Verizon: Organized Labor’s Last Stand

Verizon (NYSE: VZ) faces a strike of 45,000 of its workers. Members of the Communications Workers of America and the International Brotherhood of Electrical Workers walked out because Verizon wants sharp cuts to offset its drop in landline revenue. More and more people have abandoned home phones in favor of VoIP and cell phones. Verizon’s revenue position is even more difficult because its rapidly growing wireless business has not expanded recently like it did a few year ago. The cellular subscriber market in the U.S. is saturated.

The unions that walked out on Verizon understand they are part of a long line of workers likely to lose jobs because of new technology, a deteriorating economy, or changes in the businesses in which their employers make money.

The UAW negotiations with the Big Three this year are not likely to be contentious, which may make the Verizon strike one of the last huge labor walk-outs in American history. Auto workers have recently gotten some share of car company profits in many cases. The big “downsizing” of the industry happened when the industry nearly went under and Chrysler and GM (NYSE: GM) filed for Chapter 11. The UAW hopes to organize workers at more foreign car companies with U.S.-based plants. That includes Volkswagen. The number of people who might join the UAW from these assembly lines is small compared to the huge numbers of workers who used to work in plants at Ford (NYSE: F), GM, and Chrysler. The UAW’s best years were over long ago.

Unions have had only the most modest success in organizing workers in other large industries. Retail workers at Walmart (NYSE: WMT) have not formed a union. It is the largest employer in the U.S., so it is unlikely that unions will get a foothold in Walmart’s smaller peers if they cannot achieve success at the market leader.

Large industries that have thrown the unions out or crippled them include those with big worker bases like newspapers. The Teamsters and pressmen have lost their leverage with newspaper chains. That is good for management because the newspaper business has been taken down by the success of the Internet.

Forty-five thousand is a substantial number. The strike might work, but probably only partially. Verizon has the technology to keep most of its customers online and enough management people who can fix landline problems if they have to, at least in most cases. Verizon loses money on many of its landline customers, so it may not be anxious to make sure they are highly satisfied with their service. This weakens the position of the unions further.

Will there ever be another strike of 45,000 workers in America? The loss of power among unions has gone on for 20 years. There is no reason to believe that the situation will improve now.

Douglas A. McIntyre