In a move that is presumably designed to impress us, Sen. Hillary Rodham Clinton has called on Circuit City to “reconsider” its recently announced layoffs.

In a letter to company management, Hillary wrote:

On behalf of my constituents in New York who were terminated and the thousands of other affected individuals throughout the nation, I am writing to express my deep concern about the announcement of Circuit City Stores, Inc. (“Circuit City”) that it has laid off thousands of its higher-wage employees in order to replace them with new and lower-paid workers… These decisions are inconsistent with the fundamental compact between your company and its employees. This is the wrong way to deal with the economic pressures of the day — and the wrong way to treat workers who’ve given their all to your company. For several years, the Circuit City told its consumers that “We’re With You.” The steps your company took this week indicate that it is not similarly committed to being with its workers and families. I ask you to reconsider your company’s actions, and I stand ready to help in any way I can.

By the way – I’ll note a personal agreement with Hillary in her disapproval of the manner in which Circuit City dismissed the employees, telling them to leave the store immediately, and informing them they are not permitted to reapply for their old jobs at a lower wage for ten weeks. But then again, once you tell someone they’re being laid off, I’m sure they represent something of a potential threat for sabotage, theft, even workplace violence.

So why were the employees laid off? Well, for starters, Circuit City had a bad year. I mean, really bad – from a $140 million profit in the 2006 fiscal year to a $12 million loss in 2007.

Why did that happen? Well, look around your home. Chances are, consumer electronics make up some of the most expensive items you own – or at least they used to be. But prices are falling for most of these products, and fast. Flat panel televisions – one of the biggest segments of CC’s product array – have particularly fallen:

Indeed, the prices of flat-panel TVs dropped dramatically last year, between 38 percent and 75 percent in a range of screen sizes, according to DisplaySearch.

Before Christmas, some retailers were offering Sylvania 42-inch plasma TVs for as low as $800, from a list price of $1500.

The company’s stock price dropped about twelve dollars over the course of last year, to the high teens.

When Best Buy, CompUSA, and Wal-Mart are all offering stiff competition, a company has to look at how to keep its costs down. One of these ways is by getting rid of their most expensive employees.

(And for those asking, “well, why don’t those at the top sacrifice first?”, if you eliminated the entire salaries of the top four highest-paid employees, it still amounts to only 43 percent of last year’s loss. The other 57 percent was going to have to come from somewhere.)

The New York Times opined:

As American consumers turn ever more to online shopping, it would seem that customer service provided by knowledgeable salespeople would be the highest priority for face-to-face interactions. The best shopping experience has to be the goal if people are going to keep slogging through the elements and marching through the sliding doors.
Circuit City seems to have missed that point. It also seems to have missed the trend, described by Michael Barbaro in The Times recently, toward so-called experience stores.

(First, I love it when newspaper editorial writers tell retailers how to run their businesses.)

But that first paragraph illustrates why salespeople are less needed than they used to be, or at the least why Circuit City might need fewer of them than it used to. Its online-only competitors like Amazon don’t have any expenses on floor staff, because they have no sales floor.

(Also note the company is expanding to new locations — 65 new stores in 2007 and 100 more in 2008. Presumably the workers who were laid off are free to apply for jobs in the new stores.)

Anyway, I lay this out to point out all of the business factors that Hillary’s letter ignores. From her words, you would think that Circuit City’s management woke up one morning, cackled and rubbed their hands together, and decided to fire a large swath of their employees in order to cover the costs of reupholstering their new Bentley. Her letter doesn’t acknowledge that a company that cannot turn a profit eventually finds itself out of business, and then all of the employees end up losing their jobs.

This is posturing of the worst order. The letter won’t make any difference; the decision has been made, Circuit City’s layoffs have begun. Hillary gets to pose as standing up to corporate America on behalf of working families, but in the end her actions change nothing and cost her nothing.

Layoffs stink; I can speak from experience during the dot-com era. But a letter from a senator would not have created a way for my former dot-com employers to suddenly find a way to make money. Hillary Clinton is so locked in to this Bob Shrumian people-vs.-the-powerful populist tubthumping that she doesn’t even bother to look into the financial factors that prompt companies to lay off workers.

Hey, why let this stuff get in the way of a good press release, huh?