Independent Jobs Study Disputes AT&T’s Claims

BY Ross Schulman
September 1, 2011

A study performed by University of California at Irvine professor of economics David Neumark and released today confirms that AT&T’s proposed take-over of T-Mobile, if approved, would cost the American economy tens-of-thousands of jobs.  The study shows that AT&T would shed jobs to eliminate redundancy and overlap in the merged company and reduce overall network investment.  Professor Neumark’s work debunks the unsubstantiated claims AT&T has made to sell the merger to policymakers and regulators – namely that acquiring T-Mobile will lead to an increase in jobs.
CCIA welcomes this independent study and its common sense conclusions. We have maintained since the merger was announced that would be damaging to American consumers and workers, and we are gratified, though not surprised, to find that position backed up by independent, thorough analysis. We are particularly happy to see that Professor Neumark used the same methodology in his study as did the jobs report released by AT&T.  However, Professor Neumark corrects the fabrications in AT&T’s report and finds that the proposed take-over would destroy between 34,000 and 60,000 American jobs.
We have always fundamentally believed in the power of competition. It drives innovation and keeps costs to consumers low, of course, but it has a much more basic effect on American workers. On the other hand, mergers that destroy competition rarely, if ever, result in more jobs. Professor Neumark notes this fact in the context of AT&T’s recent history. As he points out, since 2002 AT&T has caused the loss of around 107,000 job-years as a result of its strategy to grow through M&A rather than investing in its own network. The Department of Justice reiterated this point in a press conference yesterday. Jim Cole said that the administration’s view “is that through innovation and through competition, we create jobs.” CCIA could not agree more.
Professor Neumark’s study is also of the utmost importance because of AT&T’s consistent focus on the jobs argument throughout the course of their public campaign for the merger. The constant refrain was that the merger, in addition to providing better services for customers, would actually create jobs. While we were immediately skeptical of any claim that this merger would benefit anyone other than AT&T, it is vital to have a respected economist demonstrate the fallacies behind such an argument so that policy makers can, at the end of the day, make a properly informed decision.
The full text of the report is available here.

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