Borderlands Books is Closing(borderlands-books.com)
borderlands-books.com
Borderlands Books is Closing
http://www.borderlands-books.com/
136 comments
This reinforces the point made by people who oppose the minimum wage.
The argument opposing the minimum wage is not that it hurts businesses equally, but that it focuses the pain on businesses and workers at the margins. Here we have a business that for all the reasons you point out is a marginal business, and this price shock pushed it over the edge.
It should be somewhat tautologically obvious that the businesses who have the hardest time absorbing a price shock like the minimum wage are the ones that are struggling already. This can be ignored with regard to large-scale industrial policy only if you feel there is no value in marginal industries. But keep in mind that almost all businesses go through "marginal" periods eventually, either on the way up or the way down (or both, sometimes multiple times).
The argument opposing the minimum wage is not that it hurts businesses equally, but that it focuses the pain on businesses and workers at the margins. Here we have a business that for all the reasons you point out is a marginal business, and this price shock pushed it over the edge.
It should be somewhat tautologically obvious that the businesses who have the hardest time absorbing a price shock like the minimum wage are the ones that are struggling already. This can be ignored with regard to large-scale industrial policy only if you feel there is no value in marginal industries. But keep in mind that almost all businesses go through "marginal" periods eventually, either on the way up or the way down (or both, sometimes multiple times).
If they have a strong argument that they will be able to come back after being marginal, they can take out a loan or seek investment.
Otherwise, it's just a matter of delaying the inevitable.
Otherwise, it's just a matter of delaying the inevitable.
It's not inevitable without additional burden of minimum wage increase, it is inevitable with it There's a level of expense where the business is viable, and the level of expense where the business is not viable, and no investment or loans are going to change that - investments/loans are temporary measures, they do not change the income/expense balance. The only way investment could help is if it could either reduce the expenses long-term or increase the income long-term, this was not possible. In that situation, increase of the expense brought by minimum wage rise took the business from the point of being viable to the point of being non-viable, just as any increase of the expenses that can not be avoided would.
>It's not inevitable without additional burden of minimum wage increase
Why not. Inflation doesn't increase on product evenly. If book sales prices do not inflate, but property and fuel costs do expenses increase but profits do not.
Why not. Inflation doesn't increase on product evenly. If book sales prices do not inflate, but property and fuel costs do expenses increase but profits do not.
I don't buy this. All the parties directly involved - the owners, the present employees, the landlord, and the customers - seem to be in a steady state. It's impossible to predict how long a small business like this might continue; there are still cobblers in San Francisco. Unlike large businesses, small proprietorships can survive in the margins for long periods.
Also: If you shoot someone, you can't defend yourself against murder by saying "his death was inevitable anyways".
Also: If you shoot someone, you can't defend yourself against murder by saying "his death was inevitable anyways".
Your previous point was about marginal businesses rebounding. My point was that if a marginal business is likely to rebound, they should be able to secure a loan or investment to get them through a price shock, such as an increase in the cost of goods sold, or a fall in demand, or an increase in overhead.
Perhaps we differ in our understanding of the meaning of "marginal business"? Do you anticipate that a book store operating at the margins of profitability will weather all price shocks, legislated or otherwise, indefinitely? I do not. I would consider a marginal, struggling business's demise to be inevitable unless it is able to recover and become a thriving enterprise.
A particular price shock may be the last one the marginal business is able to weather, but it's more like the last wave in a long storm drowning a business, not a bullet to the head. You can blame that last wave, but the truth is that at some point, you need to be able to float.
Regarding the impossibility of predicting how long this business might continue with no meaningful profit margin: I would argue that Poisson distributions are pretty well understood at this point.
Perhaps we differ in our understanding of the meaning of "marginal business"? Do you anticipate that a book store operating at the margins of profitability will weather all price shocks, legislated or otherwise, indefinitely? I do not. I would consider a marginal, struggling business's demise to be inevitable unless it is able to recover and become a thriving enterprise.
A particular price shock may be the last one the marginal business is able to weather, but it's more like the last wave in a long storm drowning a business, not a bullet to the head. You can blame that last wave, but the truth is that at some point, you need to be able to float.
Regarding the impossibility of predicting how long this business might continue with no meaningful profit margin: I would argue that Poisson distributions are pretty well understood at this point.
if a marginal business is likely to rebound, they should be able to secure a loan or investment
This is not necessarily true. A more accurate statement would be: If a business is likely to repay an investor at a reasonable market rate (discounted for risk), it should be able to secure a loan or investment. These are not necessarily the same thing, especially in a business where "success" may be defined by the owners as merely holding a steady state. Borderlands is a labor of love for the owner, but we cannot expect investors to feel likewise.
You seem to have a very "industrial" view of business. It's my anecdotal observation that many sole-proprietorship lifestyle businesses are run with less-than-perfectly-rational economic motives. Borderlands is clearly like this. While this does not optimize for macro statistics like GDP, it does seem to optimize for the happiness of the people involved, which is why I think it's a shame that it's being arbitrarily forced under. An 18% increase in total expenses is not just a wave, but a tsunami.
This is not necessarily true. A more accurate statement would be: If a business is likely to repay an investor at a reasonable market rate (discounted for risk), it should be able to secure a loan or investment. These are not necessarily the same thing, especially in a business where "success" may be defined by the owners as merely holding a steady state. Borderlands is a labor of love for the owner, but we cannot expect investors to feel likewise.
You seem to have a very "industrial" view of business. It's my anecdotal observation that many sole-proprietorship lifestyle businesses are run with less-than-perfectly-rational economic motives. Borderlands is clearly like this. While this does not optimize for macro statistics like GDP, it does seem to optimize for the happiness of the people involved, which is why I think it's a shame that it's being arbitrarily forced under. An 18% increase in total expenses is not just a wave, but a tsunami.
And who are you to demand they get put down before them or their consenting workers might be ready?
Are they somehow forbidden from stickering books with a higher price?
Bike shops sort of have that limitation, the big vendors pick the prices, but they're like 30% over wholesale and so the bike shops get 30% for assembling the bike and selling it. I can't imagine that book stores are prevented from selling books at a higher price.
Bike shops sort of have that limitation, the big vendors pick the prices, but they're like 30% over wholesale and so the bike shops get 30% for assembling the bike and selling it. I can't imagine that book stores are prevented from selling books at a higher price.
Ever heard of amazon? Go much over list price and people start buying on amazon while they browse your store. People want to test-drive bikes, and shipping a bike back is a pain. Not really comparable.
And trapped between the commodity supplier fixing the price, and the state bringing up the costs, its a solid recipe for killing off a business. Which it has done in this case.
So the more interesting question from an economics perspective is whether or not capturing the marginal GDP of this business is a better or worse for the people. Sure the bookstore goes poof, and folks can't get cheap used books any more. The business will be replaced by something that can afford both the higher labor rate, like an upscale coffee shop or maybe a designer boutique.
But the number of bookstores goes down by one, and the volumes available are not available in the library. So the community has lost something too.
Nominally the markets are there to express what is a good application of capital by meeting demand. Should it go to running a bookstore or running a coffee roaster or a blog aggregator Etc. But the artificial floor of minimum wage creates artificial barriers to applying capital. You can see in this post that the floor of $10 allows the bookstore to exist, the floor of $15 does not. So here is a fiscal policy which is going limit choices.
And a really interesting effect is that everyone is going to raise prices to cover that expense, they have too, and so all of those folks who were complaining that they can't afford to eat at the 'upscale' bars and bistros in California its just going to get worse for them, and it won't be the Googlers or Twitterers or Pinsters causing that upswing, it will be the very government they elected to serve them doing it to them.
I find the economics of such things very interesting in the side effects as much as the intended effects.
So the more interesting question from an economics perspective is whether or not capturing the marginal GDP of this business is a better or worse for the people. Sure the bookstore goes poof, and folks can't get cheap used books any more. The business will be replaced by something that can afford both the higher labor rate, like an upscale coffee shop or maybe a designer boutique.
But the number of bookstores goes down by one, and the volumes available are not available in the library. So the community has lost something too.
Nominally the markets are there to express what is a good application of capital by meeting demand. Should it go to running a bookstore or running a coffee roaster or a blog aggregator Etc. But the artificial floor of minimum wage creates artificial barriers to applying capital. You can see in this post that the floor of $10 allows the bookstore to exist, the floor of $15 does not. So here is a fiscal policy which is going limit choices.
And a really interesting effect is that everyone is going to raise prices to cover that expense, they have too, and so all of those folks who were complaining that they can't afford to eat at the 'upscale' bars and bistros in California its just going to get worse for them, and it won't be the Googlers or Twitterers or Pinsters causing that upswing, it will be the very government they elected to serve them doing it to them.
I find the economics of such things very interesting in the side effects as much as the intended effects.
Bookstores in SF have been closing for a while; blaming this closure on the minimum wage hike is specious, to say the least. Yeah, I read the blog; but closing the bookstore today, because wages will go up in 2018 (3 years from today), is ridiculous.
Let me offer an alternate explanation, based on speculation (but grounded in the realities of the booming SF realestate market): someone offered to buy out Borderlands lease for a ridiculous amount, and it was an offer they just couldn't refuse. So basically it was a choice between (a) struggling along paycheck-to-paycheck for the next 3 years, or (b) getting a nice fat check to close the doors and do something else. They chose (b). The Valencia corridor between 16th and 24th has exploded, with a large number of hipster restaurants and boutiques, and money is flowing in like crazy. Might as well tap into that while the going's good.
Expect to see some hipster cafe, restaurant or boutique opening in their place in the next few months.
