Verizon is asking for concessions from the Communications Workers of America (CWA), and so far, management isn't getting any. The company claims that poor performance in its landline division makes costs unsustainable, but the unionized employees don't agree. To change the cost structure, Verizon wants to implement a pension freeze, reduce the number of sick days, and raise employee contributions to health care insurance.
Verizon CEO Lowell McAdam sent a letter (download) to all employees explaining the company's position.
In its statement, CWA says that Verizon's initial list of concessions hasn't budged since June 22, when union bargaining started. 45,000 employees are now on strike and cite the following "Verizon Financials" to support their case:
- 2011 annualized revenues are $108 billion and annualized net profits are $6 billion.
- Verizon Wireless just paid its parent company and Vodaphone a $10 billion dividend.
- Verizon’s top five executives received compensation of $258 million over the past four years.
According to a New York Times article, management and the union disagree about benefits payouts to employees:
Union officials dispute the company’s estimate that each employee receives $50,000 worth of benefits each year. In that number, the company includes $14,700 for medical and dental insurance, $10,900 for retiree health care and life insurance, $10,800 for pension and $7,500 for time off.
Union officials say total benefits average $25,000 a year. Mr. Kohl, the union official, disputed the $10,800 yearly figure for pensions, noting that Verizon’s annual report said the company’s 2010 contributions to the union’s defined benefit plans “were not significant.” Verizon officials said the $10,800 was an average annual amount.
Mr. Kohl also said the $10,900 retiree health care figure was greatly exaggerated, asserting that many retirees had worked years to pay for that care so the cost should not be attributed to current employees.
Mr. Kohl also quarreled with Verizon saying the value of time off — vacation, sick days and personal days — was $7,500. He dismissed that as double-counting because that number was already counted in wages.
- Looking at the argument over employee benefits, whose version of the data do you accept?
- How convincing do you find the union's list of "Verizon Financials"? Do these numbers influence your thinking about whether the union should make concessions?
- The CWA refers to Verizon's annual report to defend its position that pensions should not be frozen. How do you interpret the note "were not significant" in the report? Is this a convincing argument?
- In CEO Lowell's letter to employees, what is his strongest argument? What is his weakest?
- What ethical issues do you see in this dispute? Do you side more with management or the employees in this case? Why?