U.S. Senate Moves Closer To Vote On Net Neutrality
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Telecoms Fired Workers After Lobbying For, And Getting, Tax Cuts And Net Neutrality Repeal

Comcast logo Last week, The Philadelphia Inquirer reported:

"Managers, supervisors, and direct sales people in Chicago, Florida, and other parts of Comcast’s Central region, mostly in the Midwest and Southeastern United States, were terminated around Dec. 15... More than 500 sales employees were terminated, company sources said... Comcast has not reorganized the direct sales forces and approach in the company’s two other big divisions, which include Pennsylvania, New Jersey, and Delaware. Comcast/NBCUniversal employs about 159,000.

In late December, Comcast announced that it would hand out $1,000 bonuses to full-time employees, in response to the Trump tax cut that will slash its corporate tax rate. The fired employees will be eligible for a “$1,000 supplemental severance payment,” Comcast said... Comcast direct sales employees earned $50,000 to $100,000 through a low base salary and commissions, the terminated employee said. The commissions ranged between roughly $75 for a new Internet Plus customer to $350 for a new customer who ordered a triple-play package with home security, the former employee said. Internet Plus is a package of television and broadband services..."

Reportedly, fired employees received severance pay only if they accepted non-disclosure agreements. Also, Comcast fired about 405 workers in Georgia.

Context matters. Earlier this week, Vox reported in December before the tax bill was passed:

"... the prospect for a deal on tax reform looking promising, lobbying reached a pinnacle this year, with 2,065 groups pushing their cause, according to reports published by the nonpartisan Center for Responsive Politics. The efforts are employing more than 6,000 lobbyists, the nonpartisan Public Citizen counted. The four organizations that reported the most lobbying activity on tax issues so far this year are Fortune 500 companies with a huge stake in the outcome: Comcast, Microsoft, Altria Group (formerly Philip Morris), and NextEra Energy."

Many politicians have repeated claims that tax cuts will create new jobs, and that repeal of net neutrality rules would encourage investment by ISPs. And, after the U.S. Federal Communications Commission (FCC) voted in December to repeal existing net neutrality rules, Comcast issued this statement:

"We commend Chairman Pai for his leadership and FCC Commissioners O’Reilly and Carr for their support in adopting the Restoring Internet Freedom Order, returning to a regulatory environment that allowed the Internet to thrive for decades by eliminating burdensome Title II regulations and opening the door for increased investment and digital innovation. Today’s action does not mark the ‘end of the Internet as we know it;’ rather it heralds in a new era of light regulation that will benefit consumers."

So, let's summarize events. After receiving two huge benefits (e.g., tax cuts, repeal of net neutrality rules), Comcast immediately terminated workers. Ars Technica asked Comcast why they fired workers when tax cuts were supposed to create new jobs:

"... Comcast gave us this statement but offered no further details: "Periodically, we reorganize groups of employees and adjust our sales tactics and talent. This change in the Central Division is an example of this practice and occurred in the context of our adding hundreds of frontline and sales employees. All these employees were offered generous severance and an opportunity to apply for other jobs at Comcast." "

One of the claims by corporate ISPs and by FCC Chairman Ajit Pai has been that net neutrality rules killed infrastructure investments by telecoms. Ars analyzed this claim:

"The firings happened around December 15. On December 20, Comcast announced that, because of the pending tax cut and recent repeal of net neutrality rules, it would give "special bonuses" of $1,000 to more than 100,000 employees and invest more than $50 billion in infrastructure over the next five years. "With these investments, we expect to add thousands of new direct and indirect jobs," Comcast said at the time.

We examined Comcast's investment claims in an article on December 21. As it turns out, Comcast's annual investments already soared during the two-plus years that net neutrality rules were on the books, and the $50 billion amount could be achieved if those investments simply continued increasing by a modest amount."

AT&T logo So, a few workers received bigger bonuses while others lost their jobs. And, it is worse. AT&T fired about 700 workers after promising to increase investments by $1 billion of Congress passed the tax cuts bill. Congress did, and AT&T didn't wait to terminate workers.

One can conclude:

  1.  The investment claims, by ISPs and advocates of repealing net neutrality rules, were bogus,
  2. Voters either didn't pay attention or were duped by claims that net neutrality rules killed investments by telecoms,
  3. Voters were duped during the 2016 election into believing claims that tax cuts would create jobs,
  4. Voters accepted these job-creation promises without demanding any guarantees, and
  5. Tax cuts are being used to reward employees and managers with bigger bonuses.

The bigger bonuses are great, if you have a job. Regardless, we now see the results: tax cuts help companies and fewer jobs hurt workers. Repeal of net neutrality rules will hurt public libraries, the poor, and disabled persons. And, there's more to come as ISPs roll out their revised broadband services (with higher prices) without net neutrality rules.