Let me offer an alternate explanation, based on speculation (but grounded in the realities of the booming SF realestate market): someone offered to buy out Borderlands lease for a ridiculous amount, and it was an offer they just couldn't refuse. So basically it was a choice between (a) struggling along paycheck-to-paycheck for the next 3 years, or (b) getting a nice fat check to close the doors and do something else. They chose (b). The Valencia corridor between 16th and 24th has exploded, with a large number of hipster restaurants and boutiques, and money is flowing in like crazy. Might as well tap into that while the going's good.
Expect to see some hipster cafe, restaurant or boutique opening in their place in the next few months.
Yeah, running a business like a bookstore is exhausting, and at some point you just hit one too many challenges and decide you're better off giving up and doing something else. I've literally walked in to client appointments and had the business owner break down crying during slow business periods.
And, the unfortunate reality is that if the community thought the bookstore was valuable, then they wouldn't be closing. Which makes me sad, I love bookstores.
I should probably go visit one of my local ones today.
And, the unfortunate reality is that if the community thought the bookstore was valuable, then they wouldn't be closing. Which makes me sad, I love bookstores.
I should probably go visit one of my local ones today.
I've often wished that I could visit a bookstore to buy e-books, with a commission going to the store. The entire transaction could take place via mobile, but physical books would be available in the store for browsing and discovery.
Alternately, put out a physical tip jar for showroomers.
Alternately, put out a physical tip jar for showroomers.
I note that the author of the blog post says:
"The change in minimum wage will mean our payroll will increase roughly 39%. That increase will in turn bring up our total operating expenses by 18%. To make up for that expense, we would need to increase our sales by a minimum of 20%. We do not believe that is a realistic possibility for a bookstore in San Francisco at this time."
"The change in minimum wage will mean our payroll will increase roughly 39%. That increase will in turn bring up our total operating expenses by 18%. To make up for that expense, we would need to increase our sales by a minimum of 20%. We do not believe that is a realistic possibility for a bookstore in San Francisco at this time."
They weren't paying their people much, were they?
No, they weren't paying their very limited staff much; it's a marginal business that's been on the decline for years, and even one of the managers is stated as having a salary of only $28k. All of this is in the article.
>managers is stated as having a salary of only $28k.
Which isn't a livable wage in SF, right? At some point businesses that can't survive cost inflation, either due to worker costs, government regulation, or energy cost must give up their space for those that can.
Which isn't a livable wage in SF, right? At some point businesses that can't survive cost inflation, either due to worker costs, government regulation, or energy cost must give up their space for those that can.
The manager didn't even make any money from the bookstore, it was the cafe that paid for the salary.
Not even the owner(s?) - I suspect that everyone involved including the owner could make significantly more by working even a low- to mid-range clerical job anywhere else in San Francisco.
It doesn't look like you paid much attention when reading, min. wage goes up immediately, not in 2018. 2018 was mentioned in different context altogether - that if the plans of minimum wage in 2018 become true, it makes more sense for the owners to get minimum wage job than to own/manage a bookstore, both money-wise and effort-wise.
Looks like YOU did not read the blog post.
Minimum wage went up by $0.31 on January 1. That's a 3% increase; not the 39% the post is whining about.
It will go up to $12.25 on May 31.
And to $15 in 2018; which is a significant jump, I admit. But long overdue.
Minimum wage went up by $0.31 on January 1. That's a 3% increase; not the 39% the post is whining about.
It will go up to $12.25 on May 31.
And to $15 in 2018; which is a significant jump, I admit. But long overdue.
Not immediately but business can not operate with a time horizon on a couple of months. If they need substantial increase in income, they have either to find the source of such income or stop digging the hole. Delaying it until the actual bankruptcy would do no good to anyone. If it is clear it is impossible to operate viable business with the projected expense level, then it's better not to waste more time and money on it.
And using derogatory terms like "whining" towards people trying to run real business and explaining their real-life challenges in factual manner only betrays your utter unwillingness to consider the subject seriously. No wonder you're using a throwaway account.
And using derogatory terms like "whining" towards people trying to run real business and explaining their real-life challenges in factual manner only betrays your utter unwillingness to consider the subject seriously. No wonder you're using a throwaway account.
"Although the major effects of the increasing minimum wage won't be felt for a while, we've chosen to close now instead of waiting for two reasons. First, the minimum wage has already increased from $10.74 per hour to $11.05 (as of January 1st) and it will increase again on May 1st to $12.25. Continuing to pay the higher wage without any corresponding increase in income will expend the store's cash assets. In essence, the store will have less money (or inventory) six months from now, so closing sooner rather than later makes better business sense. But more importantly, keeping up our morale and continuing to serve our customers while knowing that we are going to close has been very painful for all of us over the past three months. Continuing to do so for even longer would be horrible. Far better to close at a time of our choosing, keep everyone's sorrow to a minimum, and then get on with our lives."
Source: the article.
Note: The raise to $11.05 is a 2.9% increase, and from $10.74 to $12.25 is a 14.1% increase. The 3% won't kill them right away, but the 14% would hurt quite a bit more.
Source: the article.
Note: The raise to $11.05 is a 2.9% increase, and from $10.74 to $12.25 is a 14.1% increase. The 3% won't kill them right away, but the 14% would hurt quite a bit more.
I'd bet all those books are available less expensively on amazon. The only value being lost is the value of the curation by the owners.
It's also a function of demand elasticity whether cost increases are passed to consumers, eaten by businesses, or some combination. We'll see how much pricing power local businesses have.
And it's a real stretch to argue that a small business owner earning under $30k/year, with limited growth prospects, is an efficient deployment of capital. This was clearly a labor of love.
It's also a function of demand elasticity whether cost increases are passed to consumers, eaten by businesses, or some combination. We'll see how much pricing power local businesses have.
And it's a real stretch to argue that a small business owner earning under $30k/year, with limited growth prospects, is an efficient deployment of capital. This was clearly a labor of love.
A trip to a bookstore, for a large section of the book-loving populace, is indeed something of value beyond just "curation" – the experience of browsing shelves, randomly finding or remembering something you wanted to read, seeing new releases on a table and judging the quality of the paper or the binding or appreciating the rag of the edges – none of this can be reproduced online. While you certainly don't have to appreciate them personally, many folks do.
borderlands empirically demonstrates that is not a very large populace, or perhaps that populace was enjoying serendipity at borderlands then buying from amazon
ps -- some of that serendipity is available online too; see eg the big ideas -- authors talking some aspect of their novels -- on John Scalzi's site. Of the fiction books I've read in the last 3 years, probably 80% of them have come from reading these posts. http://whatever.scalzi.com/category/big-idea/
ps -- some of that serendipity is available online too; see eg the big ideas -- authors talking some aspect of their novels -- on John Scalzi's site. Of the fiction books I've read in the last 3 years, probably 80% of them have come from reading these posts. http://whatever.scalzi.com/category/big-idea/
from the OP: "2014 was the best year we've ever had". Serendipity yes can be found online - no recommendations I've seen have ever approached Amazon's (once I fed my data into them), especially a quickly-shuttered (too creepy?) and now not-remembered program that harvested recommendations via pairing you with folks who'd rated/owned/purchased similar things. That said, it was mostly the experience of physicality that I was referring to, although there is something distinct about browsing physical shelves, a hard-to-capture mix of weight, quality, and visual-imprint – spine design and relative length of titles being nearly invisible online; anecdotally one can see reports of authors captive to Amazon's self-publishing ecosystem writing shorter and shorter books in order to capitalize on per/title payments from their Prime lending program.
Ah, I see what you meant. There's still the Strand, but perhaps thats the kind of thing that can only exist in nyc.
While I buy math books in paper, for fiction I only buy ebooks. The backlight for reading in a shared bed without a lamp on is a killer feature for me and probably many others.
While I buy math books in paper, for fiction I only buy ebooks. The backlight for reading in a shared bed without a lamp on is a killer feature for me and probably many others.
The Strand in NYC, Powell's in Portland, and a number of more local ones at a smaller scale. New/used bookstores definitely aren't dead, they just survive in areas with more bookish populations (the entire city of Portland would riot for days if Powell's ever threatened to close).
I like the "treat it as a cultural institution and charge admission" solution, if that's what it takes to avoid closing. A few dollars would totally be worth it for an hour-long leisurely browse.
I like the "treat it as a cultural institution and charge admission" solution, if that's what it takes to avoid closing. A few dollars would totally be worth it for an hour-long leisurely browse.
Maybe bookstores could charge a pay-what-you-want admission fee, like museums.
> folks can't get cheap used books any more
Perhaps you meant locally? Bookfinder, amazon, alibris, et al still provide excellent service.
Perhaps you meant locally? Bookfinder, amazon, alibris, et al still provide excellent service.
"But the number of bookstores goes down by one, and the volumes available are not available in the library. So the community has lost something too."
Maybe some sort of collection could be set up to have Bay Area public libraries buy out as much of their stock as possible?
Maybe some sort of collection could be set up to have Bay Area public libraries buy out as much of their stock as possible?
That isn't it, there is a cap on the number of volumes the libraries will keep. And of course the folks who frequent used book stores don't always have access to the Internet or a credit card and a fixed address to order from Amazon.
"That isn't it, there is a cap on the number of volumes the libraries will keep"
I'm sure there is. Having said that, the Bay Area has at least a dozen public libraries, large and small. Add in public university and community college libraries, and that number could be as high as 20. It's not inconceivable that 20 libraries could absorb a single bookstore's inventory. The inter-library loan system works well enough that those books are effectively available to the entire Bay Area community.
That's not counting all the books they'll sell to private individuals in their going-out-of-business sale, and of course the libraries will pass up buying things they already have.
If you're going to buy something in the sale anyway, it might make sense to contribute that money to a common fund so libraries can buy those books and make them available to the community. Win-win.
I'm sure there is. Having said that, the Bay Area has at least a dozen public libraries, large and small. Add in public university and community college libraries, and that number could be as high as 20. It's not inconceivable that 20 libraries could absorb a single bookstore's inventory. The inter-library loan system works well enough that those books are effectively available to the entire Bay Area community.
