Verizon deadlocked with unions gets upper hand
Verizon Communications Inc., deadlocked in labor talks over pension benefits and health care that caused a strike in 2011, has gained bargaining power this time around after shedding operations that employ older unionized workers.
The Communications Workers of America and the International Brotherhood of Electrical Workers, representing about 39,000 Verizon employees, are in the weakest position they've ever been. That's because the phone giant has refocused on wireless, where it sees more growth and employees are nonunionized and typically younger.
The labor dispute is the first since Verizon took full control of Verizon Wireless and agreed to buy AOL, two deals worth almost $135 billion that point toward a wireless-centric future. Today's Verizon makes just 30 percent of revenue from its landlines, and Chief Executive Officer Lowell McAdam has begun a review of legacy telephone assets that could result in the sale of additional union-heavy operations.
"Verizon is not the same company it was when the idea of employment contracts were center stage," said Jeff Kagan, an independent telecommunications analyst based in Atlanta. The parties, which had been negotiating since June 22, remained divided on issues that include retirement security, health care and efforts to outsource call- center jobs when contracts with the CWA and the IBEW expired Aug. 1.
Leaders of the two unions, Verizon's largest, said Sunday they decided not to strike after the deadline passed, even though "the two sides remain far apart." Both unions and the company said Tuesday that the talks have stalled, and neither gave indication as to when they may resume. Employees in the Northeast and Mid-Atlantic regions have continued to work without a contract, but CWA members approved a strike authorization in July so CWA President Chris Shelton can call a walkout at any time.
Verizon is pushing back against union demands such as increasing tuition assistance and eliminating employee health-insurance contributions. The contributions were instituted for the first time in the 2012 contract that was ratified more than a year after the August 2011 strike -- the second walkout in 11 years. The unionized workforce has more than halved since the 2000 strike -- from more than 85,000 to 45,000 in 2011 and 39,000 today.
Verizon's initial offer in June included a 2 percent wage increase in each of the first two years of a three-year contract, plus a lump-sum payment in the final year.
The carrier, which has a workforce of 178,000, is seeking to cut costs as U.S. households give up their traditional home phones in favor of mobile technology. The New Yorkbased company said in a statement Friday that it wants to negotiate changes to health-care and pension benefits that would make it more competitive. The carrier would require union employees to choose between continuing to earn pension benefits or receiving company matching funds for an enhanced 401(k) retirement savings plan.
The two labor organizations are remnants of a landline legacy era, before Bell Atlantic and GTE formed Verizon in 2000. This legacy telecommunications segment transmits telephone calls via either copper landlines or fiber optics.
In February, Verizon agreed to sell landline assets across California, Florida and Texas to Frontier Communications Corp. for $10.5 billion in cash. Union employees in those three states are covered under a different contract, and once the deal closes, Verizon will have reduced its landline territory to nine East Coast states and Washington, D.C.