American Rights At Work

Telecommunications companies provide services that are as essential to the public as our national highway system, and they have long recognized their role as public utilities rather than simply private businesses. The industry has also maintained its infrastructure in communities across the country in rural, suburban, and urban areas to ensure the quality of communication necessary for public safety and economic development. Investing in employees is key to providing these services. For decades, the telecommunications industry has provided technicians, customer service agents, operators, and others with job security, opportunities to advance and gain new skills, and sustainable wages and benefits. Yet since Verizon was formed in 2000, it has shirked its responsibilities as a public utility, pursuing a race-to-the-bottom, low-road business model that is detrimental to both employees and customers.

This report will detail how Verizon has maintained non-union divisions by interfering with its employees’ freedom of association, including Verizon Business technicians whose recent request for union recognition has been denied by the company. The report will also reveal how Verizon is downsizing its traditional landline operation, risking this source of good jobs, and further degrading the quality of service and access to high speed technology for residential and business customers. Finally, using AT&T’s productive relationship with its employees and unions as an example, this report shows that Verizon could choose a high-road model of investing in its employees and still compete in a rapidly changing industry.

Good jobs that our communities need at risk

The traditional telecommunications industry (wired telecom, as opposed to wireless telecom and cable) has historically been a source of good jobs for workers without a college education. This sector has also been an important source of employment for women and workers of color, who earn considerably higher wages than average.1 This is largely the result of collective bargaining, which began nationally in the Bell system in 1974 before it was broken up, and lifted industry wages well above the national average.2

The percentage of workers represented by unions in the wired telecom industry is very high at 62 percent.3 Union workers in the sector earn considerably more than non-union workers, demonstrating the strength of collective bargaining. 4 Unions have also encouraged a high-road model of labor relations with benefits for employers and customers. Compared to non-union establishments, union employers spend 83 percent more on training for technicians, and 90 percent more for training for customer service representatives.5 Employers earn back their investment; excluding workers leaving for retirement, turnover among service representatives one-third less and for technicians it is reduced by 45 percent.6 Cornell University professor Rose Batt found that when telecom call centers emphasized greater training, higher compensation, and job security through union contracts, not only was turnover reduced, but sales growth improved.7 Conversely, Batt found that higher turnover both increased employer costs of recruitment and negatively impacted sales.8

As the telecommunications industry has undergone rapid changes, spurred by new technologies and government deregulation, employment is shifting away from wired telecom and into the cable and wireless sectors. Workers without unions in these new growth sectors receive lower compensation, less funding for job training,  less job security, and also suffer from higher turnover.9 Cable giant Comcast has a pattern of suppressing its employees’ right to form unions and ability to raise standards in the industry.10 Verizon straddles both new and old sectors, operating as a former Bell company in wired telecom, while branching out into the new growth sector with Verizon Wireless and fiber optics television services.11 Yet to the detriment of workers, customers, and communities, Verizon appears to be embracing the low-road employment model of these new sectors by denying its employees’ right to form unions.

Dubious corporate structure suppresses union representation

When David Rogol drives his van imprinted with the Verizon logo to repair phone lines, one would assume that he was part of the company’s longtime union workforce. Yet despite working side-by-side with Verizon’s union technicians, David is a non-union technician working under the company’s Verizon Business division. That’s because Verizon Communications Inc. is split into three divisions: Verizon Telecom, Verizon Business, and Verizon Wireless. Verizon Telecom provides wired services for domestic residential and small business customers, including both traditional copper and newer fiber landlines; Verizon Business provides wired services for large domestic and international customers; and Verizon Wireless provides wireless services.12

Verizon’s corporate structure appears to be a textbook example of ‘double breasting,’ a tactic where an owner operates a non-union business separate from its union business in order to avoid having all of its employees enjoy the benefits of a union contract. When the company was formed in 2000 out of the merger of Bell Atlantic Corp. and GTE Corp., it inherited a decades-long collective bargaining relationship with the Communication Workers of America (CWA) and the International Brotherhood of Electrical Workers (IBEW). By double breasting, Verizon created a wall between the approximately 97,000 union employees in Verizon Telecom and the 35,000 employees at Verizon Business and Verizon Wireless.13 Thus in order for employees at Verizon Wireless and Verizon Business to have rights on the job and the benefits a union contract, they must organize in the face of fierce company resistance. At Verizon Business, employees are still without their union despite a strong majority demanding recognition in New York and New England, while workers at only one location at Verizon Wireless have successfully formed a union.