That's not counting all the books they'll sell to private individuals in their going-out-of-business sale, and of course the libraries will pass up buying things they already have.
If you're going to buy something in the sale anyway, it might make sense to contribute that money to a common fund so libraries can buy those books and make them available to the community. Win-win.
I know it's only one of the points, but it's not true that ebooks are still "rapidly rising in popularity" - while they do seem to continue to become more popular, the trajectory has clearly slowed. It seems, generally speaking, that we're nearing if not already at a stable rate of ebook market share (on a revenue basis, at least w/r/t the US and UK markets, the only ones I can claim to watch closely.)
For point 1, while I don't have the data, I would be very surprised to find out that over the course of "decades" book sales (or even just print book sales) have "declined", especially given the rate of population growth. What has, 100%, happened is that sales have moved online, for the commodity reason you mentioned, and Amazon's inclination to deeply discount titles to gain market share (which they now are moving ever-so-steadily away from).
For point 1, while I don't have the data, I would be very surprised to find out that over the course of "decades" book sales (or even just print book sales) have "declined", especially given the rate of population growth. What has, 100%, happened is that sales have moved online, for the commodity reason you mentioned, and Amazon's inclination to deeply discount titles to gain market share (which they now are moving ever-so-steadily away from).
It seems that business was go well since the author writes "2014 was the best year we've ever had." But as you point out in a tough market with massive competitors and fixed prices it's hard to absorb a 39% payroll increase. Wish I could look into the future and see what business would replace them in that space... I'm cynically imagining a Starbucks or some ultra-hoppy brew pub.
I read that as more “even our best year was borderline” – further down the page they mention that the general manager was making $28,000/year and the profit in 2013 was roughly $3,000. It's possible for both “best year we've ever had” and ”still not enough to make it work” to be true at the same time.
>should know better than to generalize from one sample
It isn't simply looking at one data point; there are economic fundamentals that demonstrate that this will occur. Just grab any Econ 101 textbook. Granted, it isn't a straight-up loss, as there is some income re-distribution that occurs, putting more money in the pockets of low-wage earners.
It's never been clear to me why this is so controversial. If I have organized my business around the fact that I am getting $10.50 worth of production from workers that I pay $10.00, then suddenly I have to pay those same workers $14.00, the math no longer works. Someone will be out of work, or I'll be out of business, period.
It isn't simply looking at one data point; there are economic fundamentals that demonstrate that this will occur. Just grab any Econ 101 textbook. Granted, it isn't a straight-up loss, as there is some income re-distribution that occurs, putting more money in the pockets of low-wage earners.
It's never been clear to me why this is so controversial. If I have organized my business around the fact that I am getting $10.50 worth of production from workers that I pay $10.00, then suddenly I have to pay those same workers $14.00, the math no longer works. Someone will be out of work, or I'll be out of business, period.
> Someone will be out of work, or I'll be out of business, period.
Incorrect, unless you're very inefficient and your competitors are efficient. If you are operating at maximum efficiently, you'll raise your rates to $14.50 and your customers will pay it or go without, no other competitor will be able to sell for less than that without losing money. It's more likely you'll go out of business because your competing businesses allocate their capital more effectively, surviving on smaller profit margins. At worst for the customer they will pay the same effective rate after the wage increase.
Incorrect, unless you're very inefficient and your competitors are efficient. If you are operating at maximum efficiently, you'll raise your rates to $14.50 and your customers will pay it or go without, no other competitor will be able to sell for less than that without losing money. It's more likely you'll go out of business because your competing businesses allocate their capital more effectively, surviving on smaller profit margins. At worst for the customer they will pay the same effective rate after the wage increase.
The implicit assumption as far as I can tell is that you, as "nasty business owner", are making much more than 50 cents of margin on your employees' hourly labor and that minimum wage hikes will make you eat that cost. I haven't looked closely into the studies put forth, but it is repeatedly mentioned that studies show that unemployment (and partial employment) doesn't go up when the minimum wage increases.
Despite all that, their next-door neighbor, Dog Eared Books, had their best year ever in 2014 and that's been true for the past five years. Maybe it's because Borderlands has a narrower focus?
First, Dog Eared Books has a broader audience (Borderlands added mystery at one point, but going beyond that isn't feasible for both space and focus/curation reasons).
Second, just because they had their best year ever doesn't mean that it was what an objective observer would call a "good" year. Odds are very high that they're already looking at these same issues and trying to figure out how to get past them, but with different strengths. On the upside for them compared to Borderlands they have a broader base, but on the downside they may not have the same kind of genre-based support. I'll call location a wash, since both are in Mission.
On the downside for them, I suspect they don't have as much genre support, in that SF/F readers and authors do often try to support their few remaining genre bookstores. If I want a signed copy of my favorite author's new work, I'm likely either getting it directly from the author, ordering it from Borderlands, Uncle Hugo's (Minneapolis) or DreamHaven Books (Minneapolis, limited hours), or purchasing it from a bookseller at a SF convention because that seller has also been at a convention with those authors.
Finally, if you'd told me that a bookstore owner/manager was making less than $30k/year in San Francisco after 15 years in business and with an operating profit of $3000 for the year, I'd have to call that business unsustainable at least in California and particularly anywhere in the Bay Area.
Second, just because they had their best year ever doesn't mean that it was what an objective observer would call a "good" year. Odds are very high that they're already looking at these same issues and trying to figure out how to get past them, but with different strengths. On the upside for them compared to Borderlands they have a broader base, but on the downside they may not have the same kind of genre-based support. I'll call location a wash, since both are in Mission.
On the downside for them, I suspect they don't have as much genre support, in that SF/F readers and authors do often try to support their few remaining genre bookstores. If I want a signed copy of my favorite author's new work, I'm likely either getting it directly from the author, ordering it from Borderlands, Uncle Hugo's (Minneapolis) or DreamHaven Books (Minneapolis, limited hours), or purchasing it from a bookseller at a SF convention because that seller has also been at a convention with those authors.
Finally, if you'd told me that a bookstore owner/manager was making less than $30k/year in San Francisco after 15 years in business and with an operating profit of $3000 for the year, I'd have to call that business unsustainable at least in California and particularly anywhere in the Bay Area.
This is a deliberate attempt by the owners of the bookstore to make press about the minimum wage causing them to close down. As apparently Alan and Judy are owner operators, doing very little business so hopefully not requiring much external labour, this is a slightly contorted argument. Who would complain that they are not paying themselves the minimum wage and couldn't they structure it so they were not employees of their own partnership?
The unfortunate fact is that the owners have so far been able to exploit this location poorly. Valencia St around that block is now very highly sought after with numerous new glitzy businesses opening up in the last few years. If they were lucky enough to own the property or have a transferable lease they would now have an opportunity to make a huge profit on selling it to someone willing to cater to the yuppie crowd. The fact that this is not referred to in the blog post is quite disingenuous.
Another bookshop that closed down in SF was much more honest about the reasons without a weird political agenda: http://missionlocal.org/2015/01/a-heaven-for-books-moves-on/
If one takes a right wing point of view then the fact that the space will now be used more efficiently is definitely beneficial, so if the minimum wage were to blame then must be good ;)
From the point of view of the left, the question might be whether the bookstore should be subsidized to provide a living wage to its employees and owners. This is rather difficult to support as it is unclear that there is any benefit accrued to anybody beyond a sort of nostalgic effect of having a rather empty bookshop on a busy street, and if that space should be subsidized it should be made more widely useful.
The unfortunate fact is that the owners have so far been able to exploit this location poorly. Valencia St around that block is now very highly sought after with numerous new glitzy businesses opening up in the last few years. If they were lucky enough to own the property or have a transferable lease they would now have an opportunity to make a huge profit on selling it to someone willing to cater to the yuppie crowd. The fact that this is not referred to in the blog post is quite disingenuous.
Another bookshop that closed down in SF was much more honest about the reasons without a weird political agenda: http://missionlocal.org/2015/01/a-heaven-for-books-moves-on/
If one takes a right wing point of view then the fact that the space will now be used more efficiently is definitely beneficial, so if the minimum wage were to blame then must be good ;)
From the point of view of the left, the question might be whether the bookstore should be subsidized to provide a living wage to its employees and owners. This is rather difficult to support as it is unclear that there is any benefit accrued to anybody beyond a sort of nostalgic effect of having a rather empty bookshop on a busy street, and if that space should be subsidized it should be made more widely useful.
Minimum wage increases directly affect the purchasing power of all through price inflation. Here we have a real world example of this laid out by a business owner. The company recognizes that the minimum wage employment costs will be equal for all cafes in the area, as they will pass costs onto customers; the customers see their existing wages worth less through this increase and drives them to seek salary increases from their employer. The minimum wage increase does not make more things attainable as the entire system has raised the cost of goods throughout it to compensate for the employee cost increase.
The employees who are most hurt by this minimum wage increase are small businesses, borderlands books, and those trying to make a start in a business
The employees who are most hurt by this minimum wage increase are small businesses, borderlands books, and those trying to make a start in a business
Hogwash, 1 + X and 100 + X are both increases. But, the relative importance of X is 1/100th in the second example.
If 3 people can average 2 customers per min. Increasing their minimum wage by 1$/hour increases the customers costs by 3/2/60 = 2.5 cents per order. The difference between a 5$ drink and a 6$ drink would be increasing their pay by ~40$/hour.
Increasing the minimum wage slightly compresses the pay scale by reducing income inequality. It has minimal impact on total output, instead top income earners get an effective pay cut.
PS: This does how up as a reduction in service jobs and increase in manufactring type jobs due to shifts in demand.
If 3 people can average 2 customers per min. Increasing their minimum wage by 1$/hour increases the customers costs by 3/2/60 = 2.5 cents per order. The difference between a 5$ drink and a 6$ drink would be increasing their pay by ~40$/hour.
