AT&T got a giant tax cut but has laid off thousands, union says
- More than 20,000 AT&T workers in nine Southern states returned to work on Wednesday after a four-day strike.
- The Communications Workers of America says AT&T hasn't lived up to promises it made in the wake of the U.S. government's 2017 corporate tax cut.
- AT&T, which could save as much as $42 billion from the tax cut, says it has live up to its promises and then some.
AT&T CEO Randall Stephenson was one of the most vocal proponents of President Donald Trump's 2017 corporate tax cut, endorsing the idea that it would lead to higher wages for workers. The telecommunications giant was also one of the first companies to announce, even before the law was officially signed, that its employees would get a $1,000 bonus because of the cut. AT&T as a whole profited handsomely, becoming one of the biggest corporate beneficiaries when it pocketed an estimated $42 billion tax windfall.
And yet, less than two years after the Tax Cuts and Jobs Act was signed into law in late 2017, AT&T workers have been locked in a labor dispute with the company. More than 20,000 AT&T workers across nine Southern states returned to their jobs on Wednesday after a four-day strike. The Communications Workers of America (CWA) had previously said the company was not negotiating fairly, which is why union officials say the workers went on strike. The union says negotiations are moving forward, but the workers still don't have a contract.
The strike is the latest sign that President Trump's signature legislative achievement has fallen short for workers. Last week, CBS MoneyWatch reported that Lowe's recent laid off nearly 2,000 workers and offered them zero severance despite collecting billions in savings from the tax law. Instead, the home-improvement chain plans to spend much of those savings rewarding shareholders. In December, Lowe's announced that it would spend $10 billion buying back shares.
Where's my $4,000 raise?
The CWA has declined to give specifics on the wage increases or other measures it is seeking in talks with AT&T management. The company is reportedly looking to force workers to pay more out-of-pocket health care costs, as well as expand mandatory overtime and allow for more job outsourcing.
But last year, the CWA sent a letter to Stephenson saying the company has not lived up to the promises it made in wake of the tax cuts, which among other things lowered the top corporate tax rate from from 35% to 21%. The union said that, despite the billions in dollars of tax savings at AT&T, workers had yet to see the $4,000 raise that White House officials said would result from the tax cut.
More recently, the union has said that the company, which promised to hire 7,000 workers shortly after the tax cut, has instead cut nearly 28,000 jobs since late 2017. The CWA's job calculations include any layoffs that may have happened as a result of AT&T's 2018 merger with Time Warner.
More than met our commitment, AT&T says
In a statement to CBS MoneyWatch, AT&T said that it has exceeded the promises it made following passage of the tax law. In addition to boosting capital spending, the company said it put $800 million in its retiree health trust and $100 million into its AT&T charitable foundation. The retiree health benefits were likely an obligation AT&T had long before the tax cut, and charitable donations while admirable, also decrease tax bills as well as benefit corporate marketing campaigns.
"When tax reform was enacted in late 2017, we announced our intent to invest an additional $1 billion in the U.S. in 2018, and we met that commitment," an AT&T spokesman said. "AT&T has invested more than any other public company in the U.S. over the past five years."
The $42 billion benefit that AT&T is likely to receive is based on CBS MoneyWatch calculations of what the telecommunications giant is likely to save on federal taxes over the next decade. The calculation is based on AT&T's tax rate in the three years prior to the tax law change, which was 34%, and what it has averaged in the past 18 months, which is 20%.
The company has already saved $5 billion, and is on track to record nearly $7 billion in tax savings in the first two years. A $4,000 annual raise for all of its workers would cost AT&T roughly $1 billion, or less than a third of the estimated annual savings it has received from the 2017 tax cut.
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