Verizon Trims 10,000 Employees Despite Billions in Tax Cuts and Government Favors
Killing net neutrality in particular was supposed to spur both job growth and investment.
Verizon this week announced it would be trimming its workforce by more than 10,000 employees—despite repeatedly claiming the bevy of tax breaks and regulatory favors it has received in recent years would boost job creation and network investment.
According to a Verizon blog post, the company will be eliminating roughly 10,400 workers, or around 7 percent of its workforce, as part of what the telecom giant is calling a “voluntary separation program.” Under said program, Verizon says volunteers will receive “up to” 60 weeks’ salary, bonus and benefits “depending on length of service.”
Verizon insists the staff reductions are necessary to “optimize growth opportunities” related to next-gen 5G wireless, and to “better serve customers with more agility, speed and flexibility.”
But the workforce reduction comes after repeated claims by the telecom giant that a rotating crop of regulatory favors and handouts—from last year’s attack on net neutrality to the Trump tax cut—would buoy both job creation and broadband investment, neither of which has actually happened.
In 2015, for example, Verizon insisted that the agency’s then-new net neutrality rules would severely curtail job growth and network upgrades, implying that killing the rules would result in the exact opposite. The elimination of net neutrality and broadband privacy rules are just a small part of the numerous revenue-boosting favors the company has received from the Ajit Pai FCC in recent years, the full financial benefit from which is arguably incalculable.
Similarly, Verizon was one of several companies that insisted the Trump tax cuts would help boost job creation and, as Verizon put it, help employees “further share in the company’s success.” The cuts gleaned Verizon an estimated $4 billion this year up front, and another estimated $17 billion off of the company's deferred tax bill.
Where’s that money going? Historically, such tax breaks don’t actually create new jobs. The company’s own financial statements suggest it’s not going back into the network, either. Some of it funded Verizon’s attempt to pivot from stodgy old telco to sexy Millennial ad company in the wake of its acquisition of AOL and Yahoo, an effort that’s not going all that well.
Meanwhile, some ex-Verizon employees on Reddit claim the “voluntary” program Verizon’s offering isn’t quite as fantastic as Verizon is publicly suggesting.
“My few friends that still work there that took the buyout are fighting against bullshit write-ups from superiors to try and fire them/make it so miserable they quit before having to pay them their ‘buyout,’” the recently-departed employee claimed.
When contacted, Verizon denied there was any disconnect between the company’s promises and its actual delivery.
“Through the first 3 quarters of 2018, the company has reduced debt by $4.2 billion, and made discretionary contributions of $1.7 billion to employee benefit programs,” Verizon told Motherboard. “We've also returned $7.3 billion to shareowners in dividends, and continued to invest heavily in our networks.”
But former FCC lawyer Gig Sohn says the cycle of giving telecom giants tens of billions in subsidies, tax breaks and regulatory favors—then getting notably less or nothing at all in return—is a game we’ve been playing in the United States for the better part of a generation.
“This latest layoff by Verizon goes to prove, once again, that broadband providers’ decision making on jobs and investment have little, if anything to do with regulation,” Sohn told me via email. “The broadband industry ought to take this argument out of their playbook and bury it for good.”
Every four years or so a report will highlight how mindlessly throwing subsidies and regulatory handouts at big telecom doesn’t actually generate jobs or investment. More often than not, as Verizon notes, a significant portion of this money simply goes back into the pockets of investors and executives–or is used to pay down company debt, usually acquired during mergers.
Of course that’s the entire point. But since taxpayers aren’t keen on throwing money at big telecom and getting nothing in return themselves, companies tend to field a rotating crop of creative justifications for such handouts, especially in the telecom sector.
The press then fails painfully when it comes to debunking industry misdirection. CNN, for example, this week proclaimed that Verizon’s voluntary layoff program would be wonderful for the economy without citing a laundry list of empty Verizon promises as essential context.
As a result the country tends to learn little to nothing from our mistakes, leaving us in an expensive game of Charlie Brown and Lucy football, stuck perpetually throwing money at big telecom, hoping in good faith that somehow this time will be different.