AT&T: DISCONNECTED

THE BASEMENT OFFICE suites in suburban Murray Hill, New Jersey, are being expanded almost 50%, and in a big rush. Workmen are knocking down walls and hammering nails into temporary partitions to get cubicles ready as early as next week for the people who will be surging in and out.

New hires? No, new fires. Or at least AT&T employees who have been told they are "unassigned" (translation: they can expect a pink slip any day). Murray Hill is one of seven AT&T "resource centers" around the country where laid-off employees can spend their last days with the company typing up resumes and looking through computer databases for leads to new jobs. These centers will be among the busiest places in the company throughout the year. AT&T will be letting go 40,000 more employees, or 13% of its entire staff, about 70% of them before the end of the year.

The announcement, two days after the New Year's Eve horn tooting had died away, got 1996 off to a dismal start on the employment front. By now, of course, it is hardly news that "at most major companies, downsizing is standard operating procedure, year in and year out," in the words of John Challenger, executive vice president of the Chicago outplacement firm Challenger, Gray & Christmas.

Nor is it startling any longer to hear of new job eliminations, even at companies that have already gone through several previous rounds of layoffs and are earning solid profits. AT&T qualifies on both counts. It has been bouncing people at an average rate of around 900 a month since 1984, when an antitrust decree forced it to get rid of its seven "Baby Bell" regional phone companies. Not entirely by coincidence, it earned $4.7 billion in 1994 and $2.8 billion in the first nine months of 1995. (A write-off against fourth-quarter earnings of $4 billion after taxes for severance pay and related costs, however, may wipe out most of its earnings for the full year.) It had been obvious too that more firings were coming at AT&T ever since the company said last September that it would split itself into three unequal pieces.

Even so, the announcement was a bombshell. For one thing, the job terminations were much more numerous than anyone had expected--so much so as perhaps to indicate that a two-year slackening in the pace of layoffs economy-wide is about to be reversed. Challenger, Gray & Christmas counted reports of a record 615,000 job reductions in 1993; that dwindled to just under 440,000 in 1995. John Challenger, however, sees a "real risk that the pace is picking up and will surge in 1996." The AT&T layoffs point to more in telecommunications, he says. In addition, "more bank mergers mean more layoffs. And the retail industry is hurting" after stagnant Christmas sales.

As a social phenomenon, AT&T's move is the most decisive signal yet that the old bonds of mutual loyalty between worker and giant company are being strained to the breaking point. Of all American firms, AT&T probably came closest to a Japanese-style identification of worker with corporation. It was once common for an AT&T employee, asked by a new acquaintance what he did, rather than replying "I'm an accountant" or "I'm an engineer" to say "I work for the phone company."