likely stay in the Bay Area reported that they anticipate their  decisions will result in more economic impacts than social impacts.  According to postal officials, those staying in the Bay Area will likely lose  their postal IT jobs and will not likely find other jobs with the Postal  Service because of its efforts to downsize. Further, the respondents were  concerned that because of the tight job market in the technology sector,  they might be unable to find nonpostal IT jobs in the Bay Area. Of the 167  respondents, 140 (84 percent) anticipated difficulty finding jobs to  adequately support their families. Finally, respondents said they were  concerned that if they could not find satisfactory jobs with the Postal  Service or the federal government, they would lose their ties to the federal  retirement and health care systems. Respondents planning to stay in the  Bay Area generally anticipate a range of outcomes that include retiring  earlier than planned to adjusting to a reduced standard of living.
San Mateo respondents who indicated that they planned to stay in the Bay  Area cited a number of reasons for their decisions, including age, longevity  in the Bay Area, extensive family and social ties in the area, and working  spouses with substantial time invested in their careers. Three-fourths of  the respondents planning to stay are over 45 years old; have lived in the  Bay Area for more than 20 years; and indicated that they have extensive  family ties, social ties, and other responsibilities in the area. These older  respondents also typically have working spouses who are reluctant to  leave their jobs and lose their pension benefits. For example, 79 of the 134  respondents (59 percent) who provided reasons for not relocating  identified concerns with spouses’ careers as a primary motivator in their  decision not to relocate. This is not surprising since 49 of the 79  respondents (62 percent) reported that their spouses contributed at least  50 percent to the household income.
San Mateo respondents who indicated they would not likely relocate also  reported having high school and college age children reluctant or  unwilling to relocate and aging parents in need of assistance who would  be left behind. Of the 60 respondents with high school and college age  students, 58 (97 percent) said keeping their family together was a very  important factor in deciding not to relocate. In addition, 78 percent of  those deciding not to relocate cited maintaining social and community ties  as an important factor in their decision. Over 70 percent also cited health  issues and a reluctance to sell their homes as factors in deciding not to  relocate. A similar percentage were also concerned that maintaining their  health care coverage might become difficult should they lose their postal  IT jobs–a particular concern if family members have serious health  conditions and continuity of care and coverage for preexisting conditions  becomes critical.
Under the Service’s collective bargaining agreement with APWU, San  Mateo IT Center bargaining unit employees are guaranteed jobs at other  postal IT centers. Thus, these employees have the option of relocating  with their jobs to other postal IT centers and continuing employment with  the Service. Conversely, EAS employees are not guaranteed jobs, and  some San Mateo EAS employees will likely not have the option of  relocating and continuing employment with the Service. According to the  Service, the option to relocate will likely be extended to about half of the  EAS employees. One respondent who was an EAS employee, age 49 with  15 years of service, commented that not having the assurance of being able  to relocate to another postal IT center has increased his anxiety about the  potential closure. He reported that he is not eligible for retirement and  doubts that he will be offered other employment with the Service. He  indicated that he essentially has no option but to find a nonpostal job  because he is the primary breadwinner and has many years to go on his  mortgage payments. He indicated that the Service will pay him severance  pay equal to 4 or 5 months’ salary, but he anticipates much difficulty  finding another IT job in the Bay Area because of the tight labor market  for technology positions.
The majority of the 167 San Mateo respondents who anticipate staying in  the Bay Area reported that they will likely seek whatever postal  employment that may be available in the Bay Area, although many  indicated in their narrative responses that such job prospects do not look  good. The remaining respondents who anticipate staying in the Bay Area  reported that they would likely retire or seek nonpostal employment in the  Bay Area. (See fig. 4 for details.)
San Mateo respondents indicating that they would likely seek other  employment in the Bay Area were skeptical about finding such  employment. According to postal officials, finding other postal  employment is unlikely because of Servicewide downsizing. Some  respondents thought they might qualify for other postal management or  administrative positions, but they were not optimistic about the  availability of such positions. Both EAS and bargaining unit respondents  seeking nonpostal employment anticipated difficulties because of the  current slump in IT employment and the added difficulty faced by older  workers in finding new employment. Additionally, those anticipating  seeking new employment were concerned that their earnings would likely  be less and that they would lose current health and retirement benefits.
