Of Walter Reed and Circuit City

Guambat has left it to the many others to lament the hypocracy of the "support our troops" brigade.* Guambat does not speak of the fellow troops supporting their numbers, but the big money, big media, big politician types who glorify the little guy just to use him/her up in the latest military mash-up that seems to have no common rationale, and then dump the little guy when he/she's used up. You know, support our fallen heroes, but let's not talk about the broken ones. Let's build a tomb to the unknown soldier, but a derelict dump for the known ones.

Its the way they do things in the work-a-day world of everyday life, too. Guambat hattips Felix Salmon for pointing out the parable for this moral of the day.

Salmon points to a NYT article by David Carr about the latest human resource misallocation of resources at Circuit City, with a few pithy notes of his own.

Carr's article discloses some of the ignored stories behind the one-day headline that Circuit City was disposing 3400 of its very best salespersons:

Media outlets could not be blamed for having a little fatigue when it comes to layoffs, which have become an organic part of American life. With Detroit laying off more than 70,000 people in the last few years, the approximately 8 percent of Circuit City’s work force who got the heave-ho as a result of a “wage management initiative” — yet another advance in corporate-speak — do not seem like a big deal.

But there are larger issues here. Circuit City, pushed by other big retailers and the consumer’s desire for low prices, could not compete. So they fired the cream of their work force, not even giving those employees a chance to re-apply immediately for their job at lower wages until after a cooling-off period of 10 weeks. In doing so, the company engaged in a kind of domestic outsourcing.

“The fact that this was a nonstory is as emblematic of our times as the firings themselves,” said Harley Shaiken, a professor who teaches labor issues at the University of California, Berkeley. “What makes this troubling is that this is not an auto parts supplier in Michigan under global pressure; this is a retail giant jettisoning its most experienced workers because it is under pressure from the Best Buy across the street. That is a big story.”

In the 1980s and ’90s, the heroic narrative of business reporting began to focus on executives, in which a new pantheon — executives like Jeff Bezos, Bill Gates and, um, Jeffrey K. Skilling — were touted as beings who had left the gravitational pull of traditional economics.

Even now, the corner office is where reporters usually go when it’s time to cover business. According to Christopher R. Martin, an associate professor of journalism at Miami University, of the top 25 newspapers in the country, only four have reporters assigned to the labor beat.

“Newspapers have shifted from going after mass audiences to targeting upscale audiences. This is a great story,” Mr. Martin said, referring to the Circuit City layoffs, “but it’s about working people. There have been dual wage systems before, but here you have something completely different — the wholesale firing of people who did their jobs well.”

[I]ncreasingly, America is nation of clerks — not adolescents in their first jobs, but heads of households struggling to get by on the desiccated compensation that working in retail provides. Newsrooms, which should know something about layoffs, have trouble fathoming that many people work in retail because it is the only work they can find.

In a bit of happy coincidence, The New York Times did have an article on Thursday in its business section demonstrating that the top 300,000 Americans had almost as much income as the bottom 150,000,000 Americans. The explanation was just a flip of the page away in the brief about Circuit City.

The Circuit City pratfall does have an executive level narrative as well: if you add up salary, bonus, stock options, and other perks, Philip J. Schoonover, chief executive, and W. Alan McCollough, chairman, received almost $10 million in various kinds of compensation last year for steering the company to its imperiled state.

Salmon then does some of the numbers for us to provide even greater impact of that final sting in Carr's story:

Circuit City's most experienced sales people, some of whom were making the grand total of 51 cents per hour more than what the company considers to be "market wages", all got canned overnight.

Actually, $10 million in total compensation between two executives seems almost modest by today's standards – but still, if you save 51 cents per hour on 3,400 workers working 35 hours a week, that comes to just over $3 million a year. It's almost impossible to think of a policy which could cause so much pain on the individual level while saving so little money at the corporate level.

Guambat notes another thing when you look at the numbers: the corporate spin on the financial raison d'etre of the mass sacking.

Carr reports the company line that the sacking will "save $250 million over two years". But the sacking is not permanent. Circuit City will hire more salespersons to replace the sacked ones, even allowing the sacked ones to join the back of the queue if they want to re-apply for their jobs. As Salmon's numbers demonstrate, the simple numbers add up only to $6 million wage savings. That leaves a fair chunk of change from $250 million to try to explain away. But no one evidently does.

* Guambat prefers the slogan, "Support our Warriors - Scrutinize our Warmongers"

Of gooses and ganders
Executive wealth creation
Crocodile tears


UPDATE: This topic is getting quite a lot of blogbuzz, it appears. This one reviews some of it. A quick glance of it all suggests we're not all reading from the same factsheet.