Labor Union Blog

There is an oddly named tax loophole—the Reverse Morris Trust—that is so big and lucrative Verizon is getting ready to pull $600 million through it if its sale of rural phone landlines in 14 states to Frontier Communications is approved.

Not only does Verizon stand to pocket the $600 million tax break, but a similar deal in New England shows consumers’ phone and Internet services are likely to deteriorate and workers’ jobs may be put in jeopardy.

The Communications Workers of America (CWA) and Electrical Workers (IBEW) are fighting the sale and are backing soon-to-be introduced federal legislation to close the loophole. The law now allows Verizon and other companies to sell assets tax-free to smaller companies such as Frontier, that end up burdened by debt. (For a detailed look at the Reverse Morris Trust, click here.)

Less than three years after Verizon’s sale of its New England landlines to FairPoint Communications, FairPoint has filed for bankruptcy. Now, workers face cutbacks and job losses, customers complain about deteriorating service and the lack of high-speed broadband and other new technologies. Hawaiian Telecom also filed for bankruptcy after Verizon used the same tax loophole to dump its landlines in Hawaii.

If the Verizon/Frontier deal is approved, Frontier would be saddled with some $3.3 billion in debt while consumers and workers in the 14 states would be in the same dire situation as those in New England and Hawaii.

Not only is current service likely to deteriorate, but Frontier’s $3.3 billion debt makes it doubtful it would be able to build out high-speed broadband or provide other advance telecommunications services to consumers.

IBEW President Edwin Hill says if the sale is approved, it would have a

lasting and residual effect on the consumers and quite frankly will be quite devastating. With the broadband deployment, the service quality, the economic development and jobs are all at risk.

The Reverse Morris Trust is “backward thinking and bad public policy,” says CWA President Larry Cohen.

The tax loophole tax means the government is spending hundreds of millions of dollars to subsidize large companies to exit the business of investing in our network.

Rep. Paul Hodes (D-N.H.) says he will soon introduce legislation to close the loophole.

Meanwhile unions and consumer groups in West Virginia, one of the 14 states affected by the proposed sale, are mobilizing. Read more in a story at In These Times, by labor journalist Steve Early and Rand Wilson, AFL-CIO Organizing Department communications specialist.

Here are a few good nuggets about jobs to chew on this cold winter day.

• The reactionary noise machine is trying to bad-mouth the American Recovery and Reinvestment Act to make it look like it’s not creating jobs. Wrong. Labor Secretary Hilda Solis this week announced the release of nearly $100 million in renewable energy training grants that will create thousands of jobs and help move our nation to energy self-sufficiency. The Electrical Workers (IBEW) is among the unions receiving the green jobs training grants. In Austin, Texas, alone, the $4.8 million granted to the union’s Joint Apprenticeship and Training Council will enable it to train more than 1,000 workers—both experienced journeymen and workers new to the trade—by next year.

• Airbus has asked for an additional $7.6 billion toward its transport plane project—this just after the World Trade Organization ruled that billions of dollars in European subsidies to Airbus violated trade rules. This move by Airbus should be considered by the U.S. government as it weighs whether to grant a $35 billion Air Force aerial tanker contract to either Northrop-EADS (Airbus) or Boeing. Some European nations won’t even allow their neighbors in the European Union to come into their defense markets to compete let alone the United States having a shot to compete overseas. Granting Boeing the contract would create 44,000 jobs in the United States. Today’s jobless data shows the nation needs every one of them.

• In the Wall Street Journal today, United Steelworkers (USW) President Leo Gerard reiterates how China’s currency manipulation and illegal subsidies give it an unfair advantage against U.S. manufacturers, while its labor, intellectual property and environmental protections are grossly inadequate. America’s overall trade deficit this year with China alone will exceed $250 billion, Gerard writes, in large part because: “China flat-out cheats in its trade practices.”

