Min Wage increase kills a SF small business

[MongGrel]

Hey, let's go to the extreme to make our point!

Fact is, a higher minimum wage destroyed a business. We were led to believe that this never happens by many liberals on this board.

Leave your bubble someday.

 

[Victorian Gray]

From what I'm reading the new min wage in SF is going up to $15, not $11.

Fern

By 2018. The present wage is $11.05 as of Jan. 1, 2015.

 

[Sonikku]

Min Wage increase kills a SF small business

An independent San Francisco bookstore says it will be closing its doors by March 31, despite having its best year ever in 2014. And it’s pointing at San Francisco’s newly enacted minimum wage law as the reason

Borderland Books, which specializes in science fiction and horror, says it has withstood a host of challenges since it opened in 1997, including the rise of Amazon.com and e-books, a landlord who supposedly doubled their rent while dotcoms were first booming, and a deep recession that the owners say “hit us very hard.” A higher minimum wage, though, would take the business from being modestly profitable to being a money loser, the owner says.

Yep. It was all the minimum wage.

Thanks, Obama.

 

[Double Trouble]

Large megabusinesses shut down small businesses simply because they can do most things that small businesses do, for cheaper. If you want to help out small businesses, then make being a megabusiness more expensive. Period, end of story.

Small businesses have certain advantages over larger businesses. They are much more nimble, can have much more direct relationships with customers and can better cater to niche markets. That's how disruptions happen, small businesses start up to serve a perceived need, and then grow to challenge bigger businesses. Eventually they themselves become big and cumbersome, and get challenged by another smaller business. The cycle continues.

Big businesses have many advantages, but small business have some advantages as well. They can compete without needing to have an external force make the larger business more expensive, they just have to compete on a basis other than cost.

I'm not sure why we always have to focus on the stories where some member of the rabble gets paid as much or even better than ourselves and our tribe members. If a libruul does it while pointing at a CEO making 450x what the worker makes, we're being jealous and just want to take someone else's stuff. If we point to someone trying to support themselves on $15 an hour, then it's some dumbhead loser getting paid far above their station.

When the CEO gets paid some exorbitant amount, is it because the law mandates it? No, it's because his employer has decided he/she is worth that exorbitant amount. Now if some dolt with no marketable skills wants $15 per hour, the only way that's going to happen is by force of law. Two completely different scenarios, and it's perfectly fine to bitch about one and not the other.

 

[DrPizza]

Let's see... Let's say the minimum wage goes up $3/hour. And, that requires a "20% increase in prices on books." Then, a couple of guesses/assumptions and we can pull some more numbers out. If there's 1 employee working at any particular hour during the day, then the total selling price of the books he's selling has to increase by $3 during that hour. $3 is 20% of $15.

So, assuming the owner is telling the truth, that San Franciscans would have to pay 20% more on books, that means his book store is currently selling $15 worth of books each hour.

Now, let's say there were 10 employees. That means $30 more per hour, and thus, $150 worth of books - it scales pretty linearly. If you're only selling $15 worth of merchandise per employee per hour, you're full of crap saying that the minimum wage increase is the reason you're going out of business. Your business is already failing.

 

[Matt1970]

Everyone knows this will happen; an increase in wages whether mandated or market-driven is going to take out some marginal businesses. But it should be noted that evidently this store's "best year ever" in 2014 must not have been very good (e.g. in 2014 I managed to set myself on fire only sixteen times, a new personal best!) if it's shutting down without even attempting to adjust its business model. I hate it for the owner, who might have been living his modest little dream, but everything government does has winners and losers. We can hardly give up government just because government inherently shuffles the deck.

If by "attempting to adjust its business model" you mean raising prices, then ya, that is the next logical step.

 

[Ns1]

the actual statement from the business does address amazon, raising prices, and decreasing expenses

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.

The other obvious alternative to increasing sales would be to decrease expenses. The only way to accomplish the amount of savings needed would be to reduce our staff to: the current management (Alan Beatts and Jude Feldman), and one other part-time employee. Alan would need to take over most of Jude's administrative responsibilities and Jude would work the counter five to six days per week. Taking all those steps would allow management to increase their work hours by 50-75% while continuing to make roughly the same modest amount that they make now (by way of example, Alan's salary was $28,000 last year). That's not an option for obvious reasons and for at least one less obvious one -- at the planned minimum wage in 2018, either of them would earn more than their current salary working only 40 hours per week at a much less demanding job that paid minimum wage.

