San Francisco raised the minimum wage to $15 - guess what, businesses are closing.
From the wonderful Borderlands Books:
Borderlands Books to Close in March
In 18 years of business, Borderlands has faced a number of challenges. The first and clearest was in 2000, when our landlord increased our rent by 100% and we had to move to our current location on Valencia Street. All of the subsequent ones have been less clear-cut but more difficult. The steady movement towards online shopping, mostly with Amazon, has taken a steady toll on bookstores throughout the world and Borderlands was no exception. After that and related to it, has been the shift towards ebooks and electronic reading devices. And finally the Great Recession of 2009 hit us very hard, especially since we had just opened a new aspect to the business in the form of our cafe.
But, through all those challenges, we've managed to find a way forward and 2014 was the best year we've ever had. The credit for that achievement goes to the fine and extraordinary group of people who have come together to work here. Their hard work, combined with the flawless execution and attention to detail provided by Jude Feldman, Borderlands' General Manager, is the reason we've succeeded for these past 18 years.
What happened?
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.
I love the abject cluelessness displayed in the second paragraph:
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.
So the progressive fool (but I repeat myself) whose salary went from $10/hr to $15/hr just had their daily soy mint mocha-chino go up from $3.99 to $5.24. The price of tofu will rise, the price of the organic hemp trousers they like to wear just went up by 30%, their organic beeswax mustache creme just went up $4/tube. An act like this will have economic consequences - the market does not operate in a vacuum.
The real problem with a law like this is that anyone who suggests returning to the previous minimum wage will be pilloried for taking bread from the mouths of the working man.
There is a very good thread at Reddit.
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