In Verizon contract deal, a larger victory for unions?

Two unions representing nearly 40,000 workers across the East Coast reached an agreement with the telecom giant over the weekend.

Shannon Stapleton/Reuters
People demonstrate outside a Verizon wireless store during a strike in New York, on April 18. The telecom company reached a deal with workers on Sunday and Monday. Workers are expected to return work on Wednesday.

Six and and a half weeks after nearly 40,000 Verizon workers across the East Coast went on strike to protest the increasing use of contract workers and proposals to freeze pensions, the company has reached a deal with two striking unions to add 1,400 new jobs and raises of more than 10 percent.

Amid questions about whether labor unions are declining in influence across the country, the contract also includes benefits for some 70 retail workers at Verizon Wireless stores, a significant expansion in an industry that has traditionally excluded its retail employees from union benefits. Contract negotiations in other industries, such as between Chicago teachers and the city, have been more contentious.

Workers over all have been greatly diminished in their bargaining power, and wages have been stagnant for quite some time,” Jeffrey H. Keefe, a professor emeritus at the Rutgers School of Management and Labor Relations, who has studied the telecom industry, told The New York Times. “I want to see the details of this contract, but this may be a real shot in the arm for unions.”

Both sides hailed the deal, reached in two agreements on Sunday and Monday as a victory, likely ending a contentious strike that had begun in mid-April. Workers are set to return to work Wednesday, while members from the two unions will likely vote on the agreements in the next three weeks.

The four-year pact with the Communications Workers of America and the International Brotherhood of Electrical Workers calls for a nearly 11 percent wage increase and scales back pension cuts Verizon had pushed for.

The agreement also includes $1,250 in signing bonuses and health care reimbursements for new workers, while Verizon will increase pensions three times by 1 percent, reversing a proposal to freeze them, according to the Communications Workers of America.

“We are turning the tide from cutbacks against working people to building a stronger labor movement and strengthening the power of working Americans,” said Dennis Trainor, vice president of CWA’s District 1 in the Northeast, in a statement.

In its agreement with the workers, Verizon gains savings in other areas, however, including adopting Medicare Advantage plans – private health care contracted with the government rather than other, costlier alternatives. The company also gained the ability to more easily route calls from state to state.

Verizon praised the agreement as a positive outcome for all concerned. “This will allow our business to be more flexible and competitive,” chief administrative officer Marc Reed said in a statement.

The strike has also come amid discussions of whether Verizon will eventually leave the wireline — or fixed broadband Internet — business, which now generates about 29 percent of its revenue and 7 percent of its operating income. The telecom giant has increasingly focused on mobile video and advertising, including acquiring AOL, while battling with AT&T, Sprint, and T-Mobile for cellphone customers. Some analysts said abandoning wireline could be a longer-term effort.

“That is an option available for Verizon,” Jim Patterson, chief executive of Patterson Advisory Group told Reuters. "However, their recent investment in XO (fiber-optic business) would seem to indicate that infrastructure is becoming a more vital part of the business."

The striking workers received support from presidential candidates Bernie Sanders and Hillary Clinton, while Labor Secretary Thomas Perez worked to bring them back to the negotiating table this month.

Some workers said the contract talks marked a successful effort, especially in reversing a trend of the increased use of contract workers and potential pension cuts.

“I am extremely relieved that we have a good contract from what I am reading," Fitzgerald Boyce, a Verizon field technician who lives in Brooklyn, N.Y., told Reuters. ”To be able to keep our benefits and actually increase the number of union jobs is a great thing."

This report contains material from Reuters.

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