Borderlands Books is Closing

by protomyth • 11 years ago

135 134 11 years ago

I'm terribly saddened by this. It's a great genre bookstore, and although I have a kindle, I still love having dead tree books, especially ones I read for pleasure.

savanaly• 11 years ago

I much prefer dead trees to e books myself, and if I were nearby would love to visit. It looks great in the pictures.

wtbob• 11 years ago

In which San Franciscans discover economics.

Poor folks—I really mean it. It's terrible to have to end a dream, and it's worse to see a successful business destroyed.

al2o3cr2• 11 years ago

They cleared $3k in profit for 2013 (read down a couple posts on the blog) while paying themselves next-to-nothing - and that out of the cafe profits and not the bookstore. I think the term "successful" is very questionable here.

TheOtherHobbes• 11 years ago

This has nothing to do with minimum wage, and everything to do with running an unsuccessful business in the first place.

If you're clearing $3k in profit a year you have a very expensive hobby, not a viable business.

We can all be sad that a bookshop is closing, but the real culprit was a lack of sales and marketing savvy, and a lack of customer interest in the product/experience being offered.

Minimum wage may have thrown a few rocks onto the coffin, but it certainly didn't dig the grave.

There a lot of new booksellers making a living on Amazon. Some of them trade internationally. (I buy a steady stream of specialist titles from US sellers.)

If I wanted to buy from Borderlands, not only would I be paying far too much for every book in their list, I'd also be charged $25 for shipping.

Somehow everyone else in the world can ship me a book for less than half that. But Borderlands hasn't figured out how to.

That's where the fail is. Not in hand-wringing about having to pay staff an amount that still isn't close to a fair wage.

gaius• 11 years ago

Viable, then.

ryana• 11 years ago

They were nice enough to provide some numbers, so I tried to figure out what's going on with Borderlands.

First thing, they say that a move from $10.74 to $15.00/hr will cost them $28,000 (from +$3k to -$25k), which implies they're paying over 6,000 hours worth of hourly labor.

Another option to make up that $28k would be to increase sales by 20%, which means their current annual gross margin is somewhere around $150k.

"[R]ent, payroll, and credit card processing represent 68% of all [their] expenses" and since they're basically breakeven let's say that merchandise costs are 30% with 2% miscellaneous costs (utility bills, etc).

So their gross margin is probably something around 65% as CC fees should never be more than 5% and merch is around 30%.

With $150k of gross margin at 65%, it looks like this store, employing 3 FTEs worth of part-time labor, is grossing about $225,000 per year.

If the average book in that store costs $15 (they say they're limited on what they can charge based on the sticker price, so this may even be low) they're staffing 3 people in the store at all times, all year round, to sell 42 books per day.

I think I found why you're having to pay yourselves out of the cafe money, sirs.

x0x04• 11 years ago

In which I point and laugh at someone using a bookstore, in the year 2015, as evidence of effects of economic policy.

I mean really. A bookstore.

I eagerly await you finding a struggling video rental store. More evidence SF is full of socialists -- their damn minimum wage is making life hard for small business owners!

totallynewuser• 11 years ago

http://www.latimes.com/business/la-fi-vidiots-closing-201501...

smackfu3• 11 years ago

The management was making $28k a year salary. I don't know how viable a business it was even without the minimum wage increase.

Afforess• 11 years ago

Most businesses survive on slim profit margins. Most businesses are barely viable. This is why minor changes in the availability of credit, for example, can cause a recession.

enraged_camel• 11 years ago

Yeah, I think the profit margins on software have really spoiled most people on HN. $28k a year from a bookstore is not bad. It could actually be a livable wage in many other parts of the US.

fixermark• 11 years ago

This is an anticipated side-effect of raising the minimum wage: it raises the "table stakes" a small business needs to compete. Sad, but not in the large surprising.

(One could argue that it's also an anticipated side-effect of being a bookstore in a world moving away from bound print media, but I don't think that's the larger factor here; it's not like anyone expects Barnes & Noble to go under any time soon).

astazangasta• 11 years ago

Barnes & Noble has a huge digital library and their own e-reader.

