AT&T got into hot water last week after news surfaced that it was cutting hundreds of jobs. It now faces a union lawsuit over the layoffs. The double whammy has overshadowed the good publicity garnered by the company in December, when it announced a pledge of $1 billion in new capital investment along with $1,000 bonuses for 200,000 employees.
AT&T made that announcement in support of the controversial new tax law championed by President Trump. Unfortunately most of the good will has faded. In addition, the negative press has motivated industry observers to ask new questions about AT&T’s support for another controversial Trump position: the rollback of net neutrality rules.
The wave of bad press is quite a change of pace for the company’s public profile. Just last year, Fortune magazine named AT&T the “Most Admired Telecommunications Company in the World” for the third year in a row. Forbes also placed the company in its “Top 50 Most Admired” list for the fourth time.
AT&T has been in the middle of a high stakes takeover bid for Time Warner, so it’s not surprising that the company has gone out of its way to get in good graces with the Trump administration.
However, by hitching its star to President Trump, AT&T has exposed itself to unanticipated areas of damage. One key incident occurred last summer, when Trump spoke at the annual Boy Scouts of American Jamboree and turned the non-partisan event into a giant campaign rally.
Trump’s speech set of a torrent of outrage in and outside the Scout community. AT&T came in for its share of blowback because the company’s Chairman and CEO, Randall Stephenson, is also President of BSA.
On his election to that position back in 2016, Stephenson described BSA values:
“The values Scouts learn as young men — integrity, selflessness and self-reliance — are fundamental to a strong, healthy society…
BSA Chief Executive Mike Surbuagh also added this:
“Moving forward in our mission to serve America’s youth by teaching them leadership and developing their character, Mr. Stephenson is a shining example. As the leader of one of the world’s most innovative communications companies, Mr. Stephenson will help us fuel our effort to bring fresh, relevant and high impact experiences to youth and families.”
Despite the clear contrast between BSA values and Trump’s behavior, BSA didn’t make an official comment on Trump’s Jamboree speech (for the record, according to BSA the invitation to speak at the Jamboree is a traditional offer made to every president).
Stephenson’s connection with the Boy Scouts, which could have been a clear win for AT&T’s corporate profile, brought the company into dangerous political waters.
When a media molehill becomes a mountain
Mass layoffs are a feature of American business, not a bug. They happen all the time. Like the weather, they are usually newsworthy to some degree or another. However, it takes an extra jolt — a hurricane, for example — to make people sit up and pay attention.
In the case of AT&T, that jolt was provided by the company’s lavish praise for the new Trump tax law. The imbalance between the mass layoffs and the bonus offering added fuel to the fire. A one-time bonus of $1,000 sounds generous. A permanent wage and benefit hike would have a far greater outcome on household finances.
Last year’s recognition from Fortune adds another layer of irony to the situation.
In an announcement listing AT&T’s place on the Fortune list, Stephenson noted that the top honors were a “tribute to the hard work and customer commitment of each and every employee in the AT&T family.”
That sentiment is a little difficult to square with the recent job cuts at AT&T. The Dallas Morning News sums it up:
The layoffs have become a sore point as AT&T touted how it will benefit from GOP tax law, which lowers the corporate tax rate from 35 percent to 21 percent.
AT&T announced at least one round of layoffs internally just before Christmas last year. The reported total was 713 positions in Texas, Missouri, Arkansas and Oklahoma.
The hurt could go much deeper. Last week Indystar.com cited Larry Robbins, vice president of Communications Workers of America Local 4900, who claimed that 4,000 or more layoff notices went out to AT&T workers around the country.
The long term prospects look even worse for workers at the company. AT&T executives are on record anticipating that its workforce could eventually go down by one-third, partly due to efficiency measures related to cloud computing and digitization.
Right back at you: AT&T layoffs taint Trump brand
The union lawsuit is all but certain to keep the negative media trained on AT&T. By association, Trump gets a hefty share of that spotlight.
The president’s frequent promises to boost employment in the U.S. coal industry have already fallen flat. Coal power plants continued to shut down during President Trump’s first year in office; a major coal company announced bankruptcy proceedings, and a recently announced coal mine closure in Pennsylvania is just one more piece more bad news coming down the pike in 2018.
Trump also promised to bring back manufacturing jobs, but that hasn’t stopped companies from carrying out closures and cutting jobs.
The union action against AT&T has also reflects badly on Trump’s promises to wage earners. Last week, Communications Workers of America District 6 filed a lawsuit against the company and also filed a complaint with the National Labor Relations Board, charging that AT&T is violating an agreement by subbing in contract employees for laid off workers.
CWA makes a direct link between the AT&T layoffs and the company’s support for the new tax plan:
AT&T CEO Randall Stephenson has been one of the strongest supporters of the recently-passed tax plan, promising to use the massive corporate tax cuts for investments that would create thousands of middle class jobs. By pushing forward with layoffs while continuing to subcontract work and send jobs overseas, AT&T is breaking its promise to American workers.
The union is planning protest actions. If that materializes, the heat will increase on AT&T, and on Trump.
Meanwhile, the AT&T layoffs have drawn renewed attention to the company’s support for rolling back net neutrality rules.
With support from the Trump Administration, the Federal Communications Commission plans to roll back 2015 net neutrality rules designed to close numerous loopholes in a previous rulemaking from 2010.
ArsTechnica.com is among those pointing out that AT&T has explained the layoffs as driven by technological evolution, not net neutrality or other government regulation.
In signs of more stormy weather ahead for both Trump and AT&T, Google and other heavy hitters in the U.S. tech sector are lining up to sue the FCC if and when its net neutrality rollback becomes official, and Bloomberg reports that AT&T abruptly canceled its keynote position at Citigroup Inc.’s 2018 Global TMT West Conference.
AT&T’s head of phone and pay-TV operations, John Donovan, was set for a kickoff slot on January 8, but according to Bloomberg the engagement was nixed on December 27, just days after Newsweek reported on the layoffs.
Photo (cropped): Mike Mozart/flickr.