To paraphrase a line from a classic novel: “this is the best of times, and it is the worst of times.” The phrase certainly applies to AT&T and its Union workers.
Let’s start with the best of times:
AT&T is prosperous and its leadership is boldly predicting a bright future. In 2017, AT&T had revenues of $160.5 billion and net income of $29.5 billion, with capital investment of $22 billion.
Since our last negotiations, revenue has increased 9 percent, net income is up 120%, share price is up almost 29% and dividends are up 18%; all good news.
Company leadership bases its optimism on core company strengths and on some new wireless opportunities - FirstNet and 5G - and its expansion into video and entertainment. This company is clearly poised for growth and ready to enter a new arena. But its core business - and CWA’s bargaining unit - is still at the foundation. Our members, who provide customer support services and business support services, are a key part of AT&T’s success.
As John Stephens said recently, “customer satisfaction is the number one driver of lower churn.” Churn is enemy number one in the communications industry. CWA members are the ones who build those customer relations and create the needed stability for the company to grow.
Stephens went on to say that the second factor needed to reduce churn is a good bundle. He said the best bundle working for AT&T is its high-speed broadband:
* AT&T’s IP-based copper and fiber-based broadband service is a magnet for customers. AT&T added nearly 600,000 IP broadband customers throughout its footprint in 2017;
* This is the magnet - broadband service makes it easy to bundle with video and with wireless and bundling with broadband tends to keep customers. The networks that we build and maintain make broadband possible.
There has been another development that has fueled AT&T’s future trajectory: The Tax Cuts and Jobs Act signed into law in December. Randall Stephenson was one of the biggest corporate cheerleaders for that legislation. He said that tax reform would be positive for the U.S. economy and positive for AT&T. When AT&T released its 4th quarter report, it was clear that the last part of that sentence was true.
AT&T’s net income in 2017 was $16.5 billion higher than 2016. The vast majority of that increase was due to the tax cuts.
Stephenson pledged that if tax reform passed, the company will spend $1 billion more in capital investment and create an estimated 7,000 jobs - jobs that would be paid $70,000 to $80,000 a year.
He also promised to give AT&T employees a one-time, $1,000 bonus.
So let’s figure this out: $16.5 billion in tax breaks in 2017, minus $1 billion for capital investment (about 6 percent of the tax windfall), minus $200 million in bonuses to workers (about 1 percent of the windfall) leaves $15.3 billion. Add in the company's announced 2% increase in dividends for 2018. That accounts for roughly $240 million on an annualized basis (another 1.5%). That leaves $15 billion. That is more than enough to stabilize the workforce, bring outsourced work back, provide some real wage increases and provide pathways to jobs in the new divisions.
Now for the worst of times scenario:
As soon as the tax cut bill was signed into law, AT&T announced it would give its 200,000 employees a $1,000 bonus. Two beats later AT&T announced the layoff of some 1,500 bargaining unit employees. Rather than creating 7,000 new jobs, the company has sidelined more than 70 workers in the Legacy contract alone, and closing a NIC center in Las Vegas.
Overall, since we last held contract negotiations, the union represented workforce at Legacy T has been cut by 656 jobs. There is no reason the outsourced work can’t be brought back to keep our members employed!
All this while, throughout AT&T, customer service work is outsourced to more than 30 different call center operators in 8 countries and tech work, like installation and maintenance, to domestic, low-wage contractors.
Our members are outraged at AT&T’s duplicity. In this round of bargaining, the Union will demand an end to contracting out while laying off workers. We want to stop AT&T from farming out our work to the lowest bidder. We want to call a halt to AT&T sending more work to contractors than to bargaining unit members.
AT&T’s duplicity doesn’t stop at promising jobs but then laying off workers.
Stephenson promised 7,000 good, skilled, high-wage jobs that pay $70,000 to $80,000 a year. But at our bargaining tables, Management demands second tier jobs with second tier wages and second tier benefits. It is time for AT&T to live up to Stephenson’s promises. Stop the layoffs. Show us the jobs. Show us the good, high-wage jobs Stephenson promised. We want some of those jobs in Legacy T.
At our bargaining tables across the country, Management is demanding that workers pay more and more of health care costs regardless of their ability to pay. In our bargaining units more and more workers are opting out of health care coverage and management claims it doesn’t know why. I’ll tell you why: it is because health care costs too much at AT&T. Since 2013 contributions have gone up an average of 28% per year, every year. That is an unsustainable increase in health care costs that is driving people out of our plans.
Management wants everybody, including these second tier jobs and new hires, to pay the same amount toward health care that AT&T Management pays - 32 percent of health care costs. You think this is fair? That everybody pays the same amount? Well we do not think it is fair that a Prem Tech, a former DirecTV technician, earning about $50,000 a year, has to spend 12 percent of their wages on health care, while an AT&T Director earning $138,000 pays only 4 percent, and an Executive Director pays only 3.5 percent. If Randall Stephenson is paying for his health care, then he is spending less than 1 percent of his total compensation on health care. This is NOT fair. This is NOT right. This is NOT sustainable.
I am telling you right now - we are done with health care cost shifting. We are demanding a new approach. One based on affordability. In the past when CWA has proposed a progressive system of health care contributions, AT&T has said the approach is too complex and not administratively feasible. This is mind-blowing. AT&T, the company that is leading the world in 5G deployment, taking on the entertainment industry, capable of delivering high-speed broadband to tens of millions of homes across the country, cannot figure out how to make a payroll deduction based on wages. That answer is not acceptable.
AT&T is also shifting more responsibility and costs for retirement income onto workers. The designs of the pension plans have failed to keep pace with living costs and are no longer sufficient to assure retirement security. The cash balance accounts at Legacy T need to be updated to provide a retirement with dignity.
In this round of bargaining, CWA is determined that AT&T becomes a model employer. CWA is determined that our members benefit from the tax cut windfall that AT&T generated. The calculation we outlined before makes it clear: AT&T has a $15 billion windfall. There is plenty to be done and AT&T has the resources to get things accomplished.
This must be the best of times for all AT&T stakeholders. AT&T must work with CWA to create an equitable workplace, one required to meet the challenges of the new course AT&T has set and which assures that all stakeholders - workers as well as shareholders - take part in the prosperity we are all creating.
Our goals are straightforward, fair and equitable: job security, real income growth, affordable health care and retirement security. These are goals achievable with the prosperous AT&T poised for the next generation of communications.
A rising tide lifts all boats! We all want the company to succeed and be profitable and we expect our members to receive their fair share.