You likely read the story that broke a few weeks ago.
The headline in The Washington Post read "Circuit City Cuts 3,400 'Overpaid' Workers" (March 29, 2007, by Ylan Q. Mui, D01).
The electronics and entertainment retailer fired 3,400 employees across the country, or about 9% of the company's workforce. Circuit City said their reason was simple: all were "making too much money." The company reported that the terminated workers would be replaced by others who were willing to work for less. The company admitted that the firings were not related to performance, but were part of a strategy to "improve the bottom line."
"Retail is very competitive and store operations just have to contain their costs," said Jim Babb, a Circuit City spokesman. "We deeply regret the negative impact that was had on these folks. It was no fault of theirs."
Workers were provided severance pay. After ten weeks, if they are willing to work for less, all will be free to apply for any openings with the company. The terminations occurred on the same day as the announcement of the decision and all were told to leave the stores immediately.
Again, according to The Washington Post story, the firings, along with several other moves, are expected to reduce expenses for the electronics retailer by $110 million in fiscal year 2008 and $140 million a year starting in fiscal 2009.
Steven Rash, 24, said he was one of 11 workers fired at a Circuit City in Asheville, N.C. Rash said he has worked for the retailer for seven years where he reported that he earned $11.59 an hour and worked from 15 to 20 hours a week. Though he has a full-time job at a bank, he said he needs to find part-time work to help pay his student loans.
"It's not just a part-time job," he said. "It's about paying the bills."
According to the U.S. Bureau of Labor Statistics, the average hourly wage for retail salespeople was $11.14 in May 2005, the latest data available.
Following the round of firings, Wall Street responded favorably for Circuit City as shares closed at $19.23, up 31 cents, or 2 percent.
The on-going competition among Circuit City, Best Buy and Wal-Mart for customers drove this action by the big retailer.
How should I react to this story? I understand that businesses have to compete and make adjustments to turn a profit based on market forces and realities.
But, what about the workers? What about the families?
This incident parallels what we observe on a daily basis in the city. Hard working people find it more and more difficult to make a living, to earn enough to make life work for themselves and their families.
Who is to blame?
Ironically, most all of us are implicated.
We want cheap goods and services. As a matter of fact, for most of us, if we are honest, price is the number one consideration when it comes to making a purchase. We go to the stores where we can get the best deal without a thought about the means of production, delivery to market or the labor back of the product.
Further, most of us own a stake in the stock market. Our 401 k plans, our IRAs, our 403 b programs, all put us squarely in the game of bottom line watching and analyzing corporate strategy with little thought about labor.
I am wondering these days just how responsible such an approach, such a worldview really is?
I am also facing the fact that even though my faith has much to say about this, I find it fairly easy to ignore faith's directives in this culture of creature comforts and discount luxury.
Surely, there must be a better way. After all, what's more important to me, saving $15- $20 on a new flat screen or knowing that parents can do a better job of caring for their children?
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