Verizon Strike is About All of Our Economic Futures

Aug 24, 2011Richard Kirsch

When a company making big profits squeezes its workers, we all pay.

For now, Verizon's striking workers are back on the job. A two-week walk-out by 45,000 Communications Workers of America (CWA) and International Brotherhood of Electrical Workers (IBEW) members from Massachusetts to Virginia led to Verizon finally agreeing to seriously engage the unions at the bargaining table. But the tough bargaining is just beginning. The issues at hand are about more than just a labor dispute -- they are at the heart of the problems facing our economy.

So what about the rich getting richer while average Americans tread water? The Chairman of Verizon, Ivan Seidenberg, made $18 million last year, 300 times that of the average worker (see Verizon proxy statements). Verizon made $3 billion in profits for the first half of this year alone and $22.5 billion in the past four years. Still, the company is asking its workers for $1 billion in annual concessions, which work out to about $20,000 a worker. Verizon's list includes cuts in pensions, holidays, sick leaves, and benefits for workers injured on the job. The company is asking workers to pay thousands of dollars more for health care each year, while Seidenberg and his wife get free health care for life.

Corporate America is doing fine while paying fewer taxes at home and shipping jobs overseas. Verizon got corporate tax refunds from the IRS totaling $1.3 billion in 2009 and 2010, years in which it made $7.5 billion. Verizon has outsourced thousands of jobs and is asking in the new contract for provisions that would make that outsourcing even easier.

Unions are a shrinking part of the American work force, leading to lower wages and benefits. CWA and IBEW represent Verizon's landline business. Despite repeated attempts to unionize Verizon, only 70 Verizon wireless workers belong to a union. One bright spot is that the unionized members of Verizon are also installing the company's FiOS product, which delivers cable television and Internet. But Verizon is competing with big, non-unionized cable companies like Time Warner and ComCast, where wages and benefits are significantly lower. There is better news in the broader wireless industry, where 40,000 employees of AT&T wireless are unionized. But that represents about one-third of the industry, whereas virtually the entire landline business is unionized.

Is new efficient technology replacing the old and displacing jobs? Verizon wants to make it seem like its unionized landline workers are working for a dying technology. But much of what we think of as new technology relies on the landlines installed and maintained by Verizon's unionized workers. Did you realize that your wireless signal actually goes through landlines that carry it from a cell tower? Or that when you use Skype or make a call on Gmail that they are carried by landlines? Severe limits on available spectrum force wireless companies to constantly find new ways to transmit signals over wired connections.

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Where did Verizon get the funds to start Verizon Wireless? From the cash generated by its traditional landline business. But while Verizon shareholders continue to reap the benefits of that investment, Verizon wants to stop the landline workers from sharing in the returns.

In short, what's at stake in the labor dispute between Verizon and its unions are the middle class jobs that drive the economy but are fast disappearing. It's not a surprise that Verizon's Chairman, Seidenberg, is also the Chairman of the Business Roundtable, the organization that represents the CEOs of America's biggest companies. Verizon is working hard in its proposed contract to keep up with all the corporate Joneses that have reaped record profits by cutting wages and benefits, shipping jobs overseas, and legally bribing Congress to create huge loopholes in the corporate tax code.

In two weeks we will mark the tenth anniversary of the attacks on the World Trade Center. Will we remember that in the days following the catastrophe, Verizon technicians resurrected the entire communications infrastructure of lower Manhattan, allowing the stock market and world financial markets to resume business with barely a hitch? In the last decade, Wall Street did great -- even after crashing the economy and getting government bailouts. It's the Main Street workers who kept the Wall Street infrastructure going who remain under attack, just as our entire economy remains under attack by companies like Verizon that would destroy middle class jobs in the United States to protect their multi-millionaire CEOs and corporate shareholders.

Next time you pick up your telephone, remember that the fight that Verizon's workers will continue to wage with the company over their contracts in the coming weeks and months is not just about whether the men and woman who make that call possible will continue to hold decent jobs that provide security for their families. It's about whether one more middle class engine of America's puttering economy will be wrecked.

Richard Kirsch is a Senior Fellow at the Roosevelt Institute and a Senior Adviser to USAction, whose book on the campaign to win reform will be published in 2012. He was National Campaign Manager of Health Care for America Now during the legislative battle to pass reform.

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