Towns 'survive' AT&T, IBM layoffs

Electronic News, June 16, 1997 by Sarah Cohen

The layoff measure was referred to in January of 1996 as the biggest job cuts in the history of the telecommunications industry.

But the devastation to New Jersey employees that some anticipated never occurred. Those New Jersey communities where AT&T resides--Morris County, which includes the city of Morristown, and Somerset County, which includes Basking Ridge, seem as well off as ever. Morris and Somerset regularly compete for high rankings within the top five wealthiest communities in the U.S. The unemployment rate in Somerset is 3.2 percent and in Morris, it's 3.1 percent--well below the New Jersey unemployment rate of 5.0 percent and even below the national unemployment rate--at its lowest point since the 1970s--of 4.8 percent. Union County, which includes Murray Hill, where Lucent Technologies is now headquartered, has a somewhat higher unemployment rate at 5.2 percent, but spokespeople for Lucent say employment in Lucent's New Jersey locations has remained stable since the announcement of the layoffs.

Ray Martinetti, supervisor, division of workforce New Jersey for the New Jersey Department of Labor, told Electronic News, "The AT&T layoffs seem to have had a negligible effect on the state. We anticipated the worst-possible-case scenario, and geared up to provide services and training. But we found that the need for our services was nowhere near the magnitude that we had assumed based on newspaper announcements."

Others concur. When asked at the various chambers of commerces and economic development centers how New Jersey communities fared since the initiation of the layoffs, respondents seemed unable to come up with negative impressions. Fred Rossi, township administrator of Morris County, said, "I don't know if there's been much of an impact, per se. There's very little retail here, so that hasn't been negatively affected, and our housing market is strong. We have a good tax base, excellent services, such as garbage pick-up, police, fire, 100 acres of parks and playground."

Stark Contrast To IBM

The AT&T layoff scenario stands in stark contrast to the IBM layoffs of the early 1990s in New York State's Hudson Valley, perhaps because IBM was the only substantial business in the small towns where IBM was located, whereas much of AT&T is more closely situated to the thousands of employers in the New York metropolitan area. But perhaps there are other reasons which account for the strange benevolence of AT&T's layoff situation.

Speculation over why New Jersey seems relatively unaffected by the "biggest job cuts in the history of telecommunications" vary. Some at the Communications Workers of America, a union popular among AT&T workers, believe AT&T exaggerated the 40,000 jobs figure to include those companies AT&T was spinning off, Lucent and NCR, in order to impress Wall Street and raise the value of AT&T stock. The New Jersey Department of Labor's Mr. Martinetti believes New Jersey bypassed a catastrophe due to the high skill level of the middle managers that bore the brunt of the downsizing, the generosity of AT&T's buyout and layoff packages, and the efficiency of AT&T's outplacement services. A spokesman for AT&T also noted that the company announced worldwide layoffs over three years--not layoffs solely in New Jersey over a short period of time.

Turns out AT&T did factor the spinoff of Lucent, although not NCR, in the 40,000 layoff figure. AT&T allotted itself the loss of 17,000 employees; Lucent, the loss of 23,000. But a spokesperson for Lucent said that 23,000 is not the total number of AT&T employees lost through the spinoff. Lucent had 131,000 employees when first spun off from AT&T, and through the course of its own actions, will pare itself down to meet the AT&T layoff figure. However, said the Lucent spokesperson, 7,000 of the 16,000 thus far let go from Lucent was the result of the divestiture of Paradyne Corp. last year, a former network access subsidiary of Lucent. The spokesperson added that in Lucent's New Jersey facilities, the employment rate is stable--even growing in the areas of wireless, microelectronics and software.

AT&T, too, has grown since the announcement of the layoffs. "AT&T as of today has 6,000 more people on payroll than it had when downsizing began because of the growth of on-line wireless and customer care services. Six thousand to date have been notified of layoffs (in the past year and a half); half of those took our buyout package, and the other half tried reassignment. Forty percent of the 6,000 notified have been reassigned to other divisions of AT&T," stated an AT&T spokesman.

And as the Department of Labor's Mr. Martinetti suggested, AT&T is indeed generous to those who either accept AT&T's buyout package or wait instead to find themselves laid off. The buyout and layoff package includes, for instance, up to $10,000 reimbursement for education, moving expenses or the start-up of a new business; and up to two years of severance for union members or long-time AT&T employees.