Despite New Tax Promises, AT&T Layoffs Undercut Trump Brand

At the close of 2017, AT&T joined with Wells Fargo, Fifth Third Bancorp, Boeing and Comcast to announce new pay and benefits increases for their workers. The announcements coincided with the passage of the new tax law championed by President Trump. Though the companies reportedly did not coordinate their moves, together they created the impression that the new tax law was already having a positive effect on U.S. wage earners  -- even before it took effect.

However, a followup look at AT&T sends a clear signal that the Trump brand is in serious trouble, new tax bill or not.

Did AT&T trade small bonuses for a big favor?

As widely reported on December 20, AT&T CEO Randall Stevenson promised $1,000 bonuses for 200,000 of the company's workers after the new tax bill was signed into law.

That sounds generous on its face, but the pledge has already backfired. Critics have pointed out the obvious: a one-time bonus that amounts to a few months worth of grocery money for many households is not worth much compared to a permanent hike in salary and benefits.

The $1,000 pledge also focused renewed attention on a November 8 announcement by AT&T, in which Stephenson effusively praised the new tax bill and pledged an additional $1 billion capital investment after Trump signed it into law. Multiple sources pointed out that AT&T is lobbying hard to secure approval from the Trump administration for approval of its multi-billion acquisition of Time Warner.

In that light, the $1,000 pledge seems like a simple attempt to curry a favorable outcome.

Bonuses for some, layoffs for (many) others

For the record, the other high profile companies announcing pay and benefit improvements at the close of 2017 also had little to offer in terms of a substantial boost for middle class wage earners. AT&T seems to be getting the most attention because its positive news was offset by layoff announcements totaling more than 1,000 workers.

That could just be the tip of the iceberg. Last year, the New York Times reported that AT&T was looking at the potential for slashing one-third of its workforce over time, as the company shifts operations into the digital age.

That report is consistent with the most recent rounds of layoffs at the company. Many of the job losses involved landline and other "legacy" services. Here's a snippet from an AT&T statement cited by The Chicago Tribune:

“Technology improvements are driving higher efficiencies and there are some areas where demand for our legacy services continues to decline, and we’re adjusting our workforce in some of those areas as we continue to align our workforce with the changing needs of the business,” the company said...

The statement also notes that "many" of the newly laid off workers will be offered other positions at the company. The statement did not indicate, though, whether or not the new positions would come with a similar salary and benefits package.

Damaging the Trump brand

That point about technology improvements is the critical issue. AT&T is far from the only major company shedding jobs in favor of digitization and/or automation.

That trend has already come back to haunt Trump in the manufacturing sector. After Election Day last year, Trump took credit for "saving" more than 1,000 jobs at a Carrier plant in Indiana. However, by the end of 2017 the company was anticipating a new round of 200 layoffs at the plant. That's in addition to an earlier round of 300 layoffs in 2017 and an undisclosed number of workers retiring or leaving for other reasons.

After Election Day last year Trump also indicated -- through Twitter -- that he could save jobs at nearby factory owned by the global auto parts firm Rexnord. However, his tweet appears to be the beginning and the end of his involvement. Three hundred workers were laid off last spring and the plant closed in June.

In fact, 2017 was peppered with job losses in wage-earning sectors that were among the most visible Trump supporters.

Boeing may have offered year-end perks to some employees, but it also announced hundreds of layoffs in 2017. That includes 200 layoffs at a South Carolina plant where Trump had earlier delivered one of his first public addresses as President.

Another example is the coal sector. As a candidate and as president, Trump repeatedly promised to bring coal jobs back. That's an unrealistic goal on its face. The industry consensus is that masses of coal mining jobs are never coming back. A slight uptick in production at coal mines in 2017 masked the effect of a generations-long mechanization trend that pushed coal mining employment down from 228,000 in 1980 to just 50,400 as of July 2017.

Coal mining employment aside, coal jobs have been lost by the hundreds at the user end.  The past few years have seen mass layoffs as aging coal power plants have been retired in favor of low cost natural gas and, more recently, renewable energy.

Layoffs in the steelmaking sector provide another example of danger signs ahead for the Trump brand. Uncertainty over the Administration's trade policy has left U.S. steelmakers in limbo, and layoffs are already looming:

...Scott Paul, the president of the Alliance for American Manufacturing, a trade group that represents steelworkers, said he had “a profound sense of frustration that the president has been using steelworkers as political props.”

“The president’s own words and lack of action have actually put the industry in a worse position than if he had done nothing at all,” he said.

Trump is not generally at fault for the layoff trend -- after all, digitization, automation and clean power are global forces. The problem is that Trump branded himself as a successful, canny businessman who could leverage his experience for the benefit of wage earners.

The Trump brand is already in serious trouble with the general public, and with news of more layoffs in 2018, an increasing number of Trump supporters will have a compelling reason to abandon him.

Trump can call it "fake news," but the real damage done to real people is piling up.

Photo: Mike Mozart/flickr.