An analysis of the Verizon strike

An excellent assessment of the situation. In a nutshell, while the company is making more money, the landline business where the strikes are localized in a failing business.

So the Communications Workers of America are out on strike against Verizon. The most remarkable thing is not the alleged acts of sabotage against land lines that serve hospitals , or the shocking willingness of an anonymous Verizon manager to threaten retaliation against the more pugnacious strikers when they go back to work (the NLRB rather frowns on that sort of thing). No, the really remarkable thing is this: who cares?

Maybe you’ve noticed if you live or work near a Verizon facility, or if you are the sort of journalist or wonk who follows these issues. But unless you fall into one of those two categories, chances are you weren’t really aware that it was happening. The workers who are striking are the ones who service land lines. And land lines are simply no longer central to American lives, or the economy.

Ultimately, that’s what’s at the heart of this strike. A lot of the stories on the strike have tended to present the classic management/union he-said-she-said:

Verizon said it was asking for changes to the contract because its wireline business has been declining as people switch to cell phones. Union officials, meanwhile, say the company has been making billions of dollars in profits in the last four years.
The problem is that both of these things are true. Verizon’s margins aren’t particularly fat right now, but the company is still making a comfortable profit. Unfortunately, the landline business–the division that these workers work for–is collapsing.

Margins seem to be improving in the wireline business, thanks to FIOS; people will pay much more for a high-speed internet connection than they will for a telephone. But landline subscriptions continue to fall, and last I heard, the company had decided not to expand its FIOS network into new cities after it finishes the current rollout. Most of the profits the people on the picket line keep referring to come from the booming wireless business, which is a non-union joint venture.

In other words, while profits have recovered since 2008, the striking workers aren’t generating those profits. In fact, the legacy network of copper wires they service is rapidly turning into a cost center rather than a source of profits. They’re essentially asking that the firm divert money from the wireless business to beef up pay and benefits for the union workers even as the number of subscribers they have to service is falling. It’s not really surprising that management is saying no.

This situation is pretty much unprecedented as far as I can remember. Usually union workers are found in the core business of a company–when the company’s fortunes decline, so do the fortunes of the union. But in this case, the union workers are becoming less valuable every year, even as Verizon is worth more. No wonder this strike seems to be getting so ugly.