Circuit City to cut more than 3500 jobs

A new plan for layoffs at Circuit City is openly targeting better-paid workers, risking a public backlash by implying that its wages are as subject to discounts as its flat-screen TVs. The electronics retailer, facing larger competitors and falling sales, said 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% of the company's total work force, would get a severance package and a chance to re-apply for their former jobs at lower pay, after a 10-week delay.

Analysts and economists said the move is an uncertain experiment that could backfire for the chain. Circuit City's cuts come at a time when other retailers are trying to put more knowledgeable workers on store floors. Home Depot, whose new chief executive is struggling to re-ignite sales growth at its stores, said it has raised pay to attract skilled tradespeople, such as carpenters and electricians.

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