Some San Mateo respondents indicated they would be willing to take a  non-IT job if it would mean continued employment with the Service in the  Bay Area. For example, one younger respondent said she would be willing  to transfer from her computer programmer/analyst job to other kinds of  postal work in order to stay in the Bay Area because both her and her  husband’s families live nearby, her mother cares for her baby while she is  at work, and her husband’s parents are in frail health and need constant  assistance. Other respondents indicated they wanted to stay in the Bay  Area but did not want to take a non-IT job. For example, one senior  systems analyst, making $67,000 per year, said he would rather take early  retirement and try to find a nonpostal job in his field than take a mail clerk  job at $40,000 per year.
According to postal officials, employment opportunities may not be very  good for individuals wishing to stay in the Bay Area. Postal officials said in  July 2002 that the job market for IT positions in the Bay Area had changed  significantly in the last 2 years. They said that 2 years ago, IT jobs were  plentiful in the Bay Area and that the Service had difficulty attracting and  keeping IT personnel. More recently, however, they reported that those  conditions had changed. They said that in the current economic  environment, IT positions in the Bay Area have become difficult to find.  Additionally, postal officials indicated that they could no longer  accommodate San Mateo bargaining unit employees who might want to  stay in the Bay Area as mail clerks because the Service now has excess  employees in the Bay Area.
Fifty-two of the 167 San Mateo respondents who did not anticipate  relocating to another postal IT center reported that that they would likely  exercise their option to retire. Forty-five of those respondents said their  retirement would be earlier than planned, and 39 said they would face  financial difficulties in retirement. Of the respondents indicating that they  would likely retire, 22 said it would be very difficult to maintain or find  adequate housing on their reduced incomes. For example, one respondent  said that her reduced income would be insufficient to cover her health  benefits, mortgage payments, and other expenses and that finding  supplementary employment would be difficult at her age.
One respondent who was an EAS employee, age 50 with 25 years of  service, said he would likely take early retirement because he does not  think that the Service will offer him another job. He indicated that he must  stay in the Bay Area because his wife will not be eligible to retire for 5  years, his daughter attends a local college, and his aging parents need  regular assistance. Because retirement would considerably reduce his  income, he said he would have to find other work in order to meet his  mortgage payments and other expenses.
In discussions of the survey results with postal officials, they expressed  surprise that such a large percentage of affected San Mateo IT Center  employees had indicated they would likely stay in the Bay Area and  compete for jobs in a tight labor market, rather than relocate and continue  their employment with the Postal Service. The officials said they expected  that more affected IT employees would eventually decide to relocate when  they encountered difficulty finding other suitable jobs in the Bay Area. The  officials also said that based on past experience, about one-third of all  employees would likely relocate if the Service closes the San Mateo IT  Center. As previously noted, the Service plans to offer all EAS employees  the services of a private job search firm to help them find nonpostal jobs if  they decide to seek outside employment. However, the Service has no  current plans to extend these services to bargaining unit employees  because they are guaranteed jobs at another postal IT center.
section_title: San Mateo IT Center Employees Who Are Likely to Relocate Anticipate Primarily Social Impacts, and Some with Trailing Spouses Also Anticipate Economic Impacts
paragraphs: Nearly all of the 36 San Mateo survey respondents who indicated that they  would likely relocate to another postal IT center anticipate social impacts  if they relocate. As a group, these respondents were most concerned about  the impact that relocating would have on their spouses and/or other family  members.
Twenty-nine of the 36 San Mateo respondents (81 percent) who said they  intend to relocate to other postal IT centers are over age 45, and many are  concerned that the relocation would split up their families. Twenty-two of  the 36 respondents have spouses; and 9 said that if they relocated, their  spouses would probably not relocate with them. The nine respondents  reported several reasons why they did not believe their spouses would  relocate:    spouse has lived in the Bay Area for 30 or more years,    spouse has aging parents in the Bay Area who need care,    spouse has children who would not be relocating, and    spouse’s job pays well (about half the family income).
Twelve of the 18 San Mateo respondents who had children and/or  grandchildren living in their households reported that at least 1 family  member would be left behind. One respondent commented that leaving his  7-year-old son with no father present could have a life-long negative  impact. Another said relocation would separate him from his wife and  three children for 5 to 6 years until he was eligible to retire. He stated that  the economic impacts for him would be (1) the cost of maintaining two  households, (2) travel costs between the Bay Area and his new job for  family visits, and (3) a more expensive telephone bill. Additionally, 30 of  the 36 respondents reported having aging parents or relatives in the Bay  Area, and 25 said relocation would make current or future care for them  difficult. In some cases, the respondents reported that their parents relied  on them to assist with doctors’ appointments, aid their limited English  language skills, and be available in case of emergencies.
