Dateline: Tuesday, April 17, 2007 | Simulpost with Thomas Paine's Corner.
While the working class struggles to make ends meet, the CEO class enjoys salaries and perks fitting for royalty...just call it economic democracy, American style.
Circuit City has decided to lay off 3400 Associates who make above the "market range." That range is in the vicinity of $7.75 an hour. The rationale from the Circuit City press release reads:
"The company has completed a wage management initiative that will result in the separation of approximately 3,400 store Associates. The separations, which are occurring today, focused on Associates who were paid well above the market-based salary range for their role. New Associates will be hired for these positions and compensated at the current market range for the job.
New employee's will be hired at lower pay, and without benefits. Released employees may reapply for the lower paid positions after a ten week period. Investors apparently think this is a good idea as stocks rose after news of the restructuring.
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Philip J Schoonover Total Compensation $4,513,700 5-Year Compensation Total NA Philip J Schoonover has been CEO of Circuit City Stores (CC) for less than six months. Mr. Schoonover has been with the company for 2 years .The 45 year old executive ranks 23 within Retailing |
| The jovial Mr. Schoonover. It's easy to be jovial when you pull almost $90,000 a week. | |
A Circuit City worker earning $7.75 an hour, makes $16,120 a year at full time. If we are generous with benefits and payroll taxes - say at 50% of pay - the per employee cost is $24,180. According to USA Today, the compensation package of of Chairman W. Alan McCollough is $5,438,476, and CEO Philip J. Schoonover is $4,513,700. They are apparently not taking cuts in their pay, benefits, bonuses, or stock holding.
Circuit City is not the first corporation to make such a move, though others I have known of use a merger to fire and rehire employees at a lower rate.
In most areas of the country, $16,000 a year is hardly a living wage for an individual - much less for a family. These are not "highly paid" employees. Circuit City is also the second largest electronics retailer in the country. One might wonder what "market range" they are comparing to.
The layoff highlights a number of issues that are troublesome - not the least of which that $7.75 an hour for a trained employee is just "not competitive." I can imagine myself as one of these employees. After working for the company for a couple of years, and having finally arrived at the hard earned $7.75 an hour, I am told that I am just "too expensive."
"Rowan we think you are a great employee. You have done a fine job for us. We are laying you off for that reason alone. However, we don't want to lose you as an employee, so make sure you reapply for your job. I will hire you back in a flash for $5.25 an hour. We need employees with you customer service skills and product knowledge."
The American economy has long forgotten that it exists to serve society, not the other way around. And the "forgetting" has been helped along by ample doses of ignorance and misinformation.
What kind of a country are we creating when this sort of thing is considered a good business practice? Who are these "investors" who see this cost savings as something beneficial to themselves or Circuit City? I bet they are not employees making $7.75 and hour. Likely, McCollough and Schoonover will get a nice addition to their bonuses for their cost savings acumen.
Their is no indication in the corporate press release, or any of the articles, that Circuit City is running at a deficit, or even that their profit margin is too low. This move is for one reason - to add to the profit margin.
There are those who argue that the economy is "growing" and "improving." Well, maybe their part of it is, but for working America that isn't the case. Once again, workers take the hit, and communities will continue to subsidize the bottom line. When we allow the continued erosion of pay and benefits by corporations, the community and tax payers take up the slack. Loss of tax revenue, need for help from community and state agencies, and the disruption of lives are all absorbed by us. Meanwhile, "investors" cheer and corporate executives and boards pat themselves on the back and wait for the bonus checks to roll in.
I say that Circuit City deserves to hear from us: email Circuit City Public Relations at PR_Director@circuitcity.com. Let them know what you think. If you choose to boycott them, then please let them know why you are not doing business with them any longer.
Rowan Wolf teaches sociology in Portland, Oregon, and is the editor of Uncommon Thought Journal . She may be reached via email at rowan@uncommonthought.com