Although the major effects of the increasing minimum wage won't be felt for a while, we've chosen to close now instead of waiting for two reasons. First, the minimum wage has already increased from $10.74 per hour to $11.05 (as of January 1st) and it will increase again on May 1st to $12.25. Continuing to pay the higher wage without any corresponding increase in income will expend the store's cash assets. In essence, the store will have less money (or inventory) six months from now, so closing sooner rather than later makes better business sense. But more importantly, keeping up our morale and continuing to serve our customers while knowing that we are going to close has been very painful for all of us over the past three months. Continuing to do so for even longer would be horrible. Far better to close at a time of our choosing, keep everyone's sorrow to a minimum, and then get on with our lives.

http://www.borderlands-books.com/

 

[nickqt]

Small businesses have certain advantages over larger businesses. They are much more nimble, can have much more direct relationships with customers and can better cater to niche markets. That's how disruptions happen, small businesses start up to serve a perceived need, and then grow to challenge bigger businesses. Eventually they themselves become big and cumbersome, and get challenged by another smaller business. The cycle continues.

Big businesses have many advantages, but small business have some advantages as well. They can compete without needing to have an external force make the larger business more expensive, they just have to compete on a basis other than cost.

When the CEO gets paid some exorbitant amount, is it because the law mandates it? No, it's because his employer has decided he/she is worth that exorbitant amount. Now if some dolt with no marketable skills wants $15 per hour, the only way that's going to happen is by force of law. Two completely different scenarios, and it's perfectly fine to bitch about one and not the other.

By "some dolt", you mean the members of society.

The small business is more than free to pack up its D&D cards and fantasy novels and move to Somalia, where big bad gub'mint aka society won't force it to pay its workers a living wage.

For freedom.

 

[brycejones]

If the search function is working; look for references to min wage threads here over past couple of years.

There was support for the NYC wage increases, Seattle increase and SF increases.

Those supporters were stating that either the business should/would/could absorb the extra costs or shift the costs to the consumer.

The opponents were stating that the business would shutter or drop employees if they were unable to cover the increase by increasing sales costs due to competition.

I'm sorry but the onus is on the person making the claim to provide the proof. In this case the claim is that many liberals on this board said no business would be "destroyed" by an increase in minimum wage.

If this was really what was said then it shouldn't be too hard for you or CPA to cough up a significant number of quotes to support the claim. We'll be waiting.....

 

[Tsavo]

Minimum wage may have very well helped kill the business (it made $3k in profit in 2013), but it was a dead business, anyway. Selling a commodity item in a competitive marketplace is a hard way to make a dollar, especially with demand dropping for that commodity item (printed vs digital). Not only was this business selling a commodity item, it specialized in a niche of that market instead of the entire market.

 

[DucatiMonster696]

By "some dolt", you mean the members of society.

The small business is more than free to pack up its D&D cards and fantasy novels and move to Somalia, where big bad gub'mint aka society won't force it to pay its workers a living wage.

For freedom.

LOL The tired old Somalia strawman. How many times have we seen this one brought up on P&N?

 

[Subyman]

Sounds like the business was barely viable anyway, if you could even call it that. The head manager only brought in $28k. In SF that has to be well below the poverty line. I think their "business" was really just a hobby and wasn't viable long term anyway.

 

[nickqt]

LOL The tired old Somalia strawman. How many times have we seen this one brought up on P&N?

Not a straw man, just a valid option for true FreeMarket businesses to take if they can't survive with big bad gub'mint regulation here in the First World.

 

[DucatiMonster696]

Lol! Minimum wage increases to $15 by 2018. Saying minimum wage killed a business when that minimum wage hasn't even kicked in is laughable.

Not only that but an owner who doesn't think San Francisco residents would be will to pay a 20% increase in prices on books! is the most retarded thing I've ever heard. How much are these books? $5-15 equals $1-3 increase. Good lord people are retarded!

Except for one thing. $15 dollars an hour won't buy/rent you a pot to piss in if you intended to live in SF but it does have an impact on businesses, albeit small ones. It also has an impact on consumer prices, along with an impact on the employment rate of those who have yet to enter the job market or who currently are not worth paying a $15 dollar an hour rate to employ. Especially in a city that is already very expensive to live in period.

So the entire argument that raising this minimum wage would help the poor in the city is a complete fucking joke when you consider cost of living to ensure that those who aren't subsidized by government are actually able to afford to live in SF. In fact to have any impact you'd have to raise the minimum wage to at least 25 to 30 dollars an hour to have any meaningful effect on those working minimum wage jobs as "career" choice.

 

[DucatiMonster696]

Not a straw man, just a valid option for true FreeMarket businesses to take if they can't survive with big bad gub'mint regulation here in the First World.

No. Its a fucking straw man plain and simple. You're just not personally honest enough to admit it to yourself.

 

[nickqt]

No. Its a fucking straw man plain and simple. You're just not personally honest enough to admit it to yourself.

