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March 28, 2007

Circuit City prefects the wage cut

For years corporate titans have struggled with the dilemma. How can you encourage employees to go the extra mile for your company and its customers, but cut their wages and benefits to give yourself a raise?

Now in a move that has left CEOs nationwide in awe, Circuit City realized that if you fire people then offer them their jobs back at half the pay, they should be happy just to have a pay check at all:

The electronics retailer, facing larger competitors and falling sales, said Wednesday that it would lay off about 3,400 store workers - immediately - and replace them with lower-paid new hires as soon as possible.

The laid-off workers, about 8 percent of the company's total workforce, would get a severance package and a chance to reapply for their former jobs, at lower pay, after a 10-week delay, the company said.

The news of the layoffs came as a surprise to Rachelle Gouled, who earns about $7.75 an hour working on the sales floor at a Circuit City in Roseville, Minn. She said she was spared, but 10 people were laid off Wednesday at her store.

"For some of them, I could see them being OK without this job," she said. "For others, it was their only job."

Posted by Mike at March 28, 2007 11:20 PM

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