Increasing the minimum wage slightly compresses the pay scale by reducing income inequality. It has minimal impact on total output, instead top income earners get an effective pay cut.
PS: This does how up as a reduction in service jobs and increase in manufactring type jobs due to shifts in demand.
From a wages perspective, but doesn't the same math that you just described also apply to the cost of production?
It's kind of like how when people go to Switzerland and then they don't ever go to a cafe, because it seems ridiculous to take $7 of the money you earned back in the States, or in China, and then spend it on a cup of coffee. The marginal difference between a cup of coffee and a cup of wine also decrease, so it locks in higher consumption.
On the durable goods side, you are competing with farther-away places that have lower costs. It's why all the "maker" shops moved out of San Francisco and into Portland. It's not possible to economically produce handmade bikes in SF anymore. The only companies able to "export" are tech startups.
It's kind of like how when people go to Switzerland and then they don't ever go to a cafe, because it seems ridiculous to take $7 of the money you earned back in the States, or in China, and then spend it on a cup of coffee. The marginal difference between a cup of coffee and a cup of wine also decrease, so it locks in higher consumption.
On the durable goods side, you are competing with farther-away places that have lower costs. It's why all the "maker" shops moved out of San Francisco and into Portland. It's not possible to economically produce handmade bikes in SF anymore. The only companies able to "export" are tech startups.
Edit: Production costs are generally a small fraction of sales prices and the salary of workers at farms and factory's well below that.
The US produces more durable goods now than at any point in history mostly though automation. Little of that is in SF, but there really are places in the US where you can rent a decent apartment for 400$/month. Or, where the median sale price for a home is less than 90k vs 770k in San Francisco county.
When it comes to coffee shops rent is often there #1 cost, in some cases it's more than 1/2 there total costs. When your rent is 50,000+$/month and your limited to people within walking distance who can just as easily go across the street, you’re stuck with the salary squeeze. Bump minimum wage and some of those competitors might fail which lowers your completion and reduces the retail demand in the end the books still balance.
From an overall economic perspective there is a lot of infrastructure in people and stuff supporting the wants of people making 100+k/year. Bumping minimum wage changes the equation so the economy focuses more on the wants of lower income workers and more on the highest brackets. Consider a store that might see 1 sale per day vs 1 per minute. There are lots of knock on effects with higher advertising budget of car companies that sell 20k vs 100k cars etc. But, also lower housing costs in major city's and higher costs in the out suburbs etc.
PS: Arguably this is vary good in the long term. Consider, the one off economy of the rich leads to stagnation because they don't want mass produced goods.
The US produces more durable goods now than at any point in history mostly though automation. Little of that is in SF, but there really are places in the US where you can rent a decent apartment for 400$/month. Or, where the median sale price for a home is less than 90k vs 770k in San Francisco county.
When it comes to coffee shops rent is often there #1 cost, in some cases it's more than 1/2 there total costs. When your rent is 50,000+$/month and your limited to people within walking distance who can just as easily go across the street, you’re stuck with the salary squeeze. Bump minimum wage and some of those competitors might fail which lowers your completion and reduces the retail demand in the end the books still balance.
From an overall economic perspective there is a lot of infrastructure in people and stuff supporting the wants of people making 100+k/year. Bumping minimum wage changes the equation so the economy focuses more on the wants of lower income workers and more on the highest brackets. Consider a store that might see 1 sale per day vs 1 per minute. There are lots of knock on effects with higher advertising budget of car companies that sell 20k vs 100k cars etc. But, also lower housing costs in major city's and higher costs in the out suburbs etc.
PS: Arguably this is vary good in the long term. Consider, the one off economy of the rich leads to stagnation because they don't want mass produced goods.
> Minimum wage increases directly affect the purchasing power of all through price inflation
You're economically savvy enough to realize that increased purchasing power causes inflated costs with more money chasing goods/services, and you're zeroing in on a minimum wage increase from $11 => $15/hr instead of, I don't know, tech worker salaries?
Maybe you know something I don't, because I'd guess the effect from the former isn't even close to keeping the class of people it benefits at purchasing parity.
You're economically savvy enough to realize that increased purchasing power causes inflated costs with more money chasing goods/services, and you're zeroing in on a minimum wage increase from $11 => $15/hr instead of, I don't know, tech worker salaries?
Maybe you know something I don't, because I'd guess the effect from the former isn't even close to keeping the class of people it benefits at purchasing parity.
Tech worker salaries aren't set by the government. They're set by market forces, so why would that be something he ought to think about? Are you suggesting a government enforced salary cap on software engineering salaries? What exactly do you think you could do about high pay of software engineers? I don't understand your comment. It seems that you're understandably upset at the negative effects of rising prices, but why the focus on the high pay of others? Should everyone make the same salary?
It is always an incremental straw until the camel's back breaks.
If you increase the minimum wage for the worker, all prices across a system will increase as the business must remain a going concern to compensate the increase. The price increase affects end-users purchasing power.
The median household income in the United States is $51,000, tech worker salaries are are not the norm, they are 6% of the population ($100,000 for a single individual). Their effect on society is negligent in the purchase of everyday goods as they are only 6% of the population and purchase affluent goods and upward.
Assuming direct elasticity, if a place increases costs by 30%, 30% less will shop.
If a median income family has a 10% increase in food prices, they have to absorb it. Try getting a 10% wage increase across an entire operating company, let alone a single employee.
The median household income in the United States is $51,000, tech worker salaries are are not the norm, they are 6% of the population ($100,000 for a single individual). Their effect on society is negligent in the purchase of everyday goods as they are only 6% of the population and purchase affluent goods and upward.
Assuming direct elasticity, if a place increases costs by 30%, 30% less will shop.
If a median income family has a 10% increase in food prices, they have to absorb it. Try getting a 10% wage increase across an entire operating company, let alone a single employee.
> The median household income in the United States is $51,000, tech worker salaries are are not the norm, they are 6% of the population ($100,000 for a single individual). Their effect on society is negligent in the purchase of everyday goods as they are only 6% of the population and purchase affluent goods and upward.
I think it's fairly safe to say the the effects are considerably more pronounced in San Francisco than they are nationally:
http://www.spur.org/blog/2014-02-27/forecasting-san-francisc...
But since you brought up the median income, let's use that to talk about my point: $51k is about $25/hr. The hike under discussion moves minimum wage up to... well, from just under $10 a few years ago to $11 as of this year (so, less than half that). But wait, that's national median. San Francisco median is closer to $70k ($35+/hr), so we're really talking about a motion that's all below 1/3 median.
Again... this is a primary driver of inflation? We're talking about a roughly $2000 yearly boost in the bottom quartile that almost doesn't even keep pace with average monthly rent increases over the last 5 years.
If minimum wage hikes aren't even successfully chasing cost of living increases, it's pretty hard to argue they're driving inflation.
I think it's fairly safe to say the the effects are considerably more pronounced in San Francisco than they are nationally:
http://www.spur.org/blog/2014-02-27/forecasting-san-francisc...
But since you brought up the median income, let's use that to talk about my point: $51k is about $25/hr. The hike under discussion moves minimum wage up to... well, from just under $10 a few years ago to $11 as of this year (so, less than half that). But wait, that's national median. San Francisco median is closer to $70k ($35+/hr), so we're really talking about a motion that's all below 1/3 median.
Again... this is a primary driver of inflation? We're talking about a roughly $2000 yearly boost in the bottom quartile that almost doesn't even keep pace with average monthly rent increases over the last 5 years.
If minimum wage hikes aren't even successfully chasing cost of living increases, it's pretty hard to argue they're driving inflation.
>If you increase the minimum wage for the worker, all prices across a system will increase as the business must remain a going concern to compensate the increase.
Only if the business employs a significant number of minimum wage employees. If a business is paying well above minimum wage no changes are necessary. This also neglects the dropping reliance on minimum wage workers for years. Automation and outsourcing to other countries had reduced costs for years.
And yet every year inflation is adding 1 to 2% to costs while wages have been stagnant for 40 years, all the while companies are taking in record profits.
http://www.pewresearch.org/fact-tank/2014/10/09/for-most-wor...
Only if the business employs a significant number of minimum wage employees. If a business is paying well above minimum wage no changes are necessary. This also neglects the dropping reliance on minimum wage workers for years. Automation and outsourcing to other countries had reduced costs for years.
And yet every year inflation is adding 1 to 2% to costs while wages have been stagnant for 40 years, all the while companies are taking in record profits.
http://www.pewresearch.org/fact-tank/2014/10/09/for-most-wor...
"The company recognizes that the minimum wage employment costs will be equal for all cafes in the area, as they will pass costs onto customers"
The elasticity of demand for cafes is not zero. Claiming that businesses can "pass costs onto their consumers" without losing sales is assuming that decidedly unrealistic fact.
The elasticity of demand for cafes is not zero. Claiming that businesses can "pass costs onto their consumers" without losing sales is assuming that decidedly unrealistic fact.
Absolutely, I left this out while cutting parts from my comment. Sales will be affected as individuals debate making a purchase at an increased price.
>>Minimum wage increases directly affect the purchasing power of all through price inflation
Yes, buts it not immediate and its not clear if they are going to spend it on fantasy books.
Yes, buts it not immediate and its not clear if they are going to spend it on fantasy books.
And people looking for their first job.
We should be upfront about it: controlling prices, including the price of labor, is cruel.
We should be upfront about it: controlling prices, including the price of labor, is cruel.
The management was making $28k a year salary. I don't know how viable a business it was even without the minimum wage increase.
Most businesses survive on slim profit margins. Most businesses are barely viable. This is why minor changes in the availability of credit, for example, can cause a recession.
Yeah, I think the profit margins on software have really spoiled most people on HN. $28k a year from a bookstore is not bad. It could actually be a livable wage in many other parts of the US.
