SF Raises Minimum Wage to Zero

 

In November, San Francisco voters decided to raise the minimum wage to $15 an hour. Now one of the law’s biggest supporters is paying the price.

Borderlands Books, a Mission District store specializing in science fiction, opened in 1997. The specialty shop had survived the dot-com boom and bust, the rise of Amazon and e-books, and drastically rising rents in San Francisco. But the city’s progressive policies proved too tough to endure:

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. The cafe will continue to operate until at least the end of this year.

Many businesses can make adjustments to allow for increased wages. The cafe side of Borderlands, for example, should have no difficulty at all. Viability is simply a matter of increasing prices. And, since all the other cafes in the city will be under the same pressure, all the prices will float upwards. But books are a special case because the price is set by the publisher and printed on the book. Furthermore, for years part of the challenge for brick-and-mortar bookstores is that companies like Amazon.com have made it difficult to get people to pay retail prices. So it is inconceivable to adjust our prices upwards to cover increased wages.

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.

San Francisco Mayor Ed Lee announced the living wage initiative last summer as a way to solve city’s extreme economic inequality. Despite San Francisco already having the highest minimum wage in the nation at the time, Lee insisted that the rate of $10.74 an hour “doesn’t cut it.”

It never crossed Lee’s mind that having the highest minimum wage might be a reason the Bay Area had among the highest economic inequality. Instead, the mayor opted for a few more layers of government and a few more chains around business owners’ necks; certainly, prosperity will reign in no time.

The fact that a few foolish business owners begged for those chains doesn’t change economic reality. The true minimum wage will always be zero, as Borderlands’ former employees are about to learn. For their next venture, perhaps they could open a calculator store.

There are 49 comments.

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  1. Member

    But this is our fault for not paying more right? I mean you don’t have to shop at Amazon. Look at all they jobs you are destroying by shopping at Amazon. Shop local dang it!!!!

    • #1
    • February 2, 2015 at 5:01 pm
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  2. Inactive

    the comments on this in the San Francisco subreddit are unsympathetic

    • #2
    • February 2, 2015 at 5:07 pm
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  3. Inactive

    The beautiful state of California is wasted on Californians (not all, but most).

    • #3
    • February 2, 2015 at 5:16 pm
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  4. Inactive
    MLH

    Taza Gul:The beautiful state of California is wasted on Californians (not all, but most).

    Many of us have left.

    • #4
    • February 2, 2015 at 5:27 pm
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  5. Inactive

    When people bring up increasing the minimum wage I sometimes ask “why not make it $100 an hour, wouldn’t that be even better for workers?”

    They often reply that that is crazy because it is not economical and all there wouldn’t be jobs for the lower skilled.

    So, wouldn’t a $5 increase have the same effect, just to a lesser extent?

    • #5
    • February 2, 2015 at 5:38 pm
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  6. Thatcher

    I hope it shuts half the city down. Eat the rich, starve the poor.

    • #6
    • February 2, 2015 at 5:41 pm
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  7. Thatcher

    Pleated Pants Forever:

    When people bring up increasing the minimum wage I sometimes ask “why not make it $100 an hour, wouldn’t that be even better for workers?”

    They often reply that that is crazy because it is not economical and all there wouldn’t be jobs for the lower skilled.

    So, wouldn’t a $5 increase have the same effect, just to a lesser extent?

    I’ve tried this tactic with my Facebook friends, but I just get accused of trolling.

    • #7
    • February 2, 2015 at 5:48 pm
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  8. Member

    They’re really not thinking here. Why don’t they learn something from Hollywood and just hire illegals and pay them reduced cash wages under the table?

    It’s a twofer. They get to polish their image as good progressives who support the “living wage” and ever more immigration of brown people.

    • #8
    • February 2, 2015 at 5:55 pm
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  9. Member

    Cue protests that this bookstore must be saved and all right-thinking people should shop here, provided any and all Larry Correia books aren’t carried.

    You know the Monster Hunter series.

    http://monsterhunternation.com/

    • #9
    • February 2, 2015 at 6:02 pm
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  10. Inactive

    MLH:

    Taza Gul:The beautiful state of California is wasted on Californians (not all, but most).

    Many of us have left.