San Mateo respondents likely to relocate also reported concerns with  losing community and social ties and with adjusting to new communities,  cultures, and work environments. These concerns were particularly  reported among ethnic minority respondents, who accounted for more  than half of those likely to relocate. They expressed concerns about  leaving their important cultural ties in the Asian and Hispanic  communities of the Bay Area. For example, one respondent commented  that his wife, of Asian descent and with limited English language skills,  would have a difficult time leaving the Bay Area.
Three-fourths of San Mateo respondents who anticipated relocating to  another postal IT center reported that the relocation would strain their  family relationships, and one commented that it would likely lead to  divorce. Although respondents anticipated strained family relationships,  several saw the relocation as temporary, until they were eligible to retire.
Other San Mateo respondents who said they would likely relocate  reported concerns about anticipated economic impacts associated with  trailing spouses. Some reported concerns about the possible loss of  spousal income and benefits if their working spouses were to relocate and  be unable to find employment at the new location. For example, eight  respondents reported having a trailing spouse who would be looking for  employment after relocation, and seven of those thought employment  would be difficult for their spouses to find. One respondent commented  that relocating her spouse would be a major problem because her husband  is a journalist and has already learned that prospects for such jobs at the  new location are poor. Postal officials indicated that in cases where the  trailing spouse is also a postal employee, the Service would work with the  trailing spouse to find suitable postal employment at the new location.  However, officials did not anticipate that the Postal Service would offer  employment services to trailing spouses who are not postal employees.
Nearly all of the 36 San Mateo respondents who indicated that they would  likely relocate reported that the cost, time, and energy involved in moving  would be difficult for them. Twenty-three respondents reported being  homeowners who will face the prospect of selling and buying homes.  While relocating to a lower housing cost area could provide them some  financial advantage, several respondents commented that the differential  costs and the loss of preferential property tax status would make it  difficult for them to ever move back to the Bay Area.
section_title: Experience Shows that Providing Job-Finding Assistance Is Beneficial to Employers and Employees
paragraphs: 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. 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.
Our prior work on job loss issues further showed that, in general,  organizations that offer job placement assistance to displaced employees  also benefit. Providing job placement assistance helped sponsoring  organizations (1) avoid lawsuits by displaced employees, (2) reduce  unemployment costs, and (3) enhance their reputations in the community  by demonstrating that they cared about their employees. Similar to other  organizations that have helped displaced employees, the Service has  indicated that it plans to provide assistance to San Mateo IT Center  employees to minimize the impact, if it decides to close the center. In  addition to providing the relocation and separation benefits mentioned  earlier, the Service has indicated that it plans to hold a series of meetings  with affected San Mateo employees and their families to provide them  with needed information on available options and opportunities and to  address employees’ questions about the closure. Additionally, as noted  earlier, the Service plans to provide the services of a job search firm to San  Mateo EAS employees, although bargaining unit employees will not  receive similar services because such services are not provided for by the  collective bargaining agreement that governs IT bargaining unit  employees’ benefits. According to postal officials, services to be provided  by the job search firm are to include, among other things, seminars on  change management, skills development, resume writing, negotiation  skills, how to network, how to find a job on the Internet, and group  counseling and coaching.
In 2000, when the IT Department proposed closing the San Mateo IT  Center, it estimated that 33 percent of affected employees would likely  relocate to other postal IT centers and possibly need some relocation  assistance. The IT Department acknowledged that because it expected  that only 33 percent of affected employees would relocate, it would need  to rely on contractor support to cover for the loss of knowledgable  employees who would not be relocating from the San Mateo IT Center to  other postal IT centers. Our survey of San Mateo employees, however,  indicates that the IT Department’s estimate of relocating employees may  be overstated; and its need for contractor support could, therefore, be  greater than planned. According to our survey results, only 17 percent of  San Mateo employees currently anticipate that they would likely relocate  to another postal IT center if the Service closes the San Mateo IT Center.  Fifty-nine percent of the respondents (who indicated they would likely  stay in the Bay Area and provided reasons for not relocating) identified  concerns with their spouses’ careers as a primary motivator in their  decision not to relocate. Further, seven of the eight respondents relocating  with trailing spouses who would be looking for jobs at the new location  expressed concern that the spouses would have difficulty finding suitable  employment.
