Special Interest Groups Conflate Jobs Story in Deceitful Effort to Sink AT&T / T-Mobile Merger

by Mike Wendy on July 22, 2011

Of late, the special interest groups working to thwart the AT&T / T-Mobile merger have be hammering AT&T on its claim that the merger will result in more jobs for Americans.  They myopically cite the fact that the wireless industry – and AT&T specifically – have been shedding jobs during our fledgling recovery, and then conclude that this means few or no jobs will result from the acquisition.  That AT&T’s claim is bunk.

It seems to me that nothing could be further from the truth.

You see, the claim that the special interests like to poke at (or selectively ignore, that is) – one which AT&T and its main union, the CWA, hold out to show that anywhere from 55,000 to 100,000 jobs will result from new investment enabled by the merger (as seen in this EPI study) – is far broader than the special interest groups will let on.  This fact disturbs them because it tells an upbeat story, something they are paid to despise and distort.

Yes, the slow economic recovery, changes in technology, increased worker productivity and industry consolidation have led profitable companies like AT&T to reduce their workforces these past two years.  As with other mergers in the industry, it is also possible that overlapping jobs from the acquisition will cause AT&T to make short-term adjustments in its workforce going forward.

These changes aren’t about greed or “evilness,” much as the special interests cynically want American jobs seekers to believe.  Rather, they’re about meeting the underlying economic challenges in a way that reasonably maintains viability, growth and profit.

Profit is a good thing, by the way (though some in Washington would have you believe otherwise).  It enables companies to…create jobs, among other economically beneficial stuff.

If you look beyond the hyperbole of the special interests’ Press Release Economics, AT&T’s jobs claim reveals a truly positive multiplier effect (and we’re not talking about Keynesian kookiness here).

According to the EPI study:

The jobs estimate includes both direct jobs within the primary industries that meet the additional demand for goods and services and supplier jobs in the secondary industries that provide those primary industries with intermedia­te goods and services. Additionally, the estimate also includes ‘induced jobs’ created as incomes earned by newly hired workers are spent back into the economy. (Emphasis added)

This is a much larger context – one that especially excites the CWA because it believes it means more opportunities for union jobs (T-Mobile is said by CWA to discourage unions), as well as more, well-paying jobs generally for American workers.

I agree.  In fact, I think the study might be a tad on the conservative side in that it focuses on the supply chain instead of also looking at the buoyant effect of new information and communications technology (ICT) on the economy as a whole.

According to AT&T, the merger will bring about an $8 billion net increase of new investment.  This in turn will allow the company to reach 55 million more Americans than it otherwise would have – many in rural areas – with new and powerful, 4G LTE services.  With new tools.

Research shows that as more ICT spreads through our society, workers become more productive and competitive.  When this occurs, our economy consequently thrives. Moreover, it becomes better able to grow in both good and bad times, helping America and its workers more flexibly meet domestic and international challenges as they present themselves.

Over the last two decades, ICT has played a leading role in driving our economic growth.  It has also helped mitigate both the challenging effects of globalization, as well as those from the past two recessions.  To help us emerge from the “Great Recession,” the last Congress saw ICT as so important that it placed at least a $7 billion bet on it with its promotion of broadband in the Stimulus package (this legislation being applauded by the same special interests who are against the AT&T / T-Mobile merger).

More ICT is generally a good thing for American jobs and prosperity.  And the merger will bring more of it about.  Not just from a new AT&T for its customers, but also from the competitive maelstrom it will unleash from direct competitors, “substitute” services, and edge innovators, among others.

Like adding new roads to hungry destinations, these new wireless routes should bring new life, opportunity and prosperity to more American workers and businesses.  Consumers should benefit enormously, too.

The special interests pooh-pooh this, purposely conflating changes in AT&T’s workforce with job opportunities in the economy at large.  They are unrelated.  They choose this lowball tactic because they want to lock companies into politically correct / “You-Do economics” of “fairness,” “equity” and redistribution, preventing profitable companies from being, well, profitable.  Preventing them from innovating and serving Americans.

Preventing them from creating well paying, U.S. jobs.

The merger, which will result in $8 billion of new private investment, is a lot of money and risk to pour into new wireless infrastructure.  More investment will surely follow.  It strains reason and logic to suggest that this outlay will not help create new jobs.

 

 

{ 2 comments… read them below or add one }

Brett Glass July 25, 2011 at 2:06 pm

Mike, I agree with many of the things you write, but you are REALLY going out on a limb here by claiming that a huge consolidation such as this one would create jobs. There’s simply no credible argument for that.

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Mike Wendy July 25, 2011 at 2:40 pm

Brett, I appreciate your reply, but I think you’re missing my point on this. I don’t dispute that there will likely be some jobs re-organization at the new company. Or that they and the industry have shed jobs. But PK conflates this with no jobs in the economy as a result, and that’s wrong. I believe the EPI study and my ICT diffusion arguments are valid rebuttals to their claims.

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