This is absolutely about the world moving away from bound print media, and also from brick-and-mortar booksellers to online sellers. It's also about gentrification, rising real estate prices and a million other things (in addition to the fact that a SciFi & Fantasy book store is a somewhat dodgy proposition in the first place).

This is not the first venerable San Francisco book store to close up shop in the past few years. It's not even the first one on that block. I love Borderlands and will probably go to their meeting to see what I can do to save it, but this is not a shock, and it certainly isn't just, or mostly, about the minimum wage.

dragonwriter2• 11 years ago

Barnes & Noble has a huge digital library and their own e-reader.

...which loses tons of money, while the physical bookstores are profitable. The Nook unit is doing so bad that the long-discussed plans to split it off from the profitable physical bookstores into separate companies are now being widely discussed as in jeopardy because there is no credible business case to make to investors for the Nook unit as a separate business.

B&N is a profitable physical bookstore chain tied to failed e-book effort that is swallowing all the profits (and more), which if it can't be sold off or turned around soon is likely going to have a stake driven through its heart.

DrDanDLyons3• 11 years ago

"It's not even the first one ON THAT BLOCK"

--actually the one that left the block relocated to 24th St.

skuhn2• 11 years ago

it's not like anyone expects Barnes & Noble to go under any time soon

Well actually... On 2014 revenue of $6.4bn they lost $1.6bn. Their total assets are $3.8bn and liabilities are $2.6bn, which means another yearly loss of $1.6bn will sink them.

They are expected to spin off the Nook business and make some money (and reduce losses) from that, but I doubt it will be enough to save them in the long term.

dragonwriter2• 11 years ago

They are expected to spin off the Nook business and make some money (and reduce losses) from that, but I doubt it will be enough to save them in the long term.

The physical bookstores have remained profitable, the losses have all been in the Nook unit (and specifically the digital part of the Nook unit -- the college bookstores, which are tied to the Nook unit, are also profitable.)

The most recent reports have cast doubt on the plans to spin off the Nook unit given its worsening performance -- while the college bookstores could probably be spun off (or kept with the main bookstore business) successfully, there doesn't really seem to be anything for investors in the Nook business.

hullo5• 11 years ago

That is all pretty much completely incorrect - I think you must be misreading a 1.6b expense line as a loss? FY 2014 for BKS was pretty much even.

https://www.google.com/finance?q=NYSE%3ABKS&fstype=ii&ei=Kz_...

You'll also see the 2.6b you're calling liabilities is maybe accumulated depreciation? Actual FY2014 debt is 127.5M. Barnes & Noble is relatively debt-free for a large retailer.

https://www.google.com/finance?q=NYSE%3ABKS&fstype=ii&ei=Kz_...

wwweston3• 11 years ago

Don't forget to follow this back, though -- this is one of the problems with the general cost of living increases (or sector-specific booms that not everyone participates in, same thing when you're talking about a market economy with any scarcity): it raises the table stakes individuals need to participate. And a minimum wage law only formalizes the involved failure point, it doesn't create the fact that there would be one (though how it's not north of $15/hr in SF is beyond me).

it's not like anyone expects Barnes & Noble to go under any time soon

http://www.dailyfinance.com/on/barnes-and-noble-survival-pla...

atiffany• 11 years ago

I hope they manage to keep the cafe open. The staff is awesome, and it's a wonderful environment to work out of from time to time.

Agustus3• 11 years ago

Minimum wage increases directly affect the purchasing power of all through price inflation. Here we have a real world example of this laid out by a business owner. The company recognizes that the minimum wage employment costs will be equal for all cafes in the area, as they will pass costs onto customers; the customers see their existing wages worth less through this increase and drives them to seek salary increases from their employer. The minimum wage increase does not make more things attainable as the entire system has raised the cost of goods throughout it to compensate for the employee cost increase.

The employees who are most hurt by this minimum wage increase are small businesses, borderlands books, and those trying to make a start in a business

Retric2• 11 years ago

Hogwash, 1 + X and 100 + X are both increases. But, the relative importance of X is 1/100th in the second example.

If 3 people can average 2 customers per min. Increasing their minimum wage by 1$/hour increases the customers costs by 3/2/60 = 2.5 cents per order. The difference between a 5$ drink and a 6$ drink would be increasing their pay by ~40$/hour.