• The United Streetcar LLC is a prime example of a quality U.S. company that promotes good jobs and a stable community, as the Alliance for American Manufacturing points out. The United Streetcar, “an innovative and experienced American manufacturer,” makes high-quality street cars that are in full compliance with the Buy America Act, as the video above makes clear.

Despite the predictions of many economists, job loss worsened in December, with a net loss of 85,000 jobs. The U.S. Department of Labor jobs data out today shows the number of those officially unemployed—15 million—remains the same, as does the 10 percent unemployment rate.

But the Economic Policy Institute (EPI) says the jobless rate remained unchanged only because the labor force declined by well over half a million (661,000) workers in December. If these workers had been in the labor force unemployed, the unemployment rate would have risen to 10.4 percent. Some 7.2 million jobs have been lost since the recession began in December 2007.

Employment in December fell in construction, manufacturing and wholesale trade, while temporary help and business services, health care and education added jobs. Unemployment among teens is at a devastating 27.1 percent and for blacks, 16.2 percent. The jobless rate for Latinos is at 12.9 percent and for white workers, 9 percent.

But when both unemployed and underemployed workers are counted, there still are some 26 million people without jobs or full-time work. Another sign of the depth of the jobless rate that often goes unreported: The number of long-term unemployed (those jobless for 27 weeks and over) continued to worsen, hitting 6.1 million. In December, four in 10 unemployed workers were jobless for 27 weeks or longer and there are now six job-seekers for every one job available.

More than 7.2 million jobs have been lost since then.

Overall, the employment picture has improved over the past few months, with 450,000 jobless claims filed per week in December 2009, compared with 600,000 a week in March. In fact, weekly jobless claims in December were at the same level as in August 2008, right before the unemployment rate worsened dramatically, according to EPI economist Heidi Shierholz.

But Shierholz and EPI President Lawrence Mishel also warn that because the labor force has not grown in recent months, it’s a sign many people have given up looking for jobs or otherwise aren’t in the labor market. When the 2.7 million jobless workers who have left the labor market return to look for work, the unemployment rate could worsen rapidly unless Congress and the Obama administration support robust job creation.

Most economists don’t see the jobless rate improving for years, with estimates of 7 percent unemployment through 2012. Mishel says estimates by Goldman Sachs and economy.com predict unemployment could worsen to 10.5 percent this fall—and will fall to 9.7 percent only with a vigorous jobs initiative by Congress.

AFL-CIO President Richard Trumka says because it has taken “years of financial abuses and corporate giveaways to get us into this deep hole,”

we will only climb out if we keep our foot on the accelerator. We urge Congress to move quickly to pass emergency legislation. The bill passed by the House in December is a good start.

But more needs to be done. As part of the AFL-CIO jobs plan, we’re pushing Congress and the administration to:

• Rebuild America’s schools, roads and energy systems.
• Increase aid to state and local governments to maintain vital services.
• Put people to work doing work that needs to be done. 
• Put TARP funds to work for Main Street.

The nation’s current “jobless recovery” (an oxymoronic euphemism for anyone out of work and struggling to feed a family), is unusual in several ways, including the extent to which young workers have been hard hit, says Shierholz.

We have never just seen anything like this in modern times, this broad a swath of young people affected by the labor market.

Another difference, says Mishel, is the fact, unlike in previous recessions, productivity has increased because employers have slashed hours worked.

Bruce Bostick, a member of Alliance for Retired Americans who was forced into early retirement because he can’t find any jobs, identifies one reason behind the nation’s jobs bleed. 

For all the people I know, we have been facing an emotional as well as an economic depression for a long time now. The problems we are seeing are a result of an approach by politicians of redistributing wealth upward. The upward redistribution is now greater than it has ever been. We need to produce jobs for Main Street.

When Kasim Reed was sworn in as mayor of Atlanta on Monday, he’d come a long way for a candidate whom the Atlanta Journal Constitution said had “nearly zero name recognition” months earlier.

