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 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.

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.