Wednesday, February 04, 2015

More collateral damage amid creative destruction

Due to various domestic interruptions, I am posting this from a bookstore cafe this morning.

And the subject of this post is that the place where I am sitting is about to shut down. Borderlands is a wonderful sci fi, fantasy, and mystery bookstore that has been in my Mission neighborhood, if not forever, at least for more than a decade.

Borderlands is not -- entirely -- a casualty of the tech economy. Sure, it suffers from the usual vicissitudes of book selling these day: competition from giant online retailers that can always undersell brick and mortar establishments and from rising rents as our little corner of the world morphs into a playground for comparatively affluent tech worker newcomers. But squeezed by these realities, it was the voter mandate to raise the minimum wage to $15/hour by 2018 that did this place in. I'll let Borderlands owner tell his story:

Borderlands supports 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.

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 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.

What I take from this is that the business has always been extremely precarious. If bumping several part timers up to $15/hour will raise the payroll 39 percent, the payroll wasn't much to begin with. This is confirmed by Alan Beatts's explanation that he only made $28K last year, in a year when the bookstore was marginally profitable. Borderlands has simply been hanging by a thread all along. The entire essay is worth reading at the link.

Though I'm not an aficionado of the sort of fiction they sell, I've always loved Borderlands as the place where I first learned that there was a breed of cat known as the Sphinx. Meet Ripley, long in residence here, and now sadly deceased.


Rain Trueax said...

You described well a problem for small businesses. If they are running on a small margin, there simply isn't money for increased wages. Too bad, as now less jobs.

I also love those small bookstores. Palo Alto had a great one and then one time we came and it was gone. No minimum wage, just not able probably to cover the rent or sometimes an original owner dies, the one who will work for nothing from the joy of it.

Oregon doesn't have a $15 minimum wage, it's $9 something. We pay $10 for farm workers who come here with no skills and then up their wages as they get better at handling the animals. Often they aren't really even worth $10 as handling livestock does take some skills, but we figure if they stay with it, they can be worth $20 eventually. Shearers make more than that but they are independent contractors.

janinsanfran said...

I think of shearers as highly skilled professionals. Of course bookstore clerks and baristas can also be highly skilled, but we don't pay them accordingly.

Rain Trueax said...

Shearers work by the animal and if they are fast, they make quite a lot per hour. It takes skill to have a sheep not be bloodied and look good afterward-- but pretty much anybody can do it if all you want is the wool off. The sheep doesn't know how they look and eventually it grows out enough to even up. We prefer to find shearers for the sake of our backs ;)

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