Wednesday, August 10, 2011

Communications, Electrical Workers Strike at Verizon

Verizon:  Trying to Run a Business Like a Government

Chester Higgins Jr./The New York Times
Striking Verizon workers outside
its headquarters downtown.
 The two sides remain far apart.

This week brought the news that the CWA and IBEW, two strong unions, had engaged in a strike against the Verizon telecommunications company.  The Dismal Political Economist was all set to write about the audacity of two unions to strike for higher pay and better benefits in an economy where job losses and lower pay and benefits were the norm.  The nerve of these people.

Well it turns out the strike is not over higher pay and better benefits, it is over an attempt by Verizon to reduce benefits for workers in its hard wired operations. 

Verizon wants the unionized workers to start contributing to their health care premiums, including $1,300 to $3,000 a year toward family coverage. The company has also called for freezing pension contributions for current employees, eliminating traditional pensions for future workers, limiting sick days to five a year, and eliminating all job security provisions.

Now Verizon’s position is that the employees in its wired division are very well compensated (and exactly whose fault is that?) and the union agrees in principle, if not with the numbers.

Verizon says its unionized employees are well paid, with many field technicians earning more than $90,000 a year, including overtime, with an additional $50,000 in benefits.Union officials say the field technicians and call center workers generally earn $60,000 to $77,000 a year before overtime and that benefits come to far less than $50,000 a year.

But the issue is really about increasing profits through cost control, as Verizon readily admits.

An Endangered Species

Verizon’s chief executive, Lowell C. McAdam, took a hard line on Sunday, arguing that workers in Verizon’s heavily unionized wireline businesses must agree to cost reductions

Now all of this sounds very much like the issues with state and local public employees who have been asked to cut back their benefits due to difficult times in the public sector.  Except, there is one difference here between cash starved governments and Verizon.

the unions have resisted Verizon’s requests for concessions on scores of issues because the company has been very profitable overall, with net income of $6.9 billion in the first six months of this year.

And Verizon Wants to Endanger This Species

So Verizon is highly profitable, but its wired business is declining and its employees are well compensated.  A reasonable solution would seem to be less generous benefits to new workers and to allow attrition to correct the problem. 

But Verizon apparently feels their strong profitability is not an issue, and that if governments can demand and receive concessions by employees, then business should emulate governments. 

So, in this case, and probably others to come, government can teach even a highly profitable business lessons.  How to increase profits by cutting benefits to workers.

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