Bye, bye, Borders...

Glenn Stewart, July, 2011

Borders bookstores are gone, or quickly going as they liquidate merchandise and shut down their stores, 600 in all, including 500 ‘superstores’ and another 100 under the ‘Waldenbook’ brand. Tens of thousands of low-wage employees have lost, or will lose their jobs.

The bankruptcy of the second largest book-mega-retailer is big news. All the major media have run long, detailed stories for over a year now leading up to the final demise of the company. In several of the articles much was made of CEO Bennett Lebow’s personal injection of $25 million dollars to help the company last May. Border’s second-largest shareholder is hedge fund Pershing Square, whose manager, William Ackman, complained out-loud that Borders was his “worst investment ever.” Paraphrasing the last U.S. president to balance the Federal budget, “Mr. Lebow and Mr. Ackman, I feel your pain.” In fact, if it helps, I will hold your place in line at the unemployment office.

One article for example, devoted 130 words to Lebow, Ackman, and several other shareholder-loss scenarios. About the workers who lost their jobs, and did not have $25 million dollars to invest?---They wrote sixteen words: “All 200 closings will be superstores, and about 6,000 jobs will be affected, the company said.”

In my own book, Underlings, I write that things are getting worse for those who work at the bottom of the food chain, and further, that more and more find themselves in minimum wage jobs with virtually no health insurance, and no job security, as the Border’s bankruptcy reveals once again.

Most of those at, or below the poverty threshold are employed in low wage service jobs, most of them in retail, and represent a growing underclass. For the first time in our history, the working poor outnumber the non-working poor. Certainly over 50% of all American workers find they are ‘underlings,’ working for subsistence wages at the whim of corporate captains, whose raison d’être is stock-share value.

Underlings have always been dispensable. Only now, in a global labor market swelling with eager laborers, anxious to toil for about $2 a day, our own workers are fully disposable.

Border’s going down is not the stuff of national tragedy. But the tens of thousands of displaced workers, who will be added to the millions already extant, are a national tragedy of epic proportion. The inability of millions of parents to sustain their children is a condition created by the ‘smartest guys in the room,’ men and women like the Border geniuses, and the Enron and Worldcom criminals.

Having worked for Big Retail for 30 years, I can tell you what they did, and continue to do is not sustainable. The big companies have for decades squeezed workers on the front lines---those who represent the companies to the customers, until turnover has reached an industry average of 60%. For the eight years of the George W. Bush administration the minimum wage did not go up, and so neither did the wages of most American workers. Then the deepest, darkest recession since 1929 hit.

The employees are no better than wage slaves, and so are unhappy to say the least. The customers notice every time they see unacceptably long waiting lines, and disinterested employees merely going through the motions. Service diminishes, as do store conditions and the shopping experience overall. Brick & Mortar is doomed. But not because of technology, but rather because our large retailers do it badly.

The Border’s folks made a lot of mistakes, and squeezing employees was only part of the problem. Many companies treat employees horribly and do just fine. But if you think they are a permanent part of future commerce, just ask Circuit City, The Sharper Image, and yes, Borders. And is it any wonder they're extinct?

People are expensive, and must be employed in a way that improves the company. Exploiting people while expecting the best from them can be fatal to the future of the company.