Don’t believe minimum wage hikes hurt real people? After March 31, a famed sci-fi bookstore on Valencia St. in San Francisco’s Mission District will no longer be able to cater to your taste in fantasy:
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.
And this, which speaks for itself:
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 [principle] 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. The cafe will continue to operate until at least the end of this year.
Early reactions from customers online run heavily to two themes: 1) anguish that a beloved cultural institution is passing from the scene and 2) reflections that they, the fans and customers, had supported the minimum wage hike too when it was on the ballot. (It might restrict businesses’ rights, but who cares about that?) But in this world — as in so many of the well-crafted alternative worlds of science fiction — the link between actions and their logical consequences, foreseen and intended or otherwise, is not to be broken. [Reprinted from my post at Cato at Liberty]
Coyote read the letter in recognition:
I found the language here familiar because I spent most of last year writing such letters to angry customer bases. In our case, fortunately, we had the ability to raise prices so the letters were to defuse customer irritation rather than to announce a closure.
And Mark Perry at AEI identifies why a bookstore in particular cannot adjust the way a restaurant or a dry cleaner might:
There’s a limit to how much a bookstore can increase book prices to offset higher labor costs because the publisher sets the list price of the book and it’s printed on the book cover.
Meanwhile, in Philadelphia, a new minimum wage law hits nonprofits, which ask for more taxpayer money so they can comply [Inquirer]
15 Comments
My only reaction to this is that I’m surprised a bookstore was still in business. Hardly lends any real evidence that minimum wage laws are destroying small business.
Next up is the buggy whip industry is also on the ropes?
Snark aside – and as a lover of books – this is the market reacting to the inefficiency of delivering content in this way – this business would die with or without minimum wage laws – you are going to need to try harder.
“Hardly lends any real evidence that minimum wage laws are destroying small business.”
You mean other than the fact that this particular minimum wage law actually destroyed this particular small business? How is that anything other than real evidence?
You may be surprised that the store was still in business, but it was. And what drove it out was not, according to its owner, market forces, but SF’s drastic hike of its minimum wage. You are free to make a case for a high minimum wage, but you are not entitled to your own facts, as they say.
“Borderlands Books as it exists is not a financially viable business”
So, what’s the problem? Non-viable businesses are supposed to close. That’s the normal machinations of capitalism. It’s hard to imagine people on this site being opposed to that. Having businesses like this change or close was the entire point of the wage increase. There is a 100% chance that its valuable retail space will be filled by a different business capable of generating the revenue to comply with the law, making this a good move on SF’s part.
Or, as another person eager to second-guess voluntary market transactions once put it, “I can’t be responsible for every undercapitalized small business in America.”
Mr. Sheil: “Non-viable businesses are supposed to close. That’s the normal machinations of capitalism. It’s hard to imagine people on this site being opposed to that. ”
If this was an actual occasion of the machinations of capitalism, I would have no objection.
The business was rendered non-viable by a bunch of politicians, acting at the behest of their political friends (probably SEIU). This is a “good move” on SF’s part only if you agree with the notion that politicians have the right to destroy businesses that they deem marginally profitable.
“Having businesses like this change or close was the entire point of the wage increase.”
I can’t tell — this is a parody, right?
Having spent the better part of 50 years dealing with progressives/socialists/unions and Democrat politicians, I can assure you it is not a parody, but the mantra of the left. They believe that unless a business can deliver the wages they believe appropriate, the benefits they deem necessary, including things like Obamacare, paid sick and maternity leave, etc., it does not deserve to belong in business. They do not believe in competition or capitalism in the real sense, only in hyper regulated entities strictly adhering to their ideas of commerce.
[…] Minimum wage closes much-loved S.F. bookstore (overlawyered.com) […]
@Chris Hoey — you seem not to support the concept of being generous with other people’s money.
Do they carry Kipling, I wonder?
Working in a bookstore, for some people, is like working in a candy store– a job one is willing to work at for a bit less. And this merchandise does not make the consumer fat.
Would I rather be employed at $10/hour or unemployed at $15/hour?
And this merchandise does not make the consumer fat.
Tut tut, Hugo. Reading makes your mind fat. I personally know too many skinny people.
[…] Donald Boudreaux corrects The Guardian [Cafe Hayek] And Borderlands Books in San Francisco, threatened with closure after the city’s electorate voted in a minimum wage increase, may survive if it can get […]
Bill H,
I think the correct term is ‘narrow minded’.