  

Verizon Business	Verizon Telecom		Verizon Wireless
Employees eligible for union representation	5,000	98,000	30,000
Employees currently in unions	300	97,000	50

Fighting for fairness at Verizon Business

In 2006, Verizon acquired MCI and created the Verizon Business division for the former MCI employees. These beleaguered employees came to Verizon after surviving one of the greatest corporate scandals of our time. In 2005, former MCI/WorldCom CEO Bernard Ebbers was sentenced to 25 years in prison for perpetrating an accounting fraud that led to the 2002 collapse of the company, and the loss of 20,000 jobs and $180 billion in investments.14 MCI/WorldCom employees lost tens of thousands of dollars in their 401(k) retirement funds when the company’s stock plummeted. In 2003, MCI/WorldCom emerged from bankruptcy under the name MCI. Many of these former MCI employees hoped for a better future when they were purchased by Verizon, assuming that they would have a union to protect them from corporate greed. But Verizon had other plans.

The Verizon Business division, which houses approximately 2,500 technicians, is a non-union, lower-tiered operation. Though Verizon Business techs perform virtually the same work as their union counterparts at Verizon Telecom, according to the techs interviewed for this report, they are denied the higher wages, fully-paid health benefits, and pension plan offered by the union contract.15 Verizon Business techs are also lacking job security, as Phil St. John, a tech from New Hampshire, lamented: “If you’re willing to give up your nights at home and your family time to do the things they need you to do, you want them to be there for you when you’re older, when you can’t work all the time.”16 And unlike their Telecom coworkers, Verizon Business techs work without regular and fair raises and clear paths to promotion provided by the union contract. According to one tech from New York, “The way they dish out promotions or raises, it’s definitely geared to who they want to give it to versus who deserves them…We have techs who have been here for less time than myself and are making as much as I’m making.”17

David Rogol, a tech from Massachusetts, recounted the intimidation by management that he experienced. He was visited by a senior manager shortly before the union effort went public—a man whom he had only met twice in his seven years at the job.22 Rogol recounted how the manager cited details of his seven year work history, indicating that he had closely read his personnel file. The manager then proceeded to question Rogol about the union organizing activities that Verizon Business had apparently discovered. Rogol later resigned from his position as team leader in order to gain the protection of the National Labor Relations Act, which excludes supervisors, during his effort to form a union.

Verizon disseminates misinformation

In response to employees’ organizing, Verizon Business has launched a multi-media assault of anti-union communications. Senator Hillary Clinton expressed concern over “the intimidation, the threats, and the false statements” contained in the company’s propaganda,23 which has included flyers, emails, and even a website. The “Union Awareness” website advises employees to visit the anti-union Center for Union Facts website,24 run by notorious industry lobbyist Richard Berman described by USA Today as a “a third party hired by companies to be their public face when they take on unpopular battles.”25 To further disseminate its message, Verizon Business has dispatched senior managers to its worksites to hold captive audience meetings, numbering as many as one to two per week, according to techs interviewed for this report. Thomas Fraine, a tech from Massachusetts, witnessed Verizon Business representatives intimidating employees with warnings that they could lose their benefits because bargaining would start from “ground zero.”26

