An independent San Francisco bookstore says it will be closing its doors by March 31, despite having its best year ever in 2014. And it’s pointing at San Francisco’s newly enacted minimum wage law as the reason.
Borderland Books, which specializes in science fiction and horror, says it has withstood a host of challenges since it opened in 1997, including the rise of Amazon.com and e-books, a landlord who supposedly doubled their rent while dotcoms were first booming, and a deep recession that the owners say “hit us very hard.” A higher minimum wage, though, would take the business from being modestly profitable to being a money loser, the owner says.
“Throughout the years we've managed to plan for the problems that we could predict and, when we couldn't plan for them, we've just worked our asses off to get through. Overall, Borderlands has managed to defeat every problem that has come our way,” Borderlands owner Alan Beatts wrote in a blog post announcing the planned closure. “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.”
San Francisco voters easily approved a measure last November that would lift the city’s minimum wage from $10.74 to $12.25 an hour as of May and then gradually raise it to $15 an hour by July 2018. That hourly wage works out to a minimum salary of $31,000 a year for a full-time worker.
The blog post went on to say that the Borderlands café business will stay open and should have “no difficulty at all” with the new minimum wage because it will be able to raise prices as needed. The bookselling business is different, the blog post argued, because book prices are set by the publishers and clearly printed on the books:
“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.”
Beatts has posted more of the math underlying his decision here.
Opponents of a higher minimum wage have argued that it would kill jobs and businesses in just such a fashion. Proponents point to studies that have found little to no negative effect on employment from minimum wage hikes, and they argue that a higher minimum wage will helps businesses overall by giving consumers slightly more purchasing power.
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