San Francisco Borderlands Closes Shop

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Borderlands is a bookstore in the city of San Francisco that sells a niche but large amount of science fiction books. They have been through a lot as a company, like when their rent increased 100% and they had to move locations.They have had to deal with the shift towards electronic books from competitors not to mention making it out of the great recession of 2009.  Above all, they have had to try compete with Amazon's ease of access and low overhead model of book sales.

They made it through all those trials and were on track to make a profit this year but there was one last giant feather to land on their back: 

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. Borderlands 

They saw the gloomy future when forecasting the prices they would need to charge for books, would be inconceivable for competing with online retailers with their new overhead costs. 

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%.  

The increase in minimum wage is set to increase gradually over the next couple of years, but they decided to close early because it made the most financial sense. 

The town of SeaTac started this trend of high minimum wage which was at first just a bargaining by union organizer David Rolf who didn't expect the bill to pass. The Seattle Times conducted a survey of business owners with the following results: 

Not surprisingly, nearly 70 percent of respondents in Seattle said that the $15 minimum wage is causing a “big increase” in their labor costs, and over 60 percent planned to pass on what they could to customers through higher prices. . .  44 percent reported that they were “very likely” to scale back on employees’ hours to help offset the increased cost of the law. Bill Chandler of ViralBuzz Seattle

Extra costs always need to be offset somewhere down the line in order to stay competitive. It seems to be the small businesses that will take the biggest gut punch, followed by lower wage workers losing their jobs altogether.

 

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