Vive Le Canada

Circuit City Replaces 3400 'Overpaid' Workers!
Date: Saturday, March 31 2007

Circuit City Replaces
3400 'Overpaid' Workers!

Circuit City's candor was shocking when they announced that they are eliminating 3,400 employees because they want to replace them with cheaper ones. So just how expensive are Circuit City employees? Many of them are making $11 an hour, which in the opinion of Circuit City executives is way too much. One employee that got the boot was earning $11.59 an hour after working there for 7 years.

This is about as blunt a statement as I have ever seen a corporation make:

Circuit City, the nation's second-biggest consumer electronics retailer, behind Best Buy Co. Inc., said the store workers being laid off were earning "well above the market-based salary range for their role." They will be replaced as soon as possible with employees who will be paid at the current market range, the company said.

The term "market based salary" is similar to the term "prevailing salary". Keep that in mind next time you hear Bill Gates claiming that his H-1Bs make prevailing salaries.

The CEO of Circuit City earned $4,514,975 in compensation and an additional $5,459,409 in stock options in 2006. Executive vice-president George Clark drew $1,949,733 in compensation and $4,083,013 in stock options last year. They must be very happy at the moment since shares of Circuit City stock went up 35 cents on the announcement of the job cuts.

Retailers aren't the only ones getting the boot. Their IT department is getting the ax to save money as well. Computer/IT people were targeted who are raking in a whopping $15.50 an hour! Circuit City is outsourcing the IT department to IBM Global -- whose claim to fame is cutting cost by exploiting cheap labor in India. Domestically IBM Global uses large numbers of H-1Bs to cut cost.

Not all of Circuit City's computer people will lose their jobs however -- about 50 of them will go to IBM. It sure would be interesting to know how many of those who get to keep their jobs are H-1Bs and how many are Americans, and what kind of pay cuts they can expect when they go to IBM.

None of these articles give clues about where Circuit City plans to find cheaper employees to staff their retail stores. Perhaps they are counting on the STRIVE Act to pass Congress so that they can get a bunch of guest worker visas.

THOUGHT TO PONDER: I have been thinking about why Circuit City was so candid about their worker replacement. It's hard to believe that the executives were so ethically inclined to honesty they considered lying a sin. Could it be arrogance or perhaps something more insidious? Perhaps their candor was used as a pre-emptive strike to prevent age discrimination lawsuits. Companies can legally hire employees because they are cheaper as long as they don't use age as a criterion. Since the employees that have been there longer are probably higher paid, and of course older, wouldn't it suit the purpose of the robber barons to announce that all of the job terminations are based purely on cost?

This article comes from Vive Le Canada

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