Relocation experts have noted that because of the prevalence of dual- income households in the workforce, employees who must make a  relocation choice often base their decision on whether or not their trailing  spouses can find suitable employment at the new location. Given this,  relocation experts report more companies are providing employment  assistance to trailing spouses, such as resume preparation and review,  paying job finders-fees, assisting with finding employment, and  reimbursing trailing spouses for lost income while they seek employment  at the new location.
When the IT Department first proposed closing the San Mateo IT Center in  2000, economic conditions and the employment outlook in the Bay Area  were noticeably better than they are today; so much so that the Service  anticipated that postal positions would be available in the Bay Area for  many displaced employees who did not relocate. However, because of  changed economic conditions, recent drops in mail volumes, and advances  in automated mail processing, the Service no longer expects that it will  have job openings to accommodate employees who do not relocate. As  noted earlier, although the Service has indicated that it plans to make the  services of a private job search firm available to San Mateo EAS  employees, the Service has no plans at this time to extend similar services  to San Mateo IT Center bargaining unit employees because their benefits  are governed by the Service’s collective bargaining agreement with the  APWU. Consequently, many bargaining unit employees will face a dilemma  if the Service closes the San Mateo IT Center. If bargaining unit employees  do not relocate, they will likely lose their postal employment and would  not have the services of a private job search firm to help them find other  employment. Additionally, bargaining unit and EAS employees with  working spouses who are not postal employees face a dilemma concerning  the impact a relocation would have on their trailing spouses’ careers and  their families’ household incomes. That is, if these employees relocate, will  their trailing spouses be able to find suitable employment at the new  location or will household incomes and spouses’ careers suffer?
By not addressing employees’ concerns about trailing spouses, the Service  may be missing an opportunity to entice more of its San Mateo IT Center  employees to relocate to other postal IT centers, thereby exposing itself to  higher than necessary contractor costs. If the Service decides to close the  San Mateo IT Center, it is required under its agreement with APWU to  notify the union of its decision and offer to meet with national level  officials to discuss the closure’s impact on affected employees.  Historically, discussions preceding previous closures have resulted in  additional provisions for affected bargaining unit employees, which were  specified in Memorandums of Understanding that modified existing  collective bargaining agreements. According to postal officials, the Service  expects that if it decides to close the San Mateo IT Center, the APWU will  request a meeting to discuss, among other things, additional benefits for  affected bargaining unit employees.
section_title: Conclusions
paragraphs: The Service is following its Investment Review and Approval Process as it  moves toward a decision about closing the San Mateo IT Center. However,  economic conditions have changed significantly since 2000 when the IT  Department prepared the DAR in support of closing the San Mateo IT  Center. Also, the DAR does not reflect the impact that the Service’s  announced plans to automate and reengineer its field accounting  activity—which involves closing its 85 district accounting offices and  consolidating the residual activities into its 3 Accounting Service  Centers—could have on projected savings associated with the proposal to  close the San Mateo IT Center. Therefore, the Service may be using dated  information as it goes about making its closure decision regarding the San  Mateo IT Center. Finally, the employment outlook is not nearly as  encouraging now as it was in 2000 when employment conditions in the  Bay Area were better and the Service indicated it would have postal  positions available for bargaining unit employees who did not want to  relocate. Given these changed conditions, bargaining unit employees who  do not relocate might encounter difficulty in finding employment in the  Bay Area. Further, some San Mateo IT employees may be reluctant to  relocate because of concerns that their trailing spouses might have  difficulty finding jobs at the new location.
section_title: Recommendations for Executive Action
paragraphs: 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.
section_title: Agency Comments and Our Evaluation
paragraphs: The Postal Service provided comments on a draft of this report in a letter  from the chief financial officer and executive vice president dated  December 19, 2002. These comments are summarized below and are  reprinted in appendix II. Postal officials also provided technical and  clarifying comments, which we have incorporated into the report where  appropriate.
