Report: AT&T plans layoffs despite claiming tax cut would create 7,000 jobs
AT&T is reportedly planning a significant round of layoffs, despite receiving a large tax break and various regulatory favors such as the repeal of net neutrality rules.
Motherboard reported the pending layoffs yesterday, saying it obtained the information from AT&T internal documents and an anonymous AT&T source.
“A source at AT&T who asked to remain anonymous because they were not authorized to speak publicly told Motherboard that company leadership is planning what it’s calling a ‘geographic rationalization’ and employment ‘surplus’ reduction that will consolidate some aspects of AT&T operations in 10 major operational hubs in New York, California, Texas, New Jersey, Washington State, Colorado, Georgia, Illinois, Missouri, and Washington, DC,” the news site reported.
AT&T expects to finalize specifics of the layoffs later this month, but it already briefed managers on the plan in an internal memo last week, Motherboard wrote.
“To win in this new world, we must continue to lower costs and keep getting faster, leaner, and more agile,” AT&T Technology and Operations President Jeff McElfresh reportedly told employees in the memo. “This includes reductions in our organization, and others across the company, which will begin later this month and take place over several months.”
When contacted by Ars, AT&T said, “We are hiring to meet the needs of the growth areas of our business. In fact, we hired more than 20,000 new employees last year and more than 17,000 the year before. In cases where we do have to adjust our workforce, we take steps to lessen the effect on employees.”
AT&T didn’t say exactly how many employees would be laid off, but the company told Ars that it “adjusts” its workforce when new technology improves efficiency. AT&T also said it adjusts its workforce for “legacy” services that have declining customer demand. That may be a reference to AT&T’s copper phone and DSL network, which still operates in areas where AT&T hasn’t upgraded to fiber. The copper network has been providing poor-quality service to the chagrin of customers for years.
AT&T’s internal memo on the planned layoffs advises managers on how to explain why the tax cut didn’t prevent layoffs, according to Motherboard.
“What we’ve said was that AT&T planned to invest an additional $1 billion in the United States this year as a result of tax reform, and that research shows that every $1 billion in capital invested in the telecom industry creates about 7,000 good-paying jobs for American workers, across the broader economy,” the memo says, according to the news site.
Union reports 10,700 job cuts in 2018
AT&T “eliminated 10,700 union jobs across its business” in 2018, according to a report issued this month by the Communications Workers of America (CWA) union. “Since 2011, the company has closed 44 call centers and laid off thousands of workers, resulting in the destruction of 16,000 call center jobs nationwide,” the CWA report said.
“In early December 2018, AT&T announced another round of 172 layoffs in the Midwest, almost all of them in call centers” and plans to close three more call centers in Indiana, Michigan, and Wisconsin, the CWA also said.
AT&T, which bought Time Warner Inc. for $85 billion in June, expected a $3 billion gain in 2018 due to the corporate tax cut. AT&T reported $122.8 billion in operating revenue for the first nine months of 2018 and $14.8 billion in net income.
Companies pocket tax breaks
There have been several indications that the Trump administration’s many gifts to telecom companies aren’t bringing the promised benefits to workers or consumers.
AT&T in November 2017 promised to “invest an additional $1 billion” in exchange for the corporate tax break that was finalized by Congress and President Trump quickly thereafter. But AT&T then began “instituting an unprecedented massive layoff of employees,” the CWA said in late December 2017.
Comcast laid off hundreds of employees around the same time despite claiming the tax cut would create thousands of jobs. Verizon said that its $4 billion tax windfall would be mostly used “to strengthen Verizon’s balance sheet” instead of adding jobs or boosting broadband networks.
The Federal Communications Commission repealed net neutrality rules on the premise that the repeal would boost broadband investment. But Charter and Verizon both said last year that they’re reducing capital expenditures, and ISP lobby groups said in August 2018 that they won’t expand rural broadband unless the government gives ISPs more direct funding.
The FCC also voted to preempt about $2 billion worth of fees that local governments charge carriers for deployment of wireless equipment such as small cells, saying that eliminating the fees would boost 5G deployment. Despite that, Verizon said it would not move faster on building its 5G cellular network.