Despite this interference, 65 percent of eligible Verizon Business techs in New York and 75 percent of techs in New England have signed union authorization cards, which were verified by community leaders and elected officials, including five members of Congress who checked the signed authorization cards against the employee roster.30 Yet Verizon refuses to recognize the techs’ union and insists that an election is the only fair method of determining majority support.31 Knowing that the NLRB election process will likely subject them to long delays and managerial coercion,32 the techs have mounted a campaign to get the company to honor their choice. Phil St. John echoes the frustration felt by many of the techs: “In my eyes, a union isn’t against the company—we just want to protect ourselves from greed. If we can make our company profitable, that’s great. But let’s see the profits trickle down.”33

Verizon violates the rights of its wireless workers

Verizon’s interference with its Verizon Business techs’ efforts to win a voice at work is not an isolated instance, but is part of a pattern of anti-union conduct by the company. According to charges filed by the NLRB, Verizon Wireless managers threatened Woburn, MA, employees that it would close the call center if they organized.34 The company settled the charges, which included supervisory threats and interrogation, by agreeing to post a notice promising not to break the law.35 Yet in a stunning illustration of how labor law fails to truly protect workers, the notice had to be mailed to employees’ homes, as the company shut down the call center and moved the work to South Carolina before the employees could form a union.

In 2003, Verizon Wireless responded employees organizing in Orangeburg, NY, by illegally threatening a union activist with termination if he spoke to his coworkers about the union.36 The division was also found guilty of prohibiting employees from discussing the union during their rest breaks, and discriminatorily enforcing a no-solicitation rule against union activity while allowing other forms of solicitation at work.37

In 2004, Verizon Wireless shut down its Orangeburg and Morristown, NJ, call centers and moved the work to South Carolina, North Carolina, and Arizona—all states with ‘right-to-work’ laws that weaken unions. The only current Verizon Wireless location where workers have a union is in New York City, which was organized in 1995 when the employees were employed by Nynex (a predecessor company).

There is also evidence that Verizon is interfering with its Telecom employees’ efforts to form a union in Long Beach, CA. On the eve and day of the election, a senior manager who flew in from New Jersey went from cubicle to cubicle, talking to employees. Verizon claimed he was merely “talking about what the employee wanted to talk about.”38 However, CWA charges the manager was coercively campaigning against the union in violation of the neutrality agreement, where both the union and company refrain from disparaging each other or intimidating employees during organizing, that covers Telecom employees in that region.39 Not surprisingly, the workers ended up narrowly voting against union representation, despite a majority demonstrating support before the manager arrived.40 Eight employees recently testified of coercive tactics at arbitration hearings which remain ongoing.41

Letting the information superhighway crumble

Verizon has divisively carved out non-union divisions with Verizon Business and Verizon Wireless, preventing these employees from raising their job standards to the level of the union Verizon Telecom workers. Yet even Verizon’s union employees are at risk of losing not only their family-supporting compensation, but their jobs as well. Verizon is downsizing its older and less profitable landline operations—the core infrastructure that residential and business customers rely on for phone and high speed internet—which has detrimental ramifications for employees as well as customers.

Between 2001 and 2002, Verizon eliminated over 20,000 union Telecom employees in the Northeast.43 Shortly after, Verizon was forced to pay $15 million in customer rebates for excessively long outages in New York.44 A 2003 report by the New York Public Service Commission expressed concerns over Verizon’s serious decline in service given its further layoff plans and lack of capital spending.45 In 2007, New York State Attorney General Andrew Cuomo called on the agency to tighten standards to improve Verizon’s “chronically poor” service, noting that the company appeared to be neglecting its landlines in favor of investing in fiber optics.46 The company’s poor record was also at issue during a recent hearing by the Maryland Public Service Commission, which was prompted by a 50 percent increase in customer complaints in 2007.47

Verizon is also attempting to divest its more rural landline operations in many states. In 2004, after protests by Verizon employees, customers, and elected officials over the company’s proposal to sell its upstate New York landlines, the company dropped its plans.48 Now the company is seeking approval from the public utilities commissions to sell its landlines in Maine, New Hampshire, and Vermont to tiny FairPoint Communications in Charlotte, NC, for $2.7 billion.49 Because of FairPoint’s small size, the sale would qualify Verizon for a tax incentive worth $700 million.50 Yet a recent Morgan Stanley report exposed FairPoint’s financial vulnerabilities, giving credence to concerns raised by workers, consumer advocates, and elected officials that the new company would be unable to adequately invest in the landline workforce and infrastructure.51