Although the Service did not comment on our findings, it did agree with  our recommendations. The Service reiterated that it has not yet made a  decision regarding the proposed closure of the San Mateo IT Center and  will reevaluate the proposed closure as part of its overall strategy to  rationalize its administrative infrastructure and meet its data processing  needs with the appropriate facilities, technologies, and staff. The Service  indicated that it would implement our recommendation that the DAR be  reviewed and updated before a decision is made about closing the San  Mateo IT Center. Specifically, the Service said that before making any  decisions regarding possible disposition of the building and property, it  would update the information in the DAR. The Service further stated that  it was aware that conditions in the commercial building market in the Bay  Area have changed since the San Mateo DAR was submitted. The Service  stated that it might need to revisit the proposal to sell the building in light  of an updated assessment of the building’s fair market value, the viability  of potential outlease or leaseback options, and the space needs of the  expanded Accounting Service Center.
In response to our other recommendations that the Service consider  offering to (1) help bargaining unit employees find jobs if they remain in  the Bay Area and (2) provide some assistance to help the trailing spouses  of employees who relocate find jobs, the Service indicated that it would  try to minimize the negative effects of relocation. The Service said that if it  determines that closing the San Mateo IT Center and relocating its  functions to other postal IT centers are still critical to the Service’s IT  strategy, the Service will adhere to the provisions of its bargaining unit  agreements. The Service further stated that to the extent possible,  consistent with those agreements, it will attempt to mitigate the negative  impacts that relocation may have on employees and their families.
As agreed with your offices, unless you publicly announce its contents  earlier, we plan no further distribution of this report for 30 days after the  date of this letter. At that time, we will send copies of this report to the  Chairmen and Ranking Minority Members, Senate Committee on  Governmental Affairs and its Subcommittee on International Security,  Proliferation, and Federal Services; and to the Chairman, House  Committee on Government Reform. We will also send copies of this   report to the Postmaster General and Chief Executive Officer, U.S. Postal  Service, and the President of the American Postal Workers Union. In  addition this report will be available at our Web site at http://www.gao.gov.
Major contributors to this report included Gerald P. Barnes, Isidro L.  Gomez, Stuart M. Kaufman, Roger L. Lively, Donald J. Porteous, and  Charles F. Wicker. If you have any questions about this letter or the  appendixes, please contact me or Mr. Barnes on (202) 512-2834 or at  ungarb@gao.gov or barnesgp@gao.gov.
section_title: Appendix I: Comparative Demographic Data and Options for San Mateo and Displaced New York IT Center Employees
paragraphs: According to the responses to our survey, San Mateo IT employees, on  average, are older and have more years of service than displaced New  York IT Center employees at the time of the center’s closure. The  demographics of San Mateo IT Center employees indicating they would  not likely relocate and displaced New York IT Center employees who did  not relocate were more similar than the demographics of San Mateo IT  Center employees who indicated they would likely relocate and displaced  New York IT employees who relocated. Table 1 provides comparative  demographic data for San Mateo and displaced New York IT employees.  Data are shown for employees who relocated (or are likely to relocate in  the case of San Mateo employees) and those who did not relocate (or are  likely not to relocate in the case of San Mateo employees). Because our  data for New York IT Center employees do not include all displaced New  York employees, the data may not be totally representative. For example,  during the 9 years since the New York IT Center closed, some of its  displaced employees may have retired and are therefore not reflected in  our data. If data were available for this group, it would have tended to  increase the average age and years of service of displaced New York IT  Center employees at the time of closure.
Additionally, displaced New York IT Center employees had more favorable  options/opportunities to lessen the impact of the closure than San Mateo  IT Center employees are likely to have. For example, all displaced New  York IT Center employees had the option of relocating with their jobs to  another postal IT center or continuing to work for the Service in the same  geographic area (though not necessarily in an IT position), whereas San  Mateo IT Center employees likely will not have this option. Table 2  displays the range of options/opportunities likely to be available to San  Mateo IT Center employees and options/opportunities that were available  to displaced New York IT Center employees. Options/opportunities are  similar for early retirements, assistance programs to help EAS employees  find employment outside the Service, and help for trailing spouses who are  postal employees and need to find suitable employment at the new  location. Options/opportunities are not similar with regard to buy-outs,  ability to continue employment with the Service in some capacity, saved- pay protections, and the availability of local postal and nonpostal jobs.
section_title: Appendix II: Comments from the U.S. Postal Service