Labor Market Outcomes of Deregulation in Telecommunications Services

Abstract

[Excerpt] This paper examines the labor market outcomes of deregulation in the telecommunications industry, focusing specifically on changes in union density, real wages, wage inequality, and employment levels. Deregulation of telecommunications long distance and equipment markets began in 1984 with the dismantling of the highly unionized Bell System into AT&T (the long distance and equipment provider) and seven Regional Bell Operating Companies (RBOCs, the local service providers). Deregulation of local service has proceeded fitfully: while Congress intended to increase local competition with the passage of the 1996 Telecommunications Act, the RBOCs continue largely as monopoly providers. Despite only partial deregulation, however, former Bell System companies have fundamentally restructured their operations to compete with a growing number of new nonunion entrants; and they have focused heavily on cutting labor costs. Labor-management relations, cooperative under the prior regulated regime, have deteriorated substantially; and unions have had minimal influence on managerial strategies in the deregulated era (Keefe and Batt 1997). In this paper, we focus on three questions. First, what are the overall trends in unionization, real wages, and wage inequality since deregulation began? Second, what is the effect of deunionization on wage inequality in the industry as a whole and within occupational groups? Third, to what extent has inequality increased within both the union and nonunion segments of the industry? To answer these questions, we analyze the Current Population Survey (CPS) annual earnings files (1983 to 1996). We interpret these data in the context of field research on managerial and union strategies in response to deregulation.