    I’m about to live in Monterey for the third time due to work. I love being on the central coast and I really enjoy trips up to the bay area on the weekends, but it really is full of crazies.

    • #10
    • February 2, 2015 at 6:25 pm
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  11. Thatcher

    I look for a bookstore exception to the minimum wage laws. Just like the food industry gets. Is that not what this is all about? Creating ways for politicians to extort businesses for contributions.

    • #11
    • February 2, 2015 at 6:43 pm
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  12. Inactive

    Jon Gabriel, Ed.: Many businesses can make adjustments to allow for increased wages.

    Thus proving that they’ve learned nothing from the experience. “We’re shutting down because for legitimate economical reasons, but all the rest of those guys are just greedy fat cats.”

    • #12
    • February 2, 2015 at 6:43 pm
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  13. Chief
    Jon Gabriel, Ed. Post author

    Taza Gul:

    MLH:

    Taza Gul:The beautiful state of California is wasted on Californians (not all, but most).

    Many of us have left.

    I’m about to live in Monterey for the third time due to work. I love being on the central coast and I really enjoy trips up to the bay area on the weekends, but it really is full of crazies.

    I love Monterey. Favorite part of California.

    • #13
    • February 2, 2015 at 6:58 pm
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  14. Member

    “Viability is simply a matter of increasing prices. And, since all the other cafes in the city will be under the same pressure, all the prices will float upwards”

    doesn’t this defeat the whole purpose of enacting a “living wage”? Congrats, those of you that still have jobs now make $15 an hour, and if you all pool your money together you can afford to rent a studio apartment in the city.

    • #14
    • February 2, 2015 at 7:46 pm
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  15. Thatcher

    M.D. Wenzel:“Viability is simply a matter of increasing prices. And, since all the other cafes in the city will be under the same pressure, all the prices will float upwards”

    doesn’t this defeat the whole purpose of enacting a “living wage”? Congrats, those of you that still have jobs now make $15 an hour, and if you all pool your money together you can afford to rent a studio apartment in the city.

    At which point the progressives start advocating for a $20/hr “living wage.”

    • #15
    • February 2, 2015 at 8:04 pm
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  16. Member

    Believe it or not I go into the City from Berkeley each Sunday morning with my wife so she can attend a writer’s group at Borderlands Books. The book store is located in a recently ‘gentrified’ section of the Mission District. We have often remarked on how the bookstore\cafe can afford to remain open. We now know the answer: it can’t.

    I must say that the cafe is really a very nice place even if its prices are at the high end. I used to live near the bookstore up until 12 years ago and it is absolutely amazing how much the neighborhood has changed. Valencia street is now filled with upscale restaurants and the number of 20 – 30 year olds lining up for Sunday brunch is impressive. I am willing to bet that the increased costs now in the cafe will further ‘gentrify’ its clientele and make the neighborhood even more unaffordable.

    • #16
    • February 2, 2015 at 9:16 pm
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  17. Member

    My husband’s independent bookstore, which he had run successfully for 29 years, is hanging by a thread these days. It’s not in SF or Seattle thankfully: such a minimum wage law would have killed the store as soon as it went into effect. On the other hand, his online book business is doing quite well. The market has changed, and not necessarily for the better.

    How I have loved these bookstores! Some of the best hours and best conversations I ever had have occurred in them. Mr. Mole-eye still has to practically drag me out when it’s time to leave the shop. We’ll all be so much the poorer when they are extinct.

    • #17
    • February 2, 2015 at 9:48 pm
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  18. Coolidge

    Jon Gabriel, Ed.: …The cafe side of Borderlands, for example, should have no difficulty at all. Viability is simply a matter of increasing prices. And, since all the other cafes in the city will be under the same pressure, all the prices will float upwards…

    Hopefully these libs will get a lesson about demand elasticity and how that relates to supply when they discover that they (and not Starbucks) are the marginal supplier for the present location on the long term demand curve.

    • #18
    • February 3, 2015 at 6:08 am
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  19. Member

    Mole-eye:

    My husband’s independent bookstore, which he had run successfully for 29 years, is hanging by a thread these days. It’s not in SF or Seattle

    So what is the web address for the online store? It’s ok to put in a plug for your business isn’t it? I would support a business for a fellow-Rico.