Increasing the minimum wage slightly compresses the pay scale by reducing income inequality. It has minimal impact on total output, instead top income earners get an effective pay cut.

PS: This does how up as a reduction in service jobs and increase in manufactring type jobs due to shifts in demand.

lambdasquirrel• 11 years ago

From a wages perspective, but doesn't the same math that you just described also apply to the cost of production?

It's kind of like how when people go to Switzerland and then they don't ever go to a cafe, because it seems ridiculous to take $7 of the money you earned back in the States, or in China, and then spend it on a cup of coffee. The marginal difference between a cup of coffee and a cup of wine also decrease, so it locks in higher consumption.

On the durable goods side, you are competing with farther-away places that have lower costs. It's why all the "maker" shops moved out of San Francisco and into Portland. It's not possible to economically produce handmade bikes in SF anymore. The only companies able to "export" are tech startups.

frozenport• 11 years ago

>Minimum wage increases directly affect the purchasing power of all through price inflation

Yes, buts it not immediate and its not clear if they are going to spend it on fantasy books.

al2o3cr2• 11 years ago

"The company recognizes that the minimum wage employment costs will be equal for all cafes in the area, as they will pass costs onto customers"

The elasticity of demand for cafes is not zero. Claiming that businesses can "pass costs onto their consumers" without losing sales is assuming that decidedly unrealistic fact.

Agustus3• 11 years ago

Absolutely, I left this out while cutting parts from my comment. Sales will be affected as individuals debate making a purchase at an increased price.

wwweston3• 11 years ago

Minimum wage increases directly affect the purchasing power of all through price inflation

You're economically savvy enough to realize that increased purchasing power causes inflated costs with more money chasing goods/services, and you're zeroing in on a minimum wage increase from $11 => $15/hr instead of, I don't know, tech worker salaries?

Maybe you know something I don't, because I'd guess the effect from the former isn't even close to keeping the class of people it benefits at purchasing parity.

VieElm• 11 years ago

Tech worker salaries aren't set by the government. They're set by market forces, so why would that be something he ought to think about? Are you suggesting a government enforced salary cap on software engineering salaries? What exactly do you think you could do about high pay of software engineers? I don't understand your comment. It seems that you're understandably upset at the negative effects of rising prices, but why the focus on the high pay of others? Should everyone make the same salary?

Agustus3• 11 years ago

It is always an incremental straw until the camel's back breaks. If you increase the minimum wage for the worker, all prices across a system will increase as the business must remain a going concern to compensate the increase. The price increase affects end-users purchasing power.

The median household income in the United States is $51,000, tech worker salaries are are not the norm, they are 6% of the population ($100,000 for a single individual). Their effect on society is negligent in the purchase of everyday goods as they are only 6% of the population and purchase affluent goods and upward.

Assuming direct elasticity, if a place increases costs by 30%, 30% less will shop.

If a median income family has a 10% increase in food prices, they have to absorb it. Try getting a 10% wage increase across an entire operating company, let alone a single employee.

malchow• 11 years ago

And people looking for their first job.

We should be upfront about it: controlling prices, including the price of labor, is cruel.

batbomb• 11 years ago

I think their small size and specificity (and given the fact that a large majority of what they have is low-margin paperback fiction) is probably what makes it really hard to be viable, since there's no real way to ratchet up volume. The counter example is Green Apple Books, which seems to be doing well across two geographical locations in less populated areas of the city.

AceJohnny2• 11 years ago

This makes me sad. I nearly always pick up a book or two from Borderlands when I go to San Francisco (every other month). They're a great shop and community. It's shocking, but not entirely unexpected, to learn how little they make :(

ckozlowski• 11 years ago

This was one of the stores I checked out when visited S.F., as my wife and I were plotting a move from the east coast to S.F. And while we ended up going in the other direction, I still think fondly of the S.F. culture, and Borderlands books was one of those places I visited that I felt would be a home. Shame to hear it's going.

jedanbik2• 11 years ago

The rent also doubled for their location. That would seem to be the bigger elephant in the room, no?

pronoiac• 11 years ago

Rent doubled at their old location. It's why they moved, back in 2000.

smackfu3• 11 years ago

Valencia isn't exactly in the middle of nowhere, I'd be surprised if their rent hasn't been increasing.

jedanbik2• 11 years ago

Not sure why I'm getting so many downvotes - nobody is able to consider the possibility that running a business on some of the most expensive, sought after real estate on the west coast with such slim profit margins couldn't have had something hugely to do with their shutdown? The issue with the wages seems like the straw that broke the camels back. If I'm totally off base with my thinking here, please explain how.

