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Can Verizon hear them now?

People walk by a Verizon store in New York City.

KAI RYSSDAL: This is, I'll admit, pretty far into the program to be talking about a major strike. But a walkout against Verizon has been going on for three days now, and it's been largely overshadowed by, shall we say, other developments in the economy.

Here are the details: 45,000 workers in Verizon's wireline division walked off the job Sunday. Verizon provides traditional telephone lines in the Northeastern part of the country, from Massachusetts down to Virginia. It also delivers high-speed Internet and fiber-optic television services. But therein lies the catch. The non-union -- and much more profitable wireless division -- isn't affected by the strike.

Here's our senior business correspondent Bob Moon.


BOB MOON: Analysts say Verizon's labor unions seem to have missed this call...

VERIZON WIRELESS COMMERCIAL: Can you hear me now? Good! Can you hear me now? Can you hear me now?

While Verizon's wireless business is booming, its landline network has been shrinking about 8 percent a year. The company argues those call-center workers and technicians can't expect to make up to $91,000 a year, with benefits averaging $50,000. The unions say the company wants $20,000 in pension and health care give-backs.

Frank Louthan follows Verizon for Raymond James.

FRANK LOUTHAN: It's just not the profit center that it used to be. It just is not going to be able to sustain the cost structure that it had when they had 30 or 40 percent more customers.

The union points out the company made $3 billion in the first six months of 2011, and the CEO makes tens of millions. But at Recon Analytics, Roger Entner says most of those earnings didn't come from the landline business.

ROGER ENTNER: Should the wireless part, which is only a little bit more than half-owned by Verizon, subsidize the wireline part?

Paul Secunda is a law professor at Marquette University. He counseled Verizon during its last strike in 2000. This time around, he says, the company seems to be arguing that -- given the bad economy -- employees should be happy with what they can get. But he says struggling workers have a compelling case of their own.

PAUL SECUNDA: I think the best argument that the union has is, look, we're fighting for the middle class. If we can't have these jobs, if these types of jobs are not possible, then no one else is going to get these jobs either, and there's going to be increasing income inequality.

Either way, D.A. Davidson analyst Donna Jaegers says the union finds itself in a tough position. Strikers aren't likely to find other work, and the company actually saved money in the early weeks of previous strikes.

I'm Bob Moon for Marketplace.

About the author

Bob Moon is Marketplace’s senior business correspondent, based in Los Angeles.
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Wow, this story is terribly produced, and obviously was done hurriedly. First, Entner's comment about Verizon's "a little bit more than 50%" ownership of Verizon Wireless should have been jumped on: +50% ownership means you own the WHOLE company!! Second, nobody you interviewed actually understands how mobile technology works: it REQUIRES the "wire lines" that the striking employees are responsible for! When cell towers intercept a radio signal from a handset, they transmit that data via the traditional copper wires of yesterday to a central exchange. So, you can't have a "wireless" business without "wire". Third, the Internet/ISP business is not making a profit?! REALLY?!! When these guys are trying to get into the Netflix game of streaming, hold whole towns and states hostage with their broadband and cable monopolies or duopolies?

There is definitely something more to this, and the story deserves a lot more scrutiny. Sadly, this kind of shallow reporting seems to be rapidly becoming the norm for Marketplace.

Unfortunately, Bob Moon, despite talking to three business analysts and a lawyer who counseled the employer in the last contract, he failed to get any perspective from a person involved in the strike or even a labor leader not involved in the strike. Because of that, Mr. Moon really missed any thoughtful discussion of the compensation rewarded to the CEO relative to losses to the company. He also failed to explain that some Verizon Wireless employees are unionized and the fact that Verizon's landline subsidized and helped build the more successful Wireless network. Certainly, Mr. Moon lost the opportunity to tell a more complete story about the strike.

This is emblematic of the delusional egotism of the American corporate culture, and of the lack of challenge by media.

Entner talks about fulfilling a contract with employees as a subsidy. This ignores the fact that performance, not profit level, is the basis upon which contract employees are paid. If losses at the landline side are to be borne by workers, couldn't you at least ask what schemes have been in place for sharing the wealth at the more lucrative cell division? How about when the landline side was more profitable?

Verizon employees have been doing their jobs in a company that has artificially divided one set of operations from another for exactly this sort of bogus accounting. Both divisions are paying immense salaries, bonuses, stock options, gold-plated medical plans and expenses to those who have constructed this silliness. It is these people for whom income is supposed to be a "subsidy" based on profitability, as profitability is claimed as the result of their effort.

American business has done as well in assigning authority to management and responsibility to workers as it has in privatizing profits while socializing costs.

BTW: "Saving money" in the first weeks of a strike is just as meaningful as a government "saving money" by not repairing infrastructure, and for the same reasons. Any company saves money running a skeleton crew. The fact that corporations think this is a sustainable model, and that media accept this without challenge, just shows that we are stupider than animals. At least they know better than to void their bowels in the waterhole.

The statement "The non-union -- and much more profitable wireless division -- isn't affected by the strike." is in valid! There are 70 Verizon Wireless who are members of CWA Local 1101. We are on strike for a separate contract & continue to pay into a healthcare plan. The company has out of state workers & managers performing our work. The "wireless division" you refer to, is very much affected by the strike.

Verizon also operates landlines and internet in California.

IF the workers should be "happy" having a job, so should the CEO. He should be urging the board to retro'ing his salary to 2006 levels with no stock options or bonuses until the Country exits the Depression.

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