It's not a straw man. I could have said that the FreeMarket business could move to Texas where big bad gub'mint won't regulate it to death by forcing it to pay its employees a living wage.

Would that be a straw man too?

Somalia, like Texas, is a real place that has less regulations than California and in particular, San Francisco. Somalia is real. Their lack of regulations are real. Nothing straw about it at all.

 

[ivwshane]

Except for one thing. $15 dollars an hour won't buy/rent you a pot to piss in if you intended to live in SF but it does have an impact on businesses, albeit small ones. It also has an impact on consumer prices, along with an impact on the employment rate of those who have yet to enter the job market or who currently are not worth paying a $15 dollar an hour rate to employ. Especially in a city that is already very expensive to live in period.

So the entire argument that raising this minimum wage would help the poor in the city is a complete fucking joke when you consider cost of living to ensure that those who aren't subsidized by government are actually able to afford to live in SF. In fact to have any impact you'd have to raise the minimum wage to at least 25 to 30 dollars an hour to have any meaningful effect on those working minimum wage jobs as "career" choice.

The impacts are small across the board and are barely measurable, especially when it comes to the cost on businesses. Minimum wage increases are not business destroyers.

I agree with the rest of your points though.

 

[davmat787]

This reminds me of the oil shortages raising gas prices which killed my pet rock chain of stores back in the 1970's. D:

 

[berzerker60]

Just think of all the textile mills and coal mines we've put out of business by banning child labor! First you ban kids from working when they're 5, what's next, banning working till they're 95? Well who's going to work then!?! Clearly labor laws are all-or-nothing, and any bad effect of regulations (no matter how much good is also accomplished) means we need to scrap them entirely.

 

[sportage]

I'm glad most people are seeing through this so called small businesses bull crappy.
This stores problems go far beyond the raise in the wage.
They just thought it would be a fun little slam and cute little game to blame wage.

Cry for them not.

They're no doubt pissed they couldn't pay $2 an hour, or $1 an hour wage and get away with it.
But then, a law increasing the wage?
That just pissed them off no end.

And it is the same with Obamacare ACA.
Companies blaming 2015 insurance premium hikes to new ACA regulations.
Where companies that try to pull this shit know damn well they were going to experience a premium hike regardless, ACA or no ACA.
EXACTLY as had been the case with insurance premiums EVERY YEAR BEFORE ACA EXISTED.

Bottom line, these companies that cry fowl are just mad they can't get away with only paying slave labor wages, and offer no benefits at all.
Their piss poor attitude is un-American and they deserve to close shop.
Word gets around, and consumers stop doing business anyway.
So it's plain and simple poetic justice.

 

[Double Trouble]

By "some dolt", you mean the members of society.

The small business is more than free to pack up its D&D cards and fantasy novels and move to Somalia, where big bad gub'mint aka society won't force it to pay its workers a living wage.

For freedom.

Ah yes, the tired old "move to somalia" bullshit strawman argument, with some other worthless platitudes about "living wage" mixed in. Nice try.

 

[Double Trouble]

I'm glad most people are seeing through this so called small businesses bull crappy.
This stores problems go far beyond the raise in the wage.
They just thought it would be a fun little slam and cute little game to blame wage.

Cry for them not.

They're no doubt pissed they couldn't pay $2 an hour, or $1 an hour wage and get away with it.
But then, a law increasing the wage?
That just pissed them off no end.

Read the damned article.

 

[Double Trouble]

Small businesses, especially those teetering on the edge of profitability, fail all the time. Any change in the environment can push them over the edge. That's not a reason not to implement a change the community feels is warranted (in this case, increasing minimum wage). It should be part of the consideration, but it is only one aspect.

 

[Newell Steamer]

How is that when a private citizen can't make ends meet, they are a loser who knows jackshit and is probably spending all his/her money on drugs tattoos, TVs, iPhones and abortions.

Yet, when a business can't make ends meet, it is Obama's fault.

 

[PliotronX]

How is that when a private citizen can't make ends meet, they are a loser who knows jackshit and is probably spending all his/her money on drugs tattoos, TVs, iPhones and abortions.

Yet, when a business can't make ends meet, it is Obama's fault.

Because private citizens can get multiple jobs while businesses can't. Mechanisms for profit, particularly in retail, are very limited (protip: to keep a business afloat there needs to be a degree of profit). Raise prices, skimp on wages, find better wholesellers (one of which Target and Walmart are in love with). While they weren't in the most profitable sector, the minimum wage raises do not help. What good are minimum wage hikes when potential positions close up and mega corporations cut hours? It is much more fun to work for small businesses so this kind of hits home.