6stringmerc• 11 years ago

Honest question:

Do the cafe workers get paid the same hourly wage as the bookstore employees, or are they classified as restaurant personnel and make $2.13/hour + tips like I did when working in a restaurant / cafe setting? Does SF/CA have different rules in place? I'm genuinely curious and some brief searching alludes to the $2.13 going up to $7.07.

That's not $15/hour. It's interesting to use the "prices go up everywhere" argument when not directly addressing the economics. IMO the $2.13 isn't really a viable discussion point for business owners. Tips are the accounting and tax responsibility of the employee / earner...hmmm...

alwaysdoit• 11 years ago

CA does not allow tips to count towards minimum wage.

http://www.dir.ca.gov/dlse/FAQ_tipsandgratuities.htm

munificent• 11 years ago

I understand lots of people will want to paint this as a sweeping indictment of minimum wage hikes overall but all of us here should know better than to generalize from one sample, especially one as skewed as this.

Here, we have a business that:

1. Is in a market that's been declining for decades.

2. Is in one of the most expensive cities in the United States.

3. Has a product with an essentially fixed price.

4. Sells a "commodity" product: the book you get from there is indistiguishable from the same book bought elsewhere. (Of course, the overall book buying experience is unique.)

5. Sells a product that has a digital alternative rapidly rising in popularity.

6. Is in the number #1 city in the entire world for people predisposed to prefer digital alternatives to things.

They may as well have been a cash-only store for horse-drawn carriage accessories. I'm sad they're closing, but it's amazing they lasted as long as they did and says next to nothing about large-scale economic policy.

hullo5• 11 years ago

I know it's only one of the points, but it's not true that ebooks are still "rapidly rising in popularity" - while they do seem to continue to become more popular, the trajectory has clearly slowed. It seems, generally speaking, that we're nearing if not already at a stable rate of ebook market share (on a revenue basis, at least w/r/t the US and UK markets, the only ones I can claim to watch closely.)

For point 1, while I don't have the data, I would be very surprised to find out that over the course of "decades" book sales (or even just print book sales) have "declined", especially given the rate of population growth. What has, 100%, happened is that sales have moved online, for the commodity reason you mentioned, and Amazon's inclination to deeply discount titles to gain market share (which they now are moving ever-so-steadily away from).

lucio• 11 years ago

http://blogs.reuters.com/great-debate/2009/05/14/thousands-l...

ChuckMcM3• 11 years ago

And trapped between the commodity supplier fixing the price, and the state bringing up the costs, its a solid recipe for killing off a business. Which it has done in this case.

So the more interesting question from an economics perspective is whether or not capturing the marginal GDP of this business is a better or worse for the people. Sure the bookstore goes poof, and folks can't get cheap used books any more. The business will be replaced by something that can afford both the higher labor rate, like an upscale coffee shop or maybe a designer boutique.

But the number of bookstores goes down by one, and the volumes available are not available in the library. So the community has lost something too.

Nominally the markets are there to express what is a good application of capital by meeting demand. Should it go to running a bookstore or running a coffee roaster or a blog aggregator Etc. But the artificial floor of minimum wage creates artificial barriers to applying capital. You can see in this post that the floor of $10 allows the bookstore to exist, the floor of $15 does not. So here is a fiscal policy which is going limit choices.

And a really interesting effect is that everyone is going to raise prices to cover that expense, they have too, and so all of those folks who were complaining that they can't afford to eat at the 'upscale' bars and bistros in California its just going to get worse for them, and it won't be the Googlers or Twitterers or Pinsters causing that upswing, it will be the very government they elected to serve them doing it to them.

