According to this Boston Globe story, the average Verizon worker currently on strike earns total compensation of about $130,000 per year. If there is a defined benefit pension plan and Verizon doesn’t have a letter from God stating the year in which each current worker will actually die, the cost to Verizon shareholders of these workers could be quite a bit higher.
For a company with a bunch of older workers whose pension costs are high, you’d think that an opportunity to replace those folks with younger workers on a 401k defined contribution pension plan would be welcome. What are the actual obstacles facing Verizon in bringing in permanent replacement workers (nytimes) at a number closer to Massachusetts median household income of about $68,000 per year (Boston Globe)?
Separately, I think it is interesting that the Globe implies that Verizon should be required to pay workers more than $130,000 per year. payscale.com says that the Globe itself pays employees between $25,000 and $70,000 per year (benefits presumably add something to this).
Why are people so excited about this? The ADP paycheck calculator says that $130,000/year pre-tax is $85,658/year after tax. If the Verizon jobs disappear, aren’t there other ways for people to get hold of $85,658 per year? The Houston Chronicle‘s analysis of BLS data shows that the typical American, regardless of education level, can’t expect to earn this much by working. Perhaps there a way to get to the same standard of living of a striking Verizon union worker without working? A Massachusetts resident could obtain nearly the same spending power by having sex with two partners, each of whom earns $250,000/year (managers at Verizon?), obtaining custody of the resulting two children, and collecting for 23 years under the Massachusetts child support guidelines. A Massachusetts resident who already has custody of at least one child and who has a friend in one of the central public housing ministries, e.g., Cambridge or Boston, could obtain a luxury rental in a new building with a market value of $48,000 per year plus MassHealth (Medicaid) valued at about $15,000 per year. It is hard to see how collecting traditional welfare could result in harvesting the remaining $22,000+ without working, though perhaps it would be possible to earn $22,000 per year in after-tax dollars by working part-time in jobs that are paid in cash, e.g., 1222 hours at $18/hour as a babysitter.
If they do it, I hope they have animatronic Reagan do the announcement.
Under the NLRA, employers have the right to “permanently replace” strikers. However this is not the same as firing them. Strikers have the right to be placed upon a preferential hiring list which entitles them to be rehired if vacancies open at the employer. Once the old workers are re-hired they can again vote their union back in. There is also an important limit to an employer’s right to hire permanent replacements – if the NLRB finds that the employer’s “unfair labor practices” caused or prolonged the strike, strikers are entitled to return to employment if they decide to end their strike and make an “unconditional offer to return to work.” Thus “unfair labor practice strikers” are entitled to reclaim their employment and displace their “permanent” replacements; purely “economic” strikers are not.
BTW, I think the strikers may have overplayed their hand. Strikes are most effective if you can use them to choke off the employer’s cash flow, especially if the employer has a huge amount of capital equipment (and resulting debt service needs). You shut down the assembly plant or airline. No more cars come off the line, no passengers fly. Revenue drops to zero and the company bleeds money. As far as I can tell, this strike will have little or no impact on Verizon’s revenues, especially their profitable wireless operations. In the short run, Verizon’s profits will probably go UP.