Sprint, T-Mobile merger would cut employee pay, even at Verizon and AT&T, study says

A merger between Sprint and T-Mobile would cut into the wages of wireless store employees — including those working at Verizon, AT&T and all four companies’ authorized dealer stores, according to a study released Monday.

Average weekly earnings for these retail workers “would decline by as much as 7 percent” and between 1 percent and 3 percent “in the bulk” of the markets affected by the merger, the report released by the Economic Policy Institute and the Roosevelt Institute said.

Among the 50 markets hit hardest by a merger, the study found wages could erode by as much as $65 a week, or $3,276 in a year, or as little as $10 a week, or $500 a year.

“These are meaningful amounts to the working people in these jobs,” said Heidi Shierholz, senior economist and director of policy at the Economic Policy Institute, who spoke at a presentation of the study.

Among specific markets, the study said, wireless store employees in Kansas City, Kan., and in St. Louis would suffer among the larger losses in wages.

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Economic Policy Institute, Roosevelt Institute

Moreover, it said wages would fall even if the merger led to no layoffs.

“This is assuming there is no affect on jobs, that all the jobs stay intact,” said Marshall Steinbaum, research director at the Roosevelt Institute and a co-author of the report.

The impact on workers’ pay would extend beyond the two companies merging, the study said, and hurt wages of retail workers at Verizon, AT&T and independent retailers that serve as dealers for the various brands. Schierholz explained that all wireless retail employees’ bargaining power on the job would suffer from eliminating one of the four national wireless carriers.

“The threat that you could quit your job and get a decent job somewhere else also just went down,” Schierholz said.

Sprint and T-Mobile have said their combined business would create jobs from the first day of a merger, though they have acknowledged there would be duplication among jobs. The Communications Workers of America has argued that the merger would eliminate more than 28,000 jobs, mostly from closing retail stores.

Opponents of the proposed merger between Sprint and T-Mobile also have challenged its impact on consumers. They argue that moving from four national wireless carriers to three would reduce competition for wireless consumers and lead to higher prices as the companies flexed a greater degree of monopoly power.

Steinbaum and co-author Adil Abdela, research associate at the Roosevelt Institute, studied the power that a reduced number of potential employers would have over competition for retail workers who sell their wireless services. They found it would reduce wages through an economic concept called monopsony.

“Monopsony power is when employers have power to set wages unilaterally, and workers generally earn less than they are worth. Concentration of employers confers monopsony power because workers lack the job opportunities that would ensure pay would track their productivity,” their report said.

Steinbaum said the study shows what would result from a merger. He said the report does not take a position on whether federal and state officials should approve the merger but does argue that officials should weigh the impact on wages in making a decision.

“There’s been a debate recently bubbling up about this,” Steinbaum said. “But they definitely do not do this as a matter of routine when they’re evaluating mergers.”

The study looked at the impact a merger would have on wages by using different sets of data and methods of analysis to produce an estimate of the impact on wages. Though the answers varied — the difference between $65 a week and $10 a week — Steinbaum said the results consistently showed workers suffering a reduction in wages from a less competitive market for their labor.

Release of the study comes after 13 telecom companies, consumer groups, labor groups and others formed the 4Competition Coalition to oppose the proposed merger between Sprint and T-Mobile. The coalition called the deal “presumptively unlawful” on Thursday.

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