    • #19
    • February 3, 2015 at 6:29 am
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  20. Member

    Why is the book publishing business different from, say, consumer electronics sales? Is this a cartel problem?

    I like walking around a bookstore. But I like saving money better. Browsing in person has costs, like anything. I prefer Amazon. There’s always a library or book club for social appeal.

    I have been in little towns where all the shops are small and friendly. It’s nice, but it’s expensive. Something is lost either way.

    • #20
    • February 3, 2015 at 6:46 am
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  21. Moderator

    Normally I would feel sorry for the business owners and employees. But these people apparently endorse the very law that’s putting them out of business. This is like a concentration camp prisoner thanking the guards for showing him the way to the gas chamber.

    • #21
    • February 3, 2015 at 7:13 am
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  22. Member

    Of course they blame Amazon rather than blaming the law.

    If they want to raise the price of the books, they are free to do so. Simply place an increased price tag over the recommended price printed on the cover.

    “We can simply raise the price of our coffee.”

    Yeah, and people can buy their own coffee online for a way lower price and make it at home, just like they can buy cheaper books online. There’s no difference, really.

    • #22
    • February 3, 2015 at 7:16 am
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  23. Member

    Randy Weivoda:Normally I would feel sorry for the business owners and employees. But these people apparently endorse the very law that’s putting them out of business. This is like a concentration camp prisoner thanking the guards for showing him the way to the gas chamber.

    It’s like a concentration camp prisoner blaming Britain for starting World War II.

    • #23
    • February 3, 2015 at 7:16 am
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  24. Thatcher

    It would seem to me as a good liberal that they should have already been paying their employees a living wage.

    • #24
    • February 3, 2015 at 7:37 am
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  25. Inactive

    Fake John Galt:It would seem to me as a good liberal that they should have already been paying their employees a living wage.

    This! There is no maximum wage, what was stopping them?

    • #25
    • February 3, 2015 at 7:53 am
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  26. Member

    CuriousKevmo:

    Fake John Galt:It would seem to me as a good liberal that they should have already been paying their employees a living wage.

    This! There is no maximum wage, what was stopping them?

    I have to hand it to the City of Portland (I hope that phrase isn’t a violation of the COC), but they recent said they will pay all city workers $15 an hour minimum. Now their next step is probably to try and ram it down the throats of the rest of the city (for the record I live near Moscow on the Columbia not in it), but at least they are putting their money where their mouth is. Probably means even fewer pot holes will get fixed though.

    • #26
    • February 3, 2015 at 8:12 am
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  27. Member

    1967mustangman: but at least they are putting their money where their mouth is. Probably means even fewer pot holes will get fixed though.

    No, they are putting taxpayers’ money where politicians’ mouths are.

    • #27
    • February 3, 2015 at 9:25 am
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  28. Inactive

    MLH:

    Taza Gul:The beautiful state of California is wasted on Californians (not all, but most).

    Many of us have left.

    And some of us are planning to leave.

    I spoke with a couple of Bay Area natives this weekend who are about to leave California for (wait for it) Wisconsin.

    • #28
    • February 3, 2015 at 9:39 am
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  29. Member

    Misthiocracy:

    1967mustangman: but at least they are putting their money where their mouth is. Probably means even fewer pot holes will get fixed though.

    No, they are putting taxpayers’ money where politicians’ mouths are.

    But that is fine. A city government can pay it’s people whatever it wants to. That is what we elect administrators for and in Portland if you elect guys like Charlies Hales this is the kind of stuff you are asking for.

    • #29
    • February 3, 2015 at 9:49 am
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  30. Inactive

    The minimum wage is completely about Democrats branding themselves as the friend of the low wage worker. That it has the opposite effect doesn’t matter. The point is to help Democrats beat Republicans, and for that purpose it works very well. Republicans have to be moderates and just try to limit the minimum wage, because advocating an outright end to the minimum wage isn’t politically feasible.

    I pointed this out to my leftwing friends. The OMB predicted something like 2 million people getting pay raises if Obama’s $10.10 minimum wage was enacted, but it would also cost around half a million jobs. Who do you think is going to lose those jobs? Will it be managers and executives, or will it be low skilled workers who are just trying to get a toehold in the marketplace? The Democratic Party is a con artist guild, and it’s very good at what it does.

    • #30
    • February 3, 2015 at 10:30 am
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