After Nabbing Billions In Tax Breaks, AT&T's Promised Job Growth Magically Evaporates
from the Charlie Brown playing football dept
Telecom monopolies have a pretty good racket going. They’ll consistently demand all manner of tax cuts, subsidies, and other government perks in exchange for broadband networks they only half or partially deploy–or jobs that never materialize. The nation’s telcos in particular have received countless billions in taxpayer subsidies to expand their broadband networks, yet time and time again we’ve shown how they’ve wiggled out of these obligations, leaving huge swaths of America left outside of the reach of fast, inexpensive, competitive broadband (that’s particularly true if you’re poor).
It doesn’t matter how many times we go through this little stage play, it’s a cycle that just never ends. AT&T’s lobbying and policy folks are exceptionally good at routinely promising state and federal governments that a cornocopia of new jobs and amazing broadband investment is just around the corner, but only if AT&T gets what it wants: be that the death of net neutrality, a lower tax rate, more subsidies, or any number of protectionist or otherwise terrible laws designed largely to protect AT&T’s non-competitive geographical fiefdoms. It’s a cycle, and a level of institutional gullibility, that’s pretty staggering in scope and repetition.
Yet somehow we never wise up. We never audit investment promises. And we certainly never hold giant telecom monopolies accountable. For example, AT&T spent most of last year promising all manner of incredible broadband investment, new jobs, and new innovations if the Trump administration was willing to give it a massive new tax cut. These cuts would, we were repeatedly told, result in a huge boon for broadband investment and “really good jobs”:
“Lower taxes drives more investment, drives more hiring, drives greater wages,” Stephenson said on CNBC’s “Squawk Box.” “All of this fits together.”…For example, he said AT&T would have to add 7,000 jobs to execute on every $1 billion of capital investment. “There are jobs wearing hard hats … to put that capital into the ground or on cell towers,” he said. “There are high-paying, really good jobs with great benefits. The correlation is tight — very, very tight.”
The AT&T CEO said that reducing business regulations is another way to get companies to invest. Regulation is “effectively a tax on investment,” he argued. “Take regulation down, you get investment up.”
The Trump administration was happy to oblige, doling out cuts worth upwards of $20 billion for AT&T. But this theater ignored the fact that AT&T (and countless other companies like it) have long engaged in all manner of financial bookkeeping magic to ensure they already pay a relative pittance in taxes (especially true in telecom where complex mergers and gamesmanship like Reverse Morris Trusts can be used to endlessly dodge tax obligations). And it also ignored how many times AT&T has made these empty promises then failed to follow through.
And it’s happening again. Despite its $20 billion in tax savings and record profits, AT&T continues to lay off thousands of employees in the wake of the Trump tax cuts:
“Though AT&T is earning record profits, spending billions on stock buybacks and is expecting an estimated windfall of $20bn in savings from Donald Trump’s tax reforms, it has continued to lay off workers and outsource jobs…In the last seven years, AT&T has closed 44 call centers, according to the Communications Workers of America labor union. Four closures, including the facility in Harrisburg took place this year. While some workers are able to relocate to other call centers in the US, many are left jobless. For some, their jobs are sent offshore, where workers can be paid less than $2 an hour.”
Some of these job cuts reflect AT&T’s waning interest in being an actual broadband company as it pivots (like Verizon) to more lucrative online advertising. Others reflect the company’s efforts to manage the massive debt incurred from its endless quest to grow bigger for growth’s sake via an endless wave of megamergers. Unsurprisingly (if you spend five full minutes reading a telecom history book), any real savings from tax cuts, mergers, consolidation and mindless deregulation of natural monopolies (like net neutrality) goes to executive compensation and investors, not to employees or back into the network.
Of course enriching investors and executives is the whole point. Yet we seem intent on adding a layer of bullshit onto these proceedings that try and suggest that such mindless fealty to AT&T is good for everybody, when that’s simply not true. To sell the public and press on this manufactured idea, AT&T and other telecom companies (like Charter) promised employees bonuses (not to be confused with actual raises) as a direct result of the tax cuts. But there too AT&T was misleading, failing to mention those bonuses had already been secured as part of routine union negotiations:
“In a December 2017 news release advocating in favor of Trump’s tax cuts, AT&T promised bonuses of $1,000 to 200,000 employees over the next year. The news release omitted that unions had already previously negotiated those bonuses with AT&T before the tax cut bill was passed.”
AT&T’s broadband investment promises are also routinely hollow. One thing AT&T likes to do is take the CAPEX and network investment numbers it would have had anyway, and claim these are “new” goals only made possible if AT&T gets what it wants. Few in the press ever really bother to fact-check AT&T’s math. Neither do lawmakers, who have come to rely on AT&T’s generous windfalls to help fund their next election. The end result usually winds up being some scattered upgrades in more competitive areas, but huge swaths of America with decidedly last-generation DSL despite a parade of subsidies and tax breaks for AT&T (again, a trend especially notable in low-income AT&T markets).
Our immense gullibility to these bogus promises is a bit more stark to me than it is to most, having watched this play out countless times with nary a single penalty for AT&T over the last few decades. The drama played out again recently with the assault on net neutrality, a move that will result in countless anti-competitive headaches and rate hikes for captive customers, but was similarly framed as an incredible gift to consumers, innovation, American jobs and network investment. Someday we may learn our lesson and stop throwing billions at blatant grifters like AT&T, but it’s abundantly clear it’s not happening anytime soon.