Both FairPoint and Verizon suffer poor and declining service records in New England,52 and without an influx of resources into these operations, the situation will likely worsen. New England businesses could be at a competitive disadvantage if FairPoint cannot maintain current infrastructure and invest in high speed technologies. Landline outages could become more frequent, potentially compromising communication during emergencies. The deal could also deprive the region of a vital source of family-supporting jobs if FairPoint cannot invest in training or maintain the current level of compensation, and if it continues to outsource as it has with other operations.53 These concerns could spread as Verizon is seeking a buyer for its landlines in Indiana, Illinois, Ohio, and Michigan.54

AT&T: Taking a higher-road approach

Verizon’s model destroying family-supporting jobs in the name of competition is not inevitable in the rapidly changing telecommunications industry, even given the lower job standards of wireless and cable companies. AT&T’s experiences prove that it’s possible for a telecommunications company to maintain a productive and more balanced relationship with its employees’ unions and still remain competitive and profitable.

In 2006, AT&T, Bell South, and Cingular Wireless merged to create one of the largest union workforces in the telecommunications industry, employing nearly 180,000 union-represented employees throughout the company, including its wireless, wireline, and broadband divisions. In stark contrast to Verizon, AT&T respects its employees’ freedom to form unions. Prior to AT&T’s merger, Cingular Wireless and the CWA negotiated a strong neutrality agreement, which has proved to be a win-win strategy, allowing both management and employees to focus their energy and resources on the growth of the business rather than on hostile conflict during organizing drives. Given a free and fair chance to make an informed decision, 85 percent of the non-management wireless workforce has chosen union representation.58 

AT&T has also demonstrated a commitment to expanding its good jobs throughout communities in the United States, working with CWA to return previously outsourced help desk support positions to in-house positions. New call centers will soon open in seven cities, including New Orleans, Indianapolis, and Las Vegas, creating over 5,000 new jobs.59   An active labor-management alliance at AT&T works to enhance employee growth and development, providing employees with classes and workshops on topics as diverse as technology training to career transitioning. According to Mark Royse, Executive Vice President of Labor Relations, “AT&T and its customers benefit from the skills and professionalism of union-represented employees in our business units. Our company has long taken pride in our cooperative and respectful relationship with the unions that represent our employees.”60 

Make Verizon work for everyone

 Under Verizon’s current business model, tens of thousands of secure, well-paying jobs are at risk of disappearing. By operating non-union divisions where workers’ efforts to form a union are met with intimidation, Verizon has been able to prevent the benefits of collective bargaining from spreading beyond its union landline operation. And by downsizing its landline operations, thousands of good union jobs are at risk. The consequences of Verizon’s actions go beyond its workforce, as communities lose good jobs, and customers suffer poor service while missing out on the benefits of high speed broadband. Yet in the face of these problems, Verizon’s executives have handsomely compensated themselves. In 2006, Verizon’s top five executives earned a combined $68 million.61

How can we motivate Verizon to change course? For one, regulators and elected officials have some power to regulate Verizon as a public utility and to require the company to meet its obligations to consumers, employees, and communities. Secondly, consumers have the power to put pressure on Verizon. Verizon Wireless customers can communicate to the company that they will switch to AT&T when their contracts expire if the company doesn’t respect its workers. Likewise, Verizon Business customers, including colleges, universities, and municipal and state governments, can bring the weight of their institutions to call for the company to improve its relationship with its employees. Thirdly, Verizon shareholders can impact the company’s course, as they demonstrated this year by passing a resolution giving themselves an advisory vote on executive compensation. Lastly, community leaders must stand with all Verizon employees in their efforts to save one of the most important sources of good jobs in our country.