But given that it was in San Francisco, is that remotely viable? Can you rent a cardboard box in the gutter for $28k/year in SF?
San Francisco has strong rent control rules. You can pay $1000/month for an entire floor of a Victorian if you've lived there long enough.
It seems like a lot of people aren't mentioning the fact that a minimum wage increase cuts both ways. Small businesses must pay more, but low end consumers should now have more money to spend. Raising the minimum from $11 to $15 is a roughly 30% increase that will affect roughly 5% of Americans. The question is, what will those people spend that extra money on? I'm guessing it won't be books, or at least not vintage or trendy books. It will most likely being low end food, clothing and entertainment (mcdonalds, walmart, dvds) and childrens' needs of all varieties.
If stores have to raise their prices to cover higher employment costs, then the worst case will be a push for the lowest income Americans. They make 30% more and pay 30% more for most goods. But every walmart/mcdonalds/redbox employee doesn't earn minimum wage and their labor costs don't scale linearly, so the most likely outcome is that those earning minimum wage will get a small effective price break, the middle class will pay slightly more for things and the wealthy will also pay more but not really notice it. Bookstores and other middle class oriented businesses will be forced to close, while businesses that cater to minimum wage workers will see slight profit increases.
I'm not sure if this is an ideal situation not, or if it represents an intended or unintended consequence. But under a certain set of assumptions it could be viewed as this particular bookstore closing so that someone who is barely getting by has a few extra dollars to live on each month. It's a shame when any marginal business is forced to meet its fate, but it might be the best thing for the economy over all, or at least for the people who have benefited least from the recent recovery.
If stores have to raise their prices to cover higher employment costs, then the worst case will be a push for the lowest income Americans. They make 30% more and pay 30% more for most goods. But every walmart/mcdonalds/redbox employee doesn't earn minimum wage and their labor costs don't scale linearly, so the most likely outcome is that those earning minimum wage will get a small effective price break, the middle class will pay slightly more for things and the wealthy will also pay more but not really notice it. Bookstores and other middle class oriented businesses will be forced to close, while businesses that cater to minimum wage workers will see slight profit increases.
I'm not sure if this is an ideal situation not, or if it represents an intended or unintended consequence. But under a certain set of assumptions it could be viewed as this particular bookstore closing so that someone who is barely getting by has a few extra dollars to live on each month. It's a shame when any marginal business is forced to meet its fate, but it might be the best thing for the economy over all, or at least for the people who have benefited least from the recent recovery.
This is an anticipated side-effect of raising the minimum wage: it raises the "table stakes" a small business needs to compete. Sad, but not in the large surprising.
(One could argue that it's also an anticipated side-effect of being a bookstore in a world moving away from bound print media, but I don't think that's the larger factor here; it's not like anyone expects Barnes & Noble to go under any time soon).
(One could argue that it's also an anticipated side-effect of being a bookstore in a world moving away from bound print media, but I don't think that's the larger factor here; it's not like anyone expects Barnes & Noble to go under any time soon).
> it's not like anyone expects Barnes & Noble to go under any time soon
Well actually... On 2014 revenue of $6.4bn they lost $1.6bn. Their total assets are $3.8bn and liabilities are $2.6bn, which means another yearly loss of $1.6bn will sink them.
They are expected to spin off the Nook business and make some money (and reduce losses) from that, but I doubt it will be enough to save them in the long term.
Well actually... On 2014 revenue of $6.4bn they lost $1.6bn. Their total assets are $3.8bn and liabilities are $2.6bn, which means another yearly loss of $1.6bn will sink them.
They are expected to spin off the Nook business and make some money (and reduce losses) from that, but I doubt it will be enough to save them in the long term.
That is all pretty much completely incorrect - I think you must be misreading a 1.6b expense line as a loss? FY 2014 for BKS was pretty much even.
https://www.google.com/finance?q=NYSE%3ABKS&fstype=ii&ei=Kz_...
You'll also see the 2.6b you're calling liabilities is maybe accumulated depreciation? Actual FY2014 debt is 127.5M. Barnes & Noble is relatively debt-free for a large retailer.
https://www.google.com/finance?q=NYSE%3ABKS&fstype=ii&ei=Kz_...
https://www.google.com/finance?q=NYSE%3ABKS&fstype=ii&ei=Kz_...
You'll also see the 2.6b you're calling liabilities is maybe accumulated depreciation? Actual FY2014 debt is 127.5M. Barnes & Noble is relatively debt-free for a large retailer.
https://www.google.com/finance?q=NYSE%3ABKS&fstype=ii&ei=Kz_...
You're correct, I miscalculated their annual loss (but not from their expense line). The assets and liabilities are literally from these lines on their balance sheet:
Total Assets 3,835.75 Total Liabilities 2,627.98
Per:
http://www.bloomberg.com/research/stocks/earnings/earnings.a...
"2014 revenues at Barnes & Noble, Inc. totaled $6.4B USD, while annual losses equaled $1.12 per share."
B&N has 60.24M shares outstanding. That makes their annual loss $67 million. They do indeed have a longer runway than I anticipated, but I still feel that they run a business in decline. Their saving grace from a few years ago (Nook) is now an albatross. What is their next move?
Total Assets 3,835.75 Total Liabilities 2,627.98
Per:
http://www.bloomberg.com/research/stocks/earnings/earnings.a...
"2014 revenues at Barnes & Noble, Inc. totaled $6.4B USD, while annual losses equaled $1.12 per share."
B&N has 60.24M shares outstanding. That makes their annual loss $67 million. They do indeed have a longer runway than I anticipated, but I still feel that they run a business in decline. Their saving grace from a few years ago (Nook) is now an albatross. What is their next move?
> They are expected to spin off the Nook business and make some money (and reduce losses) from that, but I doubt it will be enough to save them in the long term.
The physical bookstores have remained profitable, the losses have all been in the Nook unit (and specifically the digital part of the Nook unit -- the college bookstores, which are tied to the Nook unit, are also profitable.)
The most recent reports have cast doubt on the plans to spin off the Nook unit given its worsening performance -- while the college bookstores could probably be spun off (or kept with the main bookstore business) successfully, there doesn't really seem to be anything for investors in the Nook business.
The physical bookstores have remained profitable, the losses have all been in the Nook unit (and specifically the digital part of the Nook unit -- the college bookstores, which are tied to the Nook unit, are also profitable.)
The most recent reports have cast doubt on the plans to spin off the Nook unit given its worsening performance -- while the college bookstores could probably be spun off (or kept with the main bookstore business) successfully, there doesn't really seem to be anything for investors in the Nook business.
Barnes & Noble has a huge digital library and their own e-reader.
This is absolutely about the world moving away from bound print media, and also from brick-and-mortar booksellers to online sellers. It's also about gentrification, rising real estate prices and a million other things (in addition to the fact that a SciFi & Fantasy book store is a somewhat dodgy proposition in the first place).
This is not the first venerable San Francisco book store to close up shop in the past few years. It's not even the first one on that block. I love Borderlands and will probably go to their meeting to see what I can do to save it, but this is not a shock, and it certainly isn't just, or mostly, about the minimum wage.
This is absolutely about the world moving away from bound print media, and also from brick-and-mortar booksellers to online sellers. It's also about gentrification, rising real estate prices and a million other things (in addition to the fact that a SciFi & Fantasy book store is a somewhat dodgy proposition in the first place).
This is not the first venerable San Francisco book store to close up shop in the past few years. It's not even the first one on that block. I love Borderlands and will probably go to their meeting to see what I can do to save it, but this is not a shock, and it certainly isn't just, or mostly, about the minimum wage.
>
Barnes & Noble has a huge digital library and their own e-reader.
...which loses tons of money, while the physical bookstores are profitable. The Nook unit is doing so bad that the long-discussed plans to split it off from the profitable physical bookstores into separate companies are now being widely discussed as in jeopardy because there is no credible business case to make to investors for the Nook unit as a separate business.
B&N is a profitable physical bookstore chain tied to failed e-book effort that is swallowing all the profits (and more), which if it can't be sold off or turned around soon is likely going to have a stake driven through its heart.
...which loses tons of money, while the physical bookstores are profitable. The Nook unit is doing so bad that the long-discussed plans to split it off from the profitable physical bookstores into separate companies are now being widely discussed as in jeopardy because there is no credible business case to make to investors for the Nook unit as a separate business.
B&N is a profitable physical bookstore chain tied to failed e-book effort that is swallowing all the profits (and more), which if it can't be sold off or turned around soon is likely going to have a stake driven through its heart.
"It's not even the first one ON THAT BLOCK"
--actually the one that left the block relocated to 24th St.
--actually the one that left the block relocated to 24th St.
Don't forget to follow this back, though -- this is one of the problems with the general cost of living increases (or sector-specific booms that not everyone participates in, same thing when you're talking about a market economy with any scarcity): it raises the table stakes individuals need to participate. And a minimum wage law only formalizes the involved failure point, it doesn't create the fact that there would be one (though how it's not north of $15/hr in SF is beyond me).
> it's not like anyone expects Barnes & Noble to go under any time soon
http://www.dailyfinance.com/on/barnes-and-noble-survival-pla...
> it's not like anyone expects Barnes & Noble to go under any time soon
http://www.dailyfinance.com/on/barnes-and-noble-survival-pla...
I think their small size and specificity (and given the fact that a large majority of what they have is low-margin paperback fiction) is probably what makes it really hard to be viable, since there's no real way to ratchet up volume. The counter example is Green Apple Books, which seems to be doing well across two geographical locations in less populated areas of the city.
This makes me sad. I nearly always pick up a book or two from Borderlands when I go to San Francisco (every other month). They're a great shop and community. It's shocking, but not entirely unexpected, to learn how little they make :(
This was one of the stores I checked out when visited S.F., as my wife and I were plotting a move from the east coast to S.F. And while we ended up going in the other direction, I still think fondly of the S.F. culture, and Borderlands books was one of those places I visited that I felt would be a home. Shame to hear it's going.
