Time for AT&T to Pay Up or Go Down

AT&T hasn’t had any labor problems in four years. Until now. About 21,000 workers walked out on Friday afternoon, beginning a 3 day strike which resulted in chaos and sporadic store closures for AT&T. Those workers belong to a union called The Communications Workers of America, which houses AT&T employees. Those employees were joined by more than 17,000 AT&T internet and wireline workers in California and Nevada. Why are these workers striking?

What Can AT&T Do to Rectify the Situation?

AT&T workers officially saw their contracts expire in February. The Communications Workers of America (CWA) union set a deadline for this past Friday to have a new contract in place, or AT&T would face a massive walkout. Turns out, AT&T didn’t take the threat seriously, and ended up with about 40k employees walking out and striking.

The workers are fighting for wage increases, job protection against outsourcing, improved sales commissions rates, and guarantees that their insurance rates won’t continue to rise. AT&T says the company has made generous offers equivalent to what unions around the country have accepted. However, with the CWA seeing support from the Teamsters, American Federation of Teachers, and the AFL-CIO (as well as one Oregon Senator), it’s unlikely AT&T matched offers traditionally accepted by any of these unions, or the CWA would have backed down.

Without employees, AT&T can’t operate their stores, their internet installation business, or their call centers. If AT&T can’t come to terms with the CWA, the company could outsource call centers relatively quickly, but training employees both in and out of stores takes time and money. Fortunately for AT&T, the strike only lasted 3 days, unlike the last Verizon strike, which lasted 7 weeks. CWA workers will be back at work Monday — for now.

Watch the news report from WMTW-TV about AT&T Labor strike:

AT&T has a good track record with the unions, and should be okay. But if the two sides can’t come to terms quickly, AT&T could face another walkout soon, and this one would be significantly longer. Labor issues are a huge red flag to traders, and as a result, expect shares of AT&T, Inc. (T) to drop down.

Microsoft announced that they are opening two mega data centers in Africa. Find out more here.

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