Yes, this stinks. What do you think? Is this what you expected?


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Chanson de Roland

Though lied to, I wasn’t duped. From Econ 102, it is fundamental economics that the expected rate of risk-adjusted returns determine the firm’s schedule of investments. For firms, such as the the huge, wealthy, and very creditworthy ISPs, such as AT&T, Verizon, Comcast, etc., their c-suite constructs and invest based on expected returns. A lower tax rate is neutral with respect to returns and so plays no role in determining investment decisions. Nor does a relatively small and onetime lower rate for repatriating earnings. And because these firms have first-rate credit, which allows them to raise all of the funds that they need for investment on the street at the best rates, these firms have and have always had all of the funds that they need to invest so that only the expected rate of return over time determines their investments.

That means that, before the latest tax revisions, large, creditworthy firms were already investing and making other financial decisions to maximum extent, with taxes being irrelevant, unless the tax is tied to a specific activity, which is not the case here. So changes in the recent tax law have no effect on investment or almost any other financial decision that large, creditworthy firms would make. So this talk about reductions in tax liability increasing employment or any other investment decision is utter nonsense.

And, of course, decisions to invest or disinvest normally take time, unless all your are doing is firing workers, so any effect on the firms’ hiring decisions, as Professor Krugman recently demonstrated in a simple graph at his New York Times’ column, would take a while to occur. So announcements of immediate raises and/or hiring are just PR to help Republicans sell their unpopular new tax law. Unfortunately, unless journalist and Democrats are utterly incompetent, they will show, as the Editor blogs about, supra, that all of that hiring and investment is either a phantom, ephemeral, or was occurring or would have occurred in anyway.

This stuff is just the basics that every student of economics learns in his 100-level micro course and every MBA student learns in his elementary finance courses. But the phony idea that Trump/Republicans’ new tax law causes investment and/or hiring works for most of the public, until they awaken to the fact that there have been no net gains in jobs and no increases in investment to increase the capacity for output.

But, as I’ve said in the past, there is no underestimating Democrats’ political incompetence being able to save the Republicans’ asses. And the mainstream media is in such bad odor with at least conservative and many moderate voters, that it has no credibility, and even where credible, my late cat knew and still knows more basic economics and finance than the average reporter, liberal or conservative, who covers politics and/or business.

So that is it: Until dismal economic reality rears its ugly head, the lie that the Republicans’ new tax law is a job-creator will probably rule the public mind.



Glad that Roland follows the intricacies of economics. Most Americans don't, nor have a clue. The bottom line: Republicans and President Trump pitched to voters that tax cuts would create jobs. Many voters bought this claim hook, line, and sinker. So, it's important to highlight decisions and events where there is a loss of jobs; where the claim and promises were not me -- which was the focus of this blog post.

2018 just started, so there is plenty of time for ISPs to reverse these job losses. We shall see during the coming months what they do.



Layoffs outside the telecommunications industry:

Walmart Quietly Lays Off Thousands of Workers After Bonus Announcement

Tenet Healthcare Expects To Layoff 2,000 Workers

Hundreds To Be Laid Off at Indiana Factory a Year After Trump Deal to Save Jobs

Sam's Club Employees Say They Were Shocked To Learn Of Layoffs

Macy's Lays Off More Than 400 Workers As 3 California Stores Close

Sen. Casey tells Wells Fargo: Bring jobs back to Pa. following 'tax windfalls'

Yes, for the firms offering bigger bonuses... that is a form of investment, but a public relations stunt... a sham. The bonuses are often limited to certain persons and are temporary (e.g., one-time).



About the promise that tax cuts will create jobs... Harley Davidson announced closing of its plant in Kansas City... 750 jobs lost... company is using tax cuts to consolidate production in PA plant... automation... unintended consequences.





Total non-farm employment increased by 200,000 in January 2018. Unemployment rate remained at 4.1 percent:

I Lost My Job At Carrier After President Trump Promised To Save It



More besides telecoms: Amazon, Ford, IBM, Pepsi, Walmart, and others. See:

These 12 Companies Have Laid Off Workers In 2018



Politicians promised that the tax cuts would help companies generate jobs. This week, companies in several industries announcing more layoffs include Hewlett-Packard, Tesal, McDonald's, and CitiGroup:

Major Companies Have Announced Big Layoffs This Month

Meanwhile, plenty of turmoil at this telecommunications company:

AT&T Workers are Leading a Massive Strike



More consequences from policy decisions by the Trump Administration:

Factory workers lose jobs as steel tariffs put business in "crisis mode"

Trump tariffs backfire as EU retaliation will force American icon Harley-Davidson to build overseas

Trade war: Mexico pork tariff threats push Iowa losses to $560 million


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