Ricochet is the best place on the internet to discuss the issues of the day, either through commenting on posts or writing your own for our active and dynamic community in a fully moderated environment. In addition, the Ricochet Audio Network offers over 50 original podcasts with new episodes released every day.
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.
Published in General
At what point do the rest of the workers start throwing chairs? If you work as a checker at a grocery store and have worked you way up to $15 a hour and then all of the sudden pimply kid working this job after school is making the same amount wouldn’t you be pretty cheesed?
SF Raises Minimum Wage to Zero
That’s a great title, by the way. Inspired by Kevin Williamson?
oh how I wish I could leave. Sadly, we have kids in the area and don’t want to stray too far.
Con artist guild….nice.
Exactly. To compete with a business that sells the same products cheaper, you have to adapt your business model by either changing the selection or by providing some additional service. It could be as simple as creating an atmosphere in which people like to regularly meet and talk about books with their neighbors.
Maybe the kids want to move, too, but think it’s you who wants to stay.
I wanted to comment earlier but couldn’t find the time. The frustrating thing to me about the idiot bookstore owner who wrote this explanation is that they stop their journey of discovery short instead of following it to it’s logical conclusion. They still think the higher mandetory wage is a good idea for people that are able to raise their prices, it’s just sad that they can’t. Of course to someone with semi-developed reasoning skills the next conclusion should be that if prices are raised across the board…wait for it…..cost of living goes up and THERE GOES YOUR INCREASED WAGE! Jeeez these people are frigging idiots.
I have seen discussions not that they do get very frustrated, not just because the new kid is making the same as they are, but also because the inevitable compression of the wage scale diminishes or eliminates the rewards for improved performance, and thus reduces the incentive for worker self-improvement.
Misthiocracy, thanks for the alternate formulation for “sucking at the public teat”.
Indeed the suggested retail price of books is set by the publisher, but are retailers free to charge a premium?
Perhaps the store owners could levy a surcharge on each purchase in light of the onerous requirements. If I were they, I’d clearly pass along the costs, detail them, and compile them for presentation to the city upon shuttering my doors.
Much as I would love to get involved in all the chortling over the californian left shooting themselves in the foot with misguided minimum wage laws (and really really i would!), I’m going to have to earn your collective ire by taking the side of the little bookstore here.
The leading tech companies such as Amazon and Apple are dodging taxes the world over and THIS is what is steamrolling smaller businesses. It is a very sophisticated international apparatus and no one has yet figured out how to effectively bring it down. In my part of the world, Apple circumvent the mandatory GST by selling their phones not as products but as ‘licenses’. I don’t have the legal mind to extrapolate in detail how this works and all that they do, but everyone in electronics and books knows that its not a level playing field and never will be until those companies are forced to pay the proper tax on their earnings in any particular jurisdiction, rather than funnelling profits through their double-Dutch Irish sandwich with a Bahamas shake.
Small businesses are getting creamed on both ends. By dumb regulation and corporate tax dodging. So i’m not laughing. And this phenomenon is worldwide. I think someday the political right is going to have to have a difficult debate and perhaps talk of slaying some sacred cows. I love fancy new products from overseas for cheap but I also like national sovereignity. Tariffs? GST for online purchases? I don’t know the answer. But the small businessman is an endangered species in this world right now.
At least I can take a certain ironic pleasure in the corporation-hating left inadvertently helping to create an environment where only the big corporation can survive. They don’t realise it though.
Customers hate this. The intention is sincere, but they do not see it this way. The only see that the guy behind the counter has dollar signs in their eyes and is trying to milk them for every last cent. It comes off as cynical. They won’t compute in their heads that we are only transferring costs imposed on us by a bank or government.
Card surcharges are another problem. With the advent of paywave even less people are paying cash, so the surcharges are really eating into our bottom line. But people don’t know or care.
Brilliant.
Oh no, it’s quite clear to them I want to leave and has been for some time. To the point where they finish my sentences. It’s one of those complicated mixed family things….their Dad is near by as well.
“le sigh.”
Clearly, the solution for this bookstore is for the owner to forgo his salary. He owns a business. He must be a filthy rich 1%-er. He has employees on whose backs he steps to make filthy lucre. Aren’t all business owners greedy and rich to the progs? If he was a real compassionate/progressive/insert-good-adjective-here person/human/non-speciesist designation, he would be running a non-profit, cuz nobody there makes money or is greedy or likes to live high on the organic free-range hog.
Hi folks. Here’s the latest update.
http://blog.sfgate.com/bookmarks/2015/02/26/borderlands-books-no-longer-in-danger-of-closing-has-more-than-500-sponsors/
Looks like its moved on to being a vanity project.
Welcome to the Potemkin village.
From the article:
“It’s not a model that will work for all,” he said, “and if San Francisco powers-that-be did more to proactively support independent businesses that provide the nucleus of flourishing, appealing neighborhoods, it would not be needed. Promoting the economic value of shopping locally and providing incentives to landlords who rent to independent retailers at below-market rates are two examples of support that City Hall could provide to maintain the diversity of neighborhoods that make the city great.”
The city raises the minimum wage to the point that it’s driving companies out of business. The store owners proposed solution is for the city to subsidize landlords who rent to the right kind of stores for below-market rates? Why not just remove economic reality completely, go full communist, and have the city take over all the businesses? Then the all-knowing city council can set the prices for everything to make it all fair.