Is the real danger to bookstores minimum wage hikes?
News broke the other day that a beloved San Francisco bookstore, Borderlands Books, will be closing because it will no longer be able to operate at a profit. It was barely hanging on, but the recent minimum wage hike to $15 an hour would drive it into the red. In an explanation on its web site, Borderlands writes:
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.
Borderlands’ management takes pains to note they support the living wage—this isn’t some kind of political protest, like some businesses have been accused of doing in the wake of Obamacare, but a necessary bow to harsh economic reality. It’s just an unfortunate unintended consequence.
Borderlands is probably not the only San Francisco area bookstore that will have this problem, but it is certainly the most visible. Ironically, bookstores that sell primarily used books shouldn’t have as much of a problem, because they can raise their prices.
While this might be an isolated incident right now, the nationwide minimum wage is going to have to go up again sooner or later, to keep pace with inflation. That might drive publishers to increase the cover prices of their books, but it would take time for that to go into effect. Might that be the straw that finally breaks bookstores’ backs?
That’s odd… I’m yet to hear of a Romanian business that had to close because of a minimum-wage hike. If anything, those *help* employers, because the minimum wage *isn’t taxed*.
Guess American businesses have a different definition of being “in the black”…
Funny thing is, if the minimum wage had been growing steadily through time, instead of holding steady until it was wholly unsustainable and needed a big jump, I suspect the bookstore wouldn’t be going out of business.
It is not possible after having two banner years to close because of something coming in 2018, they have 3 years to plan for this. Something is fishy here. I operate a small business and if I have to work more myself and give less hours to employees, well I do it.
This story is missing something and someone should get to the bottom of it.
Why has everyone bought into focusing this discussion on the minimum wage?
Essentially, they weren’t bringing in enough $$ to stay in business. Wages are just one of many of their costs, many of which fluctuate year to year, I’m sure. To make the min wage increase the centerpiece of the conversation is to miss an opportunity to talk about the difficulties faced by brick and mortar bookstores, and small businesses in general during economic upswings. What about the broader pattern of people buying fewer books? What are the other avenues that a traditional bookseller can go down to still offer value? How can a small business function effectively with fewer employees?