Circuit City Slaughter

Columnist Bill White of the Allentown Morning Call pictures Circuit City CEO Philip J. Schoonover getting a warm welcome to hell – very warm. Satan tells him, “This place is full of overpaid, outsourcing, golden-parachuting, employee-abusing worms like you.” Schoonover’s sin? Laying off 3400 employees because they had been around for too long and needed to be replaced by minimum wage workers. His punishment? Having a choice of Dick Cheney or Nancy Grace as a roommate and spending eternity listening to Sanjaya’s Greatest Hits.

The New York Times took the Circuit City slaughter with much greater equanimity. In his economics column last week, Times columnist David Leonhardt showed some pious sympathy for the laid-off, who will, after a 10 week cooling off period, be able to re-apply for their old jobs at much reduced pay. But he goes on to explain that Circuit City’s employee abuse is just part of the larger corporate demand for “efficiency.” Wal-Mart, after all, has capped employee pay and taken the stools away from its elderly employees. Sadly, Leonhardt notes:

It’s probably not possible to halt these changes. It may not even be desirable. The flexibility of the American labor force seems to be one reason that recessions have become less frequent and unemployment is less of a problem here than in Europe, notes Jason Furman, a leading Democratic economist

Furman, by the way, is a pretty flexible guy himself. An advisor to John Kerry in 04, then an NYU professor, and now a project director at the Brookings Institute, he’s made his mark as a “liberal” defender of Wal-Mart’s anti-worker policies. It’s fellows like Furman who put the “ick” in the word “Democratic.”

But from Allentown to Times Square, no one is commenting on where the new flexibility may be taking us. Time was, not so long ago, when seniority was rewarded with higher pay and other perks. But that higher pay now carries a lethal risk. As a friend who writes software for a major multinational explained to me: “If you ask for a raise, the boss is going to say, ‘Why would you want that? It would be like having a bulls-eye painted on your back.’” The more you make, the more tempting it is to fire you.

I experienced this myself a few years ago when I lost a lucrative writing contract with a major media outlet. “Why?” I asked my agent. “They said they were paying you more than any of their other outside writers,” she told me, as if that were a sufficient explanation. Foolish me, I thought the raises I had gotten meant the bosses were pleased with my work. What they meant was that I was doomed.

Once you fire the high-performers and experienced workers, the next step will be to demand that employees pay you for the privilege of working. Why not? Most workplaces provide air-conditioned environments and bathroom facilities, complete with soap and paper towels. These are things you’d expect to pay for in a hotel, so why should workers get them free? Having busted his $10-20 an hour senior employees down to $7 and change an hour, Schoonover’s bound to see that the best route to higher profit margins is negative pay.

I know what Schoonover’s defense will be when he gets to the Pearly Gates: “The market made me do it.” He’ll be confident about getting in to the Good Place, because for men like him, as well as Leonhardt and Furman, whom he’ll bring along as character witnesses, the market is in fact the deity, determining who will starve and who will eat, who will work and who will beg.

But if the deity is someone other than “the market,” if He or She turns out to be a moral entity, capable of distinguishing right from wrong, then poor Schoonover – it’ll be Sanjaya for all eternity.

Tags: allentown_morning_call, brookings_institute, Circuit-City, david_leonhardt, employee_abuse, lay-offs, minimum_wage_workers, Philip-J.-Schoonover

This entry was posted on Tuesday, April 24th, 2007 at 12:36 pm and is filed under Directors Blog. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.