And in Seattle there's bookstore owners/managers who attribute their success specifically to the high-wage earners who come to the local independent bookstores to shop[1]. Think of highly paid Amazon workers (or perhaps even folks with higher minimum wages) having extra money to spend... on local bookstores.
But then the same bookstore mentioned in the NY Times article[1] goes on to say a higher minimum wage could be fatal.[2]
Either theres some hypocrisy going on or the people with the newer, higher minimum wages are not spending their money on bookstores. I'd guess the latter. But at what point are wages too high or too low so we can have local bookstores and support them? Should we even be encouraging that in the first place?
Or look at it another way: How and why are successful bookstores being successful?
[1]http://www.nytimes.com/2014/04/12/us/bookstores-in-seattle-s... [2]http://www.thestranger.com/slog/archives/2014/03/03/elliott-...
But then the same bookstore mentioned in the NY Times article[1] goes on to say a higher minimum wage could be fatal.[2]
Either theres some hypocrisy going on or the people with the newer, higher minimum wages are not spending their money on bookstores. I'd guess the latter. But at what point are wages too high or too low so we can have local bookstores and support them? Should we even be encouraging that in the first place?
Or look at it another way: How and why are successful bookstores being successful?
[1]http://www.nytimes.com/2014/04/12/us/bookstores-in-seattle-s... [2]http://www.thestranger.com/slog/archives/2014/03/03/elliott-...
Borderlands surprises me - I thought any business made unprofitable by San Francisco's minimum wage hikes would close up shop quietly, or just blame the evil landlord. After all, they've still got inventory to sell before they close, and there's no percentage in pissing people off.
It'll be interesting to see what replaces the business, when the retail space eventually becomes available. It'll have to be something high-margin enough to afford the labor costs, so I believe there's now an increased likelihood that it'll be a chain store catering to the well-off - something like a Lululemon. There's now a decreased likelihood that it'll be one of the quirky new businesses that make a city unique, since start-up costs have increased and businesses with unknown economics are therefore riskier.
If things in San Francisco work out like I suspect, this'll be a pretty good example of the law of unintended consequences - the 77% of voters who wanted to increase the pay of the lowest-paid workers didn't realize they were also voting for increased chain-ificiation and homogenization of their city. (If they did realize that, would they have still voted for the measure?)
It'll be interesting to see what replaces the business, when the retail space eventually becomes available. It'll have to be something high-margin enough to afford the labor costs, so I believe there's now an increased likelihood that it'll be a chain store catering to the well-off - something like a Lululemon. There's now a decreased likelihood that it'll be one of the quirky new businesses that make a city unique, since start-up costs have increased and businesses with unknown economics are therefore riskier.
If things in San Francisco work out like I suspect, this'll be a pretty good example of the law of unintended consequences - the 77% of voters who wanted to increase the pay of the lowest-paid workers didn't realize they were also voting for increased chain-ificiation and homogenization of their city. (If they did realize that, would they have still voted for the measure?)
"I believe there's now an increased likelihood that it'll be a chain store catering to the well-off"
The Mission Merchants Association has a standing ban on chain stores. It is more likely to be a trust-fund enabled quirky new business. Not saying there is anything wrong with that, but it is very unlikely a chain would be able to move in.
The Mission Merchants Association has a standing ban on chain stores. It is more likely to be a trust-fund enabled quirky new business. Not saying there is anything wrong with that, but it is very unlikely a chain would be able to move in.
(I don't live in San Francisco, and I don't know Borderlands from Borders.)
> Borderlands surprises me - I thought any business made unprofitable by San Francisco's minimum wage hikes would close up shop quietly, or just blame the evil landlord. After all, they've still got inventory to sell before they close, and there's no percentage in pissing people off.
Who in their right mind would be "pissed off" by Borderlands' conduct here? Are you suggesting that their customers are going to be offended that they are placing the blame on the minimum wage law? Are people in San Francisco so politically insular?
> Borderlands surprises me - I thought any business made unprofitable by San Francisco's minimum wage hikes would close up shop quietly, or just blame the evil landlord. After all, they've still got inventory to sell before they close, and there's no percentage in pissing people off.
Who in their right mind would be "pissed off" by Borderlands' conduct here? Are you suggesting that their customers are going to be offended that they are placing the blame on the minimum wage law? Are people in San Francisco so politically insular?
I'm from here, I grew up here, and I love this town, but yes let me tell you the people in San Francisco are politically insane. (Not wrong necessarily, but totally nutty.)
Oh, I'm not merely suggesting it.
San Francisco is an extremely unfriendly place to people known to have the wrong politics.
San Francisco is an extremely unfriendly place to people known to have the wrong politics.
Thank you; that is illuminating. I live in Los Angeles, and we have our share of people who live sheltered political lives, but I've not known people to punish a business for doing something akin to what we're seeing in this story. Most people in LA just don't care enough to make a political stand of that magnitude when it comes down to it.
"There's now a decreased likelihood that it'll be one of the quirky new businesses that make a city unique"
As an aside, I was reminded this past weekend that there is an honest to god gun store, in the mission:
http://www.highbridgearms.com/english.htm
I don't know what's more surprising and unlikely in 2015 ... the surviving bookstore on Valencia or a store stocking AR-15s right on Mission.
As an aside, I was reminded this past weekend that there is an honest to god gun store, in the mission:
http://www.highbridgearms.com/english.htm
I don't know what's more surprising and unlikely in 2015 ... the surviving bookstore on Valencia or a store stocking AR-15s right on Mission.
The gun shop makes more sense to me: the average sale price is much higher and unlike the case of a bookstore, you're talking about highly regulated market which happens mostly offline and, I suspect, a higher percentage of customers like to physically inspect something before buying.
It might even be possible that they'll be able to keep the cafe, maybe even with a few books, possibly even still bringing in authors, etc. for events. It wouldn't still be a bookstore and it might end up as a sad ghoulish reminder of what once was, but they might pull it off.
BigBlockO'Salt: I'm 2000 miles away and have no idea whether this is something they're considering
BigBlockO'Salt: I'm 2000 miles away and have no idea whether this is something they're considering
This is complete spit-balling here, but:
Does anyone know whether bookstores like Borderlands sell their inventory on consignment, similar to newspaper/magazine stands? Or does the business purchase books at a wholesale price and hold that inventory on the balance sheet?
If it's the latter, it would seem like a wise move to reduce inventory by x% and re-allocate the space/funds towards the more profitable cafe, where prices have a better elasticity.
Another thought would be to re-orient the inventory towards self-published works (where there's no publisher setting a price), rare edition classics (where there's higher markup due to low supply), and pop-culture best sellers (which have high turnover). I think that a brick and mortar bookstore is as good as the people working there: if you can find one with an employee that's engaging, extremely well-read, and can recommend books, you could conceivably make a bookstore geared towards self-publishers work. Bonus points if you could provide services to self-published authors to print their works in a beautiful, professional, yet economical package.
Does anyone know whether bookstores like Borderlands sell their inventory on consignment, similar to newspaper/magazine stands? Or does the business purchase books at a wholesale price and hold that inventory on the balance sheet?
If it's the latter, it would seem like a wise move to reduce inventory by x% and re-allocate the space/funds towards the more profitable cafe, where prices have a better elasticity.
Another thought would be to re-orient the inventory towards self-published works (where there's no publisher setting a price), rare edition classics (where there's higher markup due to low supply), and pop-culture best sellers (which have high turnover). I think that a brick and mortar bookstore is as good as the people working there: if you can find one with an employee that's engaging, extremely well-read, and can recommend books, you could conceivably make a bookstore geared towards self-publishers work. Bonus points if you could provide services to self-published authors to print their works in a beautiful, professional, yet economical package.
Books (from major publishers at least) are generally purchased at wholesale and held - but (and this is a big but) they're generally returnable to the publisher. Individual store and publisher terms may and will vary.
I am surprised. I always thought that increasing low salaries was good for the economy because those people generally put 100% of their take home pay back into the economy. On the other hand I put a large percentage of my pay into savings (including 100% of the differenc when I get a raise) which has a much smaller benefit to the local economy.
But in this case, if they buy books, they will buy from Amazon, which won't have to increase its prices when San Francisco raises minimum wage, as that will have 0 effect on their costs.
Are there any economists reading this who can comment on the state of research and theory on this matter? (This question also raises the issue of posting a story about minimum wage on HN.)
Many here are applying a few concepts from Econ 101, often with surprising confidence in their own analysis. I expect economists have studied these questions extensively.
Many here are applying a few concepts from Econ 101, often with surprising confidence in their own analysis. I expect economists have studied these questions extensively.
http://www.uh.edu/~adkugler/Neumark%26Wascher.pdf might be a good place to start, perhaps search for citations of that, to get info. They concluded that for every 10% increase in the min wage the primary effect was -1% to -2% drop in teenage employment rates (in USA).
I much prefer dead trees to e books myself, and if I were nearby would love to visit. It looks great in the pictures.
What drew me to this article is the general trend of the marginal, but loved, businesses being forced out of business. It's amazing how many small businesses that allow folks to do what they love, provide part-time work for people needing the experience, and contribute to the general "happiness / uniqueness" of an area are basically one storm away from disappearing.
I'm sure they'll be replaced by a Starbucks or other big company place that knows the tax system and can bring their scale to bear. Might even employee more people, or maybe one of those companies doing some automation since the cost of the worker is higher than the profit they generate.
Regardless, your cool area looks more and more like a strip mall. The strange and unique mostly lives at the margins.
I'm sure they'll be replaced by a Starbucks or other big company place that knows the tax system and can bring their scale to bear. Might even employee more people, or maybe one of those companies doing some automation since the cost of the worker is higher than the profit they generate.
