For 18 years Borderland Books, a science fiction specialty store located in San Francisco, weathered every economic storm that came its way. The bookstore managed to survive recession, on-line purchasing, electronic books, even a 100% rent increase by a former landlord. What the bookseller was unable to survive was the decision by San Francisco voters to increase the minimum wage to $15 per hour.
In a note to customers the bookstore explains:
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.
…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 letter goes on to discuss the alternative of cutting back staff and increasing the work loads of the staff who would remain. The letter also mentions that the cafe attached to the store will survive because they will be able to RAISE PRICES along with EVERY OTHER CAFE IN THE CITY.
You can read the entire letter here.
Here in black and white is the real-world effect of arbitrarily setting the price of labor. In spite of all the common sense warnings, the know-it-alls in government move forward with their feel good schemes leaving destruction in their wake. Denial is a sickness that infects everyone.
Those of us who oppose the minimum wage (because we KNOW that it increases unemployment among the very people the increase purports to help, as well as hurting business owners) warned that there would be consequences. We were summarily dismissed as evil and told to be quiet. And yet here is the truth of what we warned. Business MUST respond to an increase in the cost of labor. They do so by raising prices (as the cafe’s will do), streamlining, (as the fast food restaurants are slowly doing), decrease staff or slow hiring (as the store discusses), or they go out of business altogether. There is also a ripple effect. The employees who (used to) work at Borderland will have a difficult time enjoying the new minimum wage without jobs. The landlord who owns the commercial space will suffer once he loses his tenant. The city will lose tax revenue. But, hey, at least the Leftists in the city can all feel noble that they fought for the dignity of low wage earners. In fact, when they see them pan-handling on the street, perhaps they will buy them a cup of severely overpriced coffee and a danish.
Tragic! And so unavoidable.