A San Francisco area book store that actively campaigned for minimum wage increases is now closing its doors due to those very increases.
For more than 18 years, Borderlands Books has been a book lovers nirvana, despite being low profit business. However, owner Alan Beatts has decided to close down after the passage of a statewide minimum wage increase from $10.75 up to $15 an hour.
The store made just $3,000 in profit last year but there’s no way for them to pass on increased salary expenses to customers.
“I can’t increase the prices of my products because books, unlike many other things, have a price printed on them,” said Beatts.
The increased minimum wage would raise salaries by 39% for the well-established small business and that would turn their meager profit into a $25,000 annual loss.
This is likely just the first of many family-owned small businesses to be forced out of business by ludicrous minimum wage hikes that have no basis in the marketplace.
Another unintended consequence of political hype not matching the reality.
“You know, I voted for the measure as well, the minimum wage measure,” customer Edward Vallecillo said. “It’s not something that I thought would affect certain specific small businesses. I feel sad.”
According to their website:
In 18 years of business, Borderlands has faced a number of challenges. The first and clearest was in 2000, when our landlord increased our rent by 100% and we had to move to our current location on Valencia Street. All of the subsequent ones have been less clear-cut but more difficult. The steady movement towards online shopping, mostly with Amazon, has taken a steady toll on bookstores throughout the world and Borderlands was no exception. After that and related to it, has been the shift towards ebooks and electronic reading devices. And finally the Great Recession of 2009 hit us very hard, especially since we had just opened a new aspect to the business in the form of our cafe.
But, through all those challenges, we’ve managed to find a way forward and 2014 was the best year we’ve ever had. The credit for that achievement goes to the fine and extraordinary group of people who have come together to work here. Their hard work, combined with the flawless execution and attention to detail provided by Jude Feldman, Borderlands’ General Manager, is the reason we’ve succeeded for these past 18 years.
Throughout the years we’ve managed to plan for the problems that we could predict and, when we couldn’t plan for them, we’ve just worked our asses off to get through. Overall, Borderlands has managed to defeat every problem that has come our way. At the beginning of 2014, the future of the business looked, if not rosy, at least stable and very positive. We were not in debt, sales were meeting expenses and even allowing a small profit, and, perhaps most importantly, the staff and procedures at both the bookstore and the cafe were well established and working smoothly.
So it fills us with sorrow and horror to say that we will be closing very soon.
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.
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.
Some of you may be wondering, what can I do to help? Honestly, the best thing that you can do for us is — come in and buy books! We’ve got an awful lot of damn good ones and we’d love to see every single one go to someone who appreciates it before we close. We’re also going to be selling all our shelves and other fixtures. It would make us very happy to know that our hand-built shelves were going to sit in the living room of someone who was a customer of ours and who appreciates their history. And finally, if you’re looking for a way to remember Borderlands (and you already have enough shelves and books — crazy though that idea is) — we’re having hooded sweatshirts made with our logo and “1997 – 2015″ on them. Once we’re closed, there’ll never be another place to get them again. We’ll have those in by the middle of February.
But, more importantly than coming in and buying stuff, please come in and say, “Hi”. The best thing about this business has been our customers and we’re going to miss you all (well, most of you at least <grin>). But please do be considerate of us; we all understand that finding that we’re closing may be sad and upsetting but remember — it’s even harder for us. Borderlands was our livelihood, our pride & joy, and, for many of us, it was a big part of what defined us. Although we understand your feeling of loss, it is dwarfed by what we are feeling. So come in, give us your best wishes, and try to be cheerful. Everything changes and everything ends. We did a hell of a job for a long time and now it’s time for us to do something else.
Some of you reading this probably have questions popping into your minds — Is there a way to keep Borderlands open? What alternatives have you considered? What about moving out of SF? What is going to happen to the cafe? Is the business for sale? And so on. Before asking us your questions, please wait for a week. We’ll be sending out and posting updates frequently at our blog over the next week or so and those updates will probably answer most of your questions. We will also be holding a public meeting in the cafe at seven P. M. on Thursday, February 12th. We’ll be on hand to answer questions and moderate a discussion about alternatives to closing the store. Although we do not believe that any viable alternative exists, we also think that we have a very smart and imaginative group of customers. It is not impossible that we’ve missed a potential solution, and so we want an opportunity to hear your thoughts.
Thank you all for your support, business, and friendship over these last 18 years. This has been the best job that any of us has ever had and we’re very grateful to you for giving us the chance to do it.
—Courtesy of Controversial Times