Borderlands Books is Closing
borderlands-books.com
borderlands-books.com
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.
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).
Otherwise, it's just a matter of delaying the inevitable.
Also: If you shoot someone, you can't defend yourself against murder by saying "his death was inevitable anyways".
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.
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.
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.
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.
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.
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.
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.
"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."
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.
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.
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, 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.
Alternately, put out a physical tip jar for showroomers.
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.
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/
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.
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.
Perhaps you meant locally? Bookfinder, amazon, alibris, et al still provide excellent service.
Maybe some sort of collection could be set up to have Bay Area public libraries buy out as much of their stock as possible?
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.
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 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.
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.
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 $3000 for the year, I'd have to call that business unsustainable at least in California and particularly anywhere in the Bay Area.
The unfortunate fact is that the owners have so far been able to exploit this location poorly. Valencia St around that block is now very highly sought after with numerous new glitzy businesses opening up in the last few years. If they were lucky enough to own the property or have a transferable lease they would now have an opportunity to make a huge profit on selling it to someone willing to cater to the yuppie crowd. The fact that this is not referred to in the blog post is quite disingenuous.
Another bookshop that closed down in SF was much more honest about the reasons without a weird political agenda: http://missionlocal.org/2015/01/a-heaven-for-books-moves-on/
If one takes a right wing point of view then the fact that the space will now be used more efficiently is definitely beneficial, so if the minimum wage were to blame then must be good ;)
From the point of view of the left, the question might be whether the bookstore should be subsidized to provide a living wage to its employees and owners. This is rather difficult to support as it is unclear that there is any benefit accrued to anybody beyond a sort of nostalgic effect of having a rather empty bookshop on a busy street, and if that space should be subsidized it should be made more widely useful.
The employees who are most hurt by this minimum wage increase are small businesses, borderlands books, and those trying to make a start in a business
If 3 people can average 2 customers per min. Increasing their minimum wage by 1$/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.
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 $7 of the money you earned back in the States, or in China, and then spend it on a cup of coffee. The marginal difference between a cup of coffee and a cup of wine also decrease, so it locks in higher consumption.
On the durable goods side, you are competing with farther-away places that have lower costs. It's why all the "maker" shops moved out of San Francisco and into Portland. It's not possible to economically produce handmade bikes in SF anymore. The only companies able to "export" are tech startups.
The US produces more durable goods now than at any point in history mostly though automation. Little of that is in SF, but there really are places in the US where you can rent a decent apartment for 400$/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.
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.
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.
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.
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 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.
Yes, buts it not immediate and its not clear if they are going to spend it on fantasy books.
We should be upfront about it: controlling prices, including the price of labor, is cruel.
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.
(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).
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.
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_...
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?
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.
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.
...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.
--actually the one that left the block relocated to 24th St.
> it's not like anyone expects Barnes & Noble to go under any time soon
http://www.dailyfinance.com/on/barnes-and-noble-survival-pla...
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-...
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?)
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.
> 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?
San Francisco is an extremely unfriendly place to people known to have the wrong politics.
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.
BigBlockO'Salt: I'm 2000 miles away and have no idea whether this is something they're considering
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.
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.
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 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.
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 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 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.
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.
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...
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.
Just a thought.
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?
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 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.
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.
If you illegalize low-wage labor, only scoundrels will hire the young and the desperate.
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.
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.
Depends on whether you pay yourself before the profit or not.
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.
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!
So, great job San Francisco voters; your ignorance of economics is exacerbating the inequality you complain about.
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.
Whether this is good social policy is a much more complicated question.