Regardless, your cool area looks more and more like a strip mall. The strange and unique mostly lives at the margins.
Live by the margin, die by the margin. You do realize by changing the margins, you've only moved them somewhere else, not killed them off. Also, it's a strange metric to say business serviced by mostly middle income earners generates more happiness than a few hundred/thousands low end employees being able to pay their bills or afford slightly more.
"Live by the margin, die by the margin."
I'm not sure what to say to this one. Uncaring seems to be the word.
"You do realize by changing the margins, you've only moved them somewhere else, not killed them off."
Looks like it killed a bookstore. Probably killed a few more businesses in the area.
"Also, it's a strange metric to say business serviced by mostly middle income earners generates more happiness than a few hundred/thousands low end employees being able to pay their bills or afford slightly more."
Your statement of the choices. One which I don't believe are the only choices. Seems like these folks are going to be out of work now, so they might have some problem paying their bills.
The whole thought process that people should be "minimum wage workers" as a continuing, long term condition is misguided and foolish. Its more platform building just above the water instead of building a way farther up. It also kills off entry level jobs and part-time jobs for teenagers. Its the wrong policy and just ignores the real problems.
I'm not sure what to say to this one. Uncaring seems to be the word.
"You do realize by changing the margins, you've only moved them somewhere else, not killed them off."
Looks like it killed a bookstore. Probably killed a few more businesses in the area.
"Also, it's a strange metric to say business serviced by mostly middle income earners generates more happiness than a few hundred/thousands low end employees being able to pay their bills or afford slightly more."
Your statement of the choices. One which I don't believe are the only choices. Seems like these folks are going to be out of work now, so they might have some problem paying their bills.
The whole thought process that people should be "minimum wage workers" as a continuing, long term condition is misguided and foolish. Its more platform building just above the water instead of building a way farther up. It also kills off entry level jobs and part-time jobs for teenagers. Its the wrong policy and just ignores the real problems.
>It also kills off entry level jobs and part-time jobs for teenagers.
If we disregard wages, those are being killed off already. Health care, insurance, and automation and off-shoring have reduced the pool of low paying jobs greatly. If we raise wages, more jobs will be automated sooner. If we do not raise wages we have a subset of people that do not make enough to live, or live off government subsidies.
Most of the rest of your argument is "Oh look at the poor buggy whip manufactures, they should be protected".
If we disregard wages, those are being killed off already. Health care, insurance, and automation and off-shoring have reduced the pool of low paying jobs greatly. If we raise wages, more jobs will be automated sooner. If we do not raise wages we have a subset of people that do not make enough to live, or live off government subsidies.
Most of the rest of your argument is "Oh look at the poor buggy whip manufactures, they should be protected".
No, they really aren't. Most entry level jobs cannot be done "over the wire".
"If we raise wages, more jobs will be automated sooner."
So, lets artificially force automation to put more people out of work quicker. That doesn't sound like a good idea.
"If we do not raise wages we have a subset of people that do not make enough to live, or live off government subsidies."
Once again, this is the broken logic that I cannot understand. Teenagers aren't making a living from the job, they are gaining experience and getting some pocket money. The desire to have people remain in entry-level jobs to make a living is some of the poorest use of people and most foolish ideas. If people spent the effort on providing paths to actual careers that they put into advocating for higher minimum wages, we probably could get somewhere. This is just building a platform right above the water, and not building the paths up.
"Oh look at the poor buggy whip manufactures, they should be protected".
Nope, never even thought something like that. If technology kills the job, then that's how it goes, but governments doing it is another thing.
"If we raise wages, more jobs will be automated sooner."
So, lets artificially force automation to put more people out of work quicker. That doesn't sound like a good idea.
"If we do not raise wages we have a subset of people that do not make enough to live, or live off government subsidies."
Once again, this is the broken logic that I cannot understand. Teenagers aren't making a living from the job, they are gaining experience and getting some pocket money. The desire to have people remain in entry-level jobs to make a living is some of the poorest use of people and most foolish ideas. If people spent the effort on providing paths to actual careers that they put into advocating for higher minimum wages, we probably could get somewhere. This is just building a platform right above the water, and not building the paths up.
"Oh look at the poor buggy whip manufactures, they should be protected".
Nope, never even thought something like that. If technology kills the job, then that's how it goes, but governments doing it is another thing.
>Teenagers aren't making a living from the job, they are gaining experience and getting some pocket money.
Teenagers aren't making anything from the jobs now, they have been replaced by low skill older people who have been replaced by technology already.
http://www.bloomberg.com/bw/articles/2014-03-14/how-to-fix-t...
>This is just building a platform right above the water, and not building the paths up.
Correct, Minimum income is one solution to this issue.
How to fix the teenage employment problem is lower education costs or start apprenticeship programs to get them in to high tech jobs. We don't need 100 million toilet washers any more.
>If technology kills the job, then that's how it goes, but governments doing it is another thing.
Ah, so you're one of those. I see logic is already out the window.
Teenagers aren't making anything from the jobs now, they have been replaced by low skill older people who have been replaced by technology already.
http://www.bloomberg.com/bw/articles/2014-03-14/how-to-fix-t...
>This is just building a platform right above the water, and not building the paths up.
Correct, Minimum income is one solution to this issue.
How to fix the teenage employment problem is lower education costs or start apprenticeship programs to get them in to high tech jobs. We don't need 100 million toilet washers any more.
>If technology kills the job, then that's how it goes, but governments doing it is another thing.
Ah, so you're one of those. I see logic is already out the window.
"Ah, so you're one of those. I see logic is already out the window."
Please explain this line, I tend to think ill of anyone who uses the line "one of those" on another person. I feel disinclined to spend time gathering the youth stats versus minimum wage increases if ad hominem are your preference.
Please explain this line, I tend to think ill of anyone who uses the line "one of those" on another person. I feel disinclined to spend time gathering the youth stats versus minimum wage increases if ad hominem are your preference.
Honest question:
Do the cafe workers get paid the same hourly wage as the bookstore employees, or are they classified as restaurant personnel and make $2.13/hour + tips like I did when working in a restaurant / cafe setting? Does SF/CA have different rules in place? I'm genuinely curious and some brief searching alludes to the $2.13 going up to $7.07.
That's not $15/hour. It's interesting to use the "prices go up everywhere" argument when not directly addressing the economics. IMO the $2.13 isn't really a viable discussion point for business owners. Tips are the accounting and tax responsibility of the employee / earner...hmmm...
Do the cafe workers get paid the same hourly wage as the bookstore employees, or are they classified as restaurant personnel and make $2.13/hour + tips like I did when working in a restaurant / cafe setting? Does SF/CA have different rules in place? I'm genuinely curious and some brief searching alludes to the $2.13 going up to $7.07.
That's not $15/hour. It's interesting to use the "prices go up everywhere" argument when not directly addressing the economics. IMO the $2.13 isn't really a viable discussion point for business owners. Tips are the accounting and tax responsibility of the employee / earner...hmmm...
CA does not allow tips to count towards minimum wage.
http://www.dir.ca.gov/dlse/FAQ_tipsandgratuities.htm
http://www.dir.ca.gov/dlse/FAQ_tipsandgratuities.htm
Thought #1: bookstores go under all the time, specialty bookstores even more so.
Thought #2: google maps has a 'see inside' feature, and that store looks like a little tiny place, I don't work in SF any more but if I did and made time out of my commute to go there, odds are I'd be disappointed.
I shopped at City Lights up on Kearny, and that always seemed to be doing a pretty good business, and after I quit that SF job I worked in Mountain View which has a pretty good used bookstore right downtown, and a decent new bookstore right next to it, both of which seem to be moving lots of product.
Thought #2: google maps has a 'see inside' feature, and that store looks like a little tiny place, I don't work in SF any more but if I did and made time out of my commute to go there, odds are I'd be disappointed.
I shopped at City Lights up on Kearny, and that always seemed to be doing a pretty good business, and after I quit that SF job I worked in Mountain View which has a pretty good used bookstore right downtown, and a decent new bookstore right next to it, both of which seem to be moving lots of product.
I'm terribly saddened by this. It's a great genre bookstore, and although I have a kindle, I still love having dead tree books, especially ones I read for pleasure.
I'm curious if they could just become 100% cafe. I've got to assume it would be successful. They're in a great location. There's plenty of other cafes in SF that are doing fine. I suppose maybe they don't want to run a cafe? Although they are already running a cafe. What about just making it a SciFi themed cafe? They could still put a few books out. They could still invite authors and have SciFi / Fantasy speakers.
Just a thought.
Just a thought.
I hope they manage to keep the cafe open. The staff is awesome, and it's a wonderful environment to work out of from time to time.
Sad to see another awesome bookstore go.
First Bogey's Books in Davis, then even Borders. :(
From what I heard at the time, Powell's (one of the bookstore others would sell their inventory to) was overwhelmed with shipments from closing bookstores and the market rate for used domestic books was quite low for a long time. Has this changed?
First Bogey's Books in Davis, then even Borders. :(
From what I heard at the time, Powell's (one of the bookstore others would sell their inventory to) was overwhelmed with shipments from closing bookstores and the market rate for used domestic books was quite low for a long time. Has this changed?
How did the US publishing industry found itself in a situation that the book price is fixed and printed on the book?
Royalties are tied to list price.
This avoids accounting shenanigans of the kind observed in music and film, where creative properties with millions of dollars in revenue somehow make little profit, reducing payments to the talent.
A fixed list price means that royalties can be calculated based on unit sales, rather than unit sales times a variable price (even within one outlet) at thousands of retail outlets. Shenanigans are then limited to inventory accounting.
This avoids accounting shenanigans of the kind observed in music and film, where creative properties with millions of dollars in revenue somehow make little profit, reducing payments to the talent.
