Some readers of this Web journal may be interested in an article I published last month on Fortune.com entitled “Verizon strike: Can both sides win?“ Here is a short summary:
There are very few surprised faces from either side of the Verizon picket lines. When a labor contract signed in buoyant times expires in a bleaker era – as is the case with the company’s current 45,000-worker strike — the stage is set for conflict. . . .
Although Verizon is making decent profits, only 0.5% of its income is attributable to the slowly shrinking landline business where its unionized employees are concentrated. The difference between the wireless and wireline sides of Verizon’s house is driven by its network architecture. In the wireline business, there are hundreds of thousands of miles of individual telephone and data lines, most sagging from aging telephone poles, exposed to the elements and accidents. After a major storm in southern California it may take 10,000 truck rolls to repair the damage. That is why the wireline business needs 111,000 employees – about one-third more than the wireless business – to support revenues only two-thirds as large. . . .
In cases like these, where the pie is shrinking, management may have to legally separate the two businesses in order to avoid cross subsidization. When the business in question has no surplus, the union’s position is greatly weakened.
Turning to the union’s strategy, it is smart to push back on management before such a split is engineered, exploiting the company’s overall profitability. And, it is smart to push back at a moment when the unions have the luxury of having sympathetic ears in the White House.
But winning concessions from management in this round of contract negotiations does nothing to halt the gradual shrinkage of the wireline business. This shrinkage is a problem for more than the workers at Verizon; it affects many of the estimated 500,000 union workers in the U.S. wireline industry.
The Communication Workers union would have a much stronger position were it to use its clout across the industry to work with Congress and the administration to promote a national fiber-to-the-home initiative. Such a program would build infrastructure, create jobs, and, like Eisenhower’s Interstate highway program, would have benefits to the economy that many conservative Republicans could embrace.
In a surprise move, top union leaders called off the strike on August 20. The striking workers returned to their jobs with no new contract.