Hacker News Reader

Comment by stickfigure | Hacker News Reader

This reinforces the point made by people who oppose the minimum wage.

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).

View on HN

If they have a strong argument that they will be able to come back after being marginal, they can take out a loan or seek investment.

Otherwise, it's just a matter of delaying the inevitable.

I don't buy this. All the parties directly involved - the owners, the present employees, the landlord, and the customers - seem to be in a steady state. It's impossible to predict how long a small business like this might continue; there are still cobblers in San Francisco. Unlike large businesses, small proprietorships can survive in the margins for long periods.

Also: If you shoot someone, you can't defend yourself against murder by saying "his death was inevitable anyways".

Your previous point was about marginal businesses rebounding. My point was that if a marginal business is likely to rebound, they should be able to secure a loan or investment to get them through a price shock, such as an increase in the cost of goods sold, or a fall in demand, or an increase in overhead.

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.

if a marginal business is likely to rebound, they should be able to secure a loan or investment

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.

Are they somehow forbidden from stickering books with a higher price?

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.

Ever heard of amazon? Go much over list price and people start buying on amazon while they browse your store. People want to test-drive bikes, and shipping a bike back is a pain. Not really comparable.

And who are you to demand they get put down before them or their consenting workers might be ready?

It's not inevitable without additional burden of minimum wage increase, it is inevitable with it There's a level of expense where the business is viable, and the level of expense where the business is not viable, and no investment or loans are going to change that - investments/loans are temporary measures, they do not change the income/expense balance. The only way investment could help is if it could either reduce the expenses long-term or increase the income long-term, this was not possible. In that situation, increase of the expense brought by minimum wage rise took the business from the point of being viable to the point of being non-viable, just as any increase of the expenses that can not be avoided would.

>It's not inevitable without additional burden of minimum wage increase

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.

Reply on news.ycombinator.com