The get-out-the-vote drive by the unions of the Atlanta, North Georgia Central Labor Council was a key reason voters not only knew his name on Election Day, but pulled the lever by his name.

Reed’s deputy campaign manager, Rashad Taylor, says union support was critical.

No mayor has won without the support of labor.

Read about the successful campaign in the Atlanta Journal Constitution.

Rallies for hotel workers in San Francisco (above) and Los Angeles bookended AFL-CIO President Richard Trumka’s jobs tour this week in California.

At a rally last night in front of the Hyatt Regency Century Plaza in Los Angeles, AFL-CIO President Richard Trumka told a cheering crowd of about 1,000 members of UNITEHERE! Local 11 and supporters from the unions of the Los Angeles County Federation of Labor:

It’s time to take on the Hyatt Hotel Corporation!

The rally, filled with hundreds of people and chanting drums so loud they echoed off high rise buildings, wrapped up his jobs and hotel worker justice swing through California.

The Hyatt is one of several national hotel chains that are using the recession as an excuse to demand cuts in health care benefits and other concessions in contract talks. In Los Angeles, San Francisco and Chicago, some, 20,000 UNITEHERE! members since last year have been working without contracts, while contracts for hotel workers in a half dozen other cities are set to expire soon.

Trumka noted that Hyatt made $1.3 billion in profits between 2004 and 2008—”more than enough to pay better wages and benefits.” But even with those profits, he added, Hyatt is

Number 1 in workplace injuries among the top five U.S. hotel corporations—Hyatt has a horrible safety record. What Hyatt and the other big hotel chains don’t seem to want to understand is that jobs are about people’s lives.

The fight for good jobs is not some abstract fight for us. It’s a fight for the right to work hard and get some respect for that work, whatever it is, to work without fear of injury or insult…to take pride in your work and be able to take care of yourself and your family.

Click here to read his full speech.

Tuesday night, Trumka kicked off his tour with a march and rally in San Francisco, where he and UNITEHERE! President John Wilhelm and about 140 others were arrested at a sit-in in front of the Hilton.

Mike Casey, president of UNITEHERE! Local 2 and of the San Francisco Labor Council, told Steve Stallone, president of the International Labor Communications Association and editor of “Ralph,” the California Media Workers Guild publication:

Having Trumka and Wilhelm getting arrested with Local 2 sends a great message to these corporations and trumpets the fact that this is going to be a national campaign in nine cities this summer. We will be stronger and capable of marshaling our resources to win contracts collectively.

For more on the UNITEHERE! national campaign, visit the union’s Hotel Workers Rising website here.

On Thursday, Trumka met with students at the Electrical Workers (IBEW) Training Institute in the City of Commerce near Los Angeles, where they are learning skills to prepare for family-supporting jobs—with an emphasis on green jobs.

It is the largest electrical training facility in the country that, along with green technology courses, includes apprentice and journeymen programs for outside electrical line work, home wiring and other skills. On his FaceBook page, Trumka wrote about the visit to the IBEW facility:

It’s a great GREEN building. Union workers installed its solar panels, and it provides 90 percent of its own electricity. Plus, the union is helping train jobless workers in the community for union jobs that will support them. Hats off to these IBEW members!

On Wednesday, Trumka met with union members, labor leaders and Orange County officials to discuss job-creation projects and prospects there, especially a massive construction project in Irvine dubbed the “Great Park.” Trumka said:

The Orange County Labor Federation pushed to create tens of thousands of union jobs at the Great Park construction. The community gets a great park with sustainable elements that benefit the environment.

Click here to read about Trumka’s earlier stop in San Diego.

On Monday, Jan. 11, Trumka will make a major address at the National Press Club in Washington, D.C., on the jobs crisis and the economic future of working families. You can watch the live webcast at www.press.org beginning at 1 p.m., EST. We will bring you more details later today.