A fixed list price means that royalties can be calculated based on unit sales, rather than unit sales times a variable price (even within one outlet) at thousands of retail outlets. Shenanigans are then limited to inventory accounting.
If you can't sustain a business paying people a living wage then the market will find someone who can.
If you argue that businesses can't function without the ability to pay people poverty wages then that's essentially saying capitalism can't function without a permanent underclass.
If you argue that businesses can't function without the ability to pay people poverty wages then that's essentially saying capitalism can't function without a permanent underclass.
If by "underclass" you mean people that work on low value jobs - yes, these people exist and will always exist, unless you figure out how to make everyone be born with equal skills and immediately be ready to take any job and do it equally well. Then, of course, you could pay everybody the same and be content that nobody is paid below average. Fortunately, this particular nightmare society would never happen.
In real world, people have different skills, and they start with low to no skills and then develop them. In the process, they progress from low wages to high wages. When I was young and uneducated, I worked low-wage jobs like cleaning the floors in local supermarket or looking after the conveyor in local bakery. If these job were forced to have wage anywhere close to what I ask for now, these jobs wouldn't exist. And I, as a poor student, would not have a possibility to study, since I would literally have no money to buy food with, let alone pay other bills. Yes, that's how capitalism works and I'm not sure how could it work differently and remain capitalism. If you prefer the other option - taking the money to central authority and then let it provide for the food to the students, the education, the wages and so on - that's not capitalism and the experience shows that idea doesn't really work out.
In real world, people have different skills, and they start with low to no skills and then develop them. In the process, they progress from low wages to high wages. When I was young and uneducated, I worked low-wage jobs like cleaning the floors in local supermarket or looking after the conveyor in local bakery. If these job were forced to have wage anywhere close to what I ask for now, these jobs wouldn't exist. And I, as a poor student, would not have a possibility to study, since I would literally have no money to buy food with, let alone pay other bills. Yes, that's how capitalism works and I'm not sure how could it work differently and remain capitalism. If you prefer the other option - taking the money to central authority and then let it provide for the food to the students, the education, the wages and so on - that's not capitalism and the experience shows that idea doesn't really work out.
That underclass work kept me alive when I was homeless. The work let me eat and keep my dignity.
If you illegalize low-wage labor, only scoundrels will hire the young and the desperate.
If you illegalize low-wage labor, only scoundrels will hire the young and the desperate.
I don't think anyone is saying that. There's plenty of proof that lots of businesses that function...even thrive by paying people poverty wages. The question however is...is that right? Are you okay climbing to the top on the back of someone else? If you are, then you'll do well. If you aren't then your hike up will be difficult and slow.
In which San Franciscans discover economics.
Poor folks—I really mean it. It's terrible to have to end a dream, and it's worse to see a successful business destroyed.
Poor folks—I really mean it. It's terrible to have to end a dream, and it's worse to see a successful business destroyed.
They cleared $3k in profit for 2013 (read down a couple posts on the blog) while paying themselves next-to-nothing - and that out of the cafe profits and not the bookstore. I think the term "successful" is very questionable here.
This has nothing to do with minimum wage, and everything to do with running an unsuccessful business in the first place.
If you're clearing $3k in profit a year you have a very expensive hobby, not a viable business.
We can all be sad that a bookshop is closing, but the real culprit was a lack of sales and marketing savvy, and a lack of customer interest in the product/experience being offered.
Minimum wage may have thrown a few rocks onto the coffin, but it certainly didn't dig the grave.
There a lot of new booksellers making a living on Amazon. Some of them trade internationally. (I buy a steady stream of specialist titles from US sellers.)
If I wanted to buy from Borderlands, not only would I be paying far too much for every book in their list, I'd also be charged $25 for shipping.
Somehow everyone else in the world can ship me a book for less than half that. But Borderlands hasn't figured out how to.
That's where the fail is. Not in hand-wringing about having to pay staff an amount that still isn't close to a fair wage.
If you're clearing $3k in profit a year you have a very expensive hobby, not a viable business.
We can all be sad that a bookshop is closing, but the real culprit was a lack of sales and marketing savvy, and a lack of customer interest in the product/experience being offered.
Minimum wage may have thrown a few rocks onto the coffin, but it certainly didn't dig the grave.
There a lot of new booksellers making a living on Amazon. Some of them trade internationally. (I buy a steady stream of specialist titles from US sellers.)
If I wanted to buy from Borderlands, not only would I be paying far too much for every book in their list, I'd also be charged $25 for shipping.
Somehow everyone else in the world can ship me a book for less than half that. But Borderlands hasn't figured out how to.
That's where the fail is. Not in hand-wringing about having to pay staff an amount that still isn't close to a fair wage.
>If you're clearing $3k in profit a year you have a very expensive hobby, not a viable business.
Depends on whether you pay yourself before the profit or not.
Depends on whether you pay yourself before the profit or not.
Also, while this store sounds like a great place and one that I would visit... this article is the first time I have seen the name. I live in SF, I could have been going here, and yet I did not know it existed (and close enough that I could have combined it with Tartine visits to boot). Sure, it's partially my failure, but it's also a marketing failure.
They were nice enough to provide some numbers, so I tried to figure out what's going on with Borderlands.
First thing, they say that a move from $10.74 to $15.00/hr will cost them $28,000 (from +$3k to -$25k), which implies they're paying over 6,000 hours worth of hourly labor.
Another option to make up that $28k would be to increase sales by 20%, which means their current annual gross margin is somewhere around $150k.
"[R]ent, payroll, and credit card processing represent 68% of all [their] expenses" and since they're basically breakeven let's say that merchandise costs are 30% with 2% miscellaneous costs (utility bills, etc).
So their gross margin is probably something around 65% as CC fees should never be more than 5% and merch is around 30%.
With $150k of gross margin at 65%, it looks like this store, employing 3 FTEs worth of part-time labor, is grossing about $225,000 per year.
If the average book in that store costs $15 (they say they're limited on what they can charge based on the sticker price, so this may even be low) they're staffing 3 people in the store at all times, all year round, to sell 42 books per day.
I think I found why you're having to pay yourselves out of the cafe money, sirs.
First thing, they say that a move from $10.74 to $15.00/hr will cost them $28,000 (from +$3k to -$25k), which implies they're paying over 6,000 hours worth of hourly labor.
Another option to make up that $28k would be to increase sales by 20%, which means their current annual gross margin is somewhere around $150k.
"[R]ent, payroll, and credit card processing represent 68% of all [their] expenses" and since they're basically breakeven let's say that merchandise costs are 30% with 2% miscellaneous costs (utility bills, etc).
So their gross margin is probably something around 65% as CC fees should never be more than 5% and merch is around 30%.
With $150k of gross margin at 65%, it looks like this store, employing 3 FTEs worth of part-time labor, is grossing about $225,000 per year.
If the average book in that store costs $15 (they say they're limited on what they can charge based on the sticker price, so this may even be low) they're staffing 3 people in the store at all times, all year round, to sell 42 books per day.
I think I found why you're having to pay yourselves out of the cafe money, sirs.
Viable, then.
In which I point and laugh at someone using a bookstore, in the year 2015, as evidence of effects of economic policy.
I mean really. A bookstore.
I eagerly await you finding a struggling video rental store. More evidence SF is full of socialists -- their damn minimum wage is making life hard for small business owners!
I mean really. A bookstore.
I eagerly await you finding a struggling video rental store. More evidence SF is full of socialists -- their damn minimum wage is making life hard for small business owners!
The rent also doubled for their location. That would seem to be the bigger elephant in the room, no?
Not sure why I'm getting so many downvotes - nobody is able to consider the possibility that running a business on some of the most expensive, sought after real estate on the west coast with such slim profit margins couldn't have had something hugely to do with their shutdown? The issue with the wages seems like the straw that broke the camels back. If I'm totally off base with my thinking here, please explain how.
The minimum wage is a cruel policy that makes it unprofitable to employ low skilled workers. It's great for Silicon Valley robotics engineers, and terrible for disadvantaged urban teenagers.
So, great job San Francisco voters; your ignorance of economics is exacerbating the inequality you complain about.
So, great job San Francisco voters; your ignorance of economics is exacerbating the inequality you complain about.
There are lots of profitable companies that hire low skilled workers at minimum wage. Given this fact it is not possible that your first sentence is true. Perhaps you meant something different.
If it makes it clearer, please insert a "sufficiently" before the low in that sentence.
"In November, San Francisco voters overwhelmingly passed a measure that will increase the minimum wage within the city to $15 per hour by 2018. Although all of us at Borderlands support the concept of a living wage in principal and we believe that it's possible that the new law will be good for San Francisco -- Borderlands Books as it exists is not a financially viable business if subject to that minimum wage. Consequently we will be closing our doors no later than March 31st."
I would love to know why Borderlands thinks "it's possible that the new law will be good for San Francisco" considering other employers like them will be closing down because of it. Low wages > no wages.
I would love to know why Borderlands thinks "it's possible that the new law will be good for San Francisco" considering other employers like them will be closing down because of it. Low wages > no wages.
They had prime real estate that a more robust business will pick up. The jobs will be replaced.
Whether this is good social policy is a much more complicated question.
Whether this is good social policy is a much more complicated question.
Here, we have a business that:
1. Is in a market that's been declining for decades.
2. Is in one of the most expensive cities in the United States.
3. Has a product with an essentially fixed price.
4. Sells a "commodity" product: the book you get from there is indistiguishable from the same book bought elsewhere. (Of course, the overall book buying experience is unique.)
5. Sells a product that has a digital alternative rapidly rising in popularity.
6. Is in the number #1 city in the entire world for people predisposed to prefer digital alternatives to things.
They may as well have been a cash-only store for horse-drawn carriage accessories. I'm sad they're closing, but it's amazing they lasted as long as they did and says next to nothing about large-scale economic policy.