I find the economics of such things very interesting in the side effects as much as the intended effects.

niels_olson• 11 years ago

folks can't get cheap used books any more

Perhaps you meant locally? Bookfinder, amazon, alibris, et al still provide excellent service.

x0x04• 11 years ago

I'd bet all those books are available less expensively on amazon. The only value being lost is the value of the curation by the owners.

It's also a function of demand elasticity whether cost increases are passed to consumers, eaten by businesses, or some combination. We'll see how much pricing power local businesses have.

And it's a real stretch to argue that a small business owner earning under $30k/year, with limited growth prospects, is an efficient deployment of capital. This was clearly a labor of love.

discardorama• 11 years ago

Bookstores in SF have been closing for a while; blaming this closure on the minimum wage hike is specious, to say the least. Yeah, I read the blog; but closing the bookstore today, because wages will go up in 2018 (3 years from today), is ridiculous.

Let me offer an alternate explanation, based on speculation (but grounded in the realities of the booming SF realestate market): someone offered to buy out Borderlands lease for a ridiculous amount, and it was an offer they just couldn't refuse. So basically it was a choice between (a) struggling along paycheck-to-paycheck for the next 3 years, or (b) getting a nice fat check to close the doors and do something else. They chose (b). The Valencia corridor between 16th and 24th has exploded, with a large number of hipster restaurants and boutiques, and money is flowing in like crazy. Might as well tap into that while the going's good.

Expect to see some hipster cafe, restaurant or boutique opening in their place in the next few months.

jogjayr2• 11 years ago

"But the number of bookstores goes down by one, and the volumes available are not available in the library. So the community has lost something too."

Maybe some sort of collection could be set up to have Bay Area public libraries buy out as much of their stock as possible?

KevinEldon• 11 years ago

It seems that business was go well since the author writes "2014 was the best year we've ever had." But as you point out in a tough market with massive competitors and fixed prices it's hard to absorb a 39% payroll increase. Wish I could look into the future and see what business would replace them in that space... I'm cynically imagining a Starbucks or some ultra-hoppy brew pub.

acdha2• 11 years ago

I read that as more “even our best year was borderline” – further down the page they mention that the general manager was making $28,000/year and the profit in 2013 was roughly $3,000. It's possible for both “best year we've ever had” and ”still not enough to make it work” to be true at the same time.

eltondegeneres• 11 years ago

Despite all that, their next-door neighbor, Dog Eared Books, had their best year ever in 2014 and that's been true for the past five years. Maybe it's because Borderlands has a narrower focus?

fencepost3• 11 years ago

First, Dog Eared Books has a broader audience (Borderlands added mystery at one point, but going beyond that isn't feasible for both space and focus/curation reasons).

Second, just because they had their best year ever doesn't mean that it was what an objective observer would call a "good" year. Odds are very high that they're already looking at these same issues and trying to figure out how to get past them, but with different strengths. On the upside for them compared to Borderlands they have a broader base, but on the downside they may not have the same kind of genre-based support. I'll call location a wash, since both are in Mission.

On the downside for them, I suspect they don't have as much genre support, in that SF/F readers and authors do often try to support their few remaining genre bookstores. If I want a signed copy of my favorite author's new work, I'm likely either getting it directly from the author, ordering it from Borderlands, Uncle Hugo's (Minneapolis) or DreamHaven Books (Minneapolis, limited hours), or purchasing it from a bookseller at a SF convention because that seller has also been at a convention with those authors.

Finally, if you'd told me that a bookstore owner/manager was making less than $30k/year in San Francisco after 15 years in business and with an operating profit of $3000 for the year, I'd have to call that business unsustainable at least in California and particularly anywhere in the Bay Area.

stickfigure3• 11 years ago

This reinforces the point made by people who oppose the minimum wage.

The argument opposing the minimum wage is not that it hurts businesses equally, but that it focuses the pain on businesses and workers at the margins. Here we have a business that for all the reasons you point out is a marginal business, and this price shock pushed it over the edge.

It should be somewhat tautologically obvious that the businesses who have the hardest time absorbing a price shock like the minimum wage are the ones that are struggling already. This can be ignored with regard to large-scale industrial policy only if you feel there is no value in marginal industries. But keep in mind that almost all businesses go through "marginal" periods eventually, either on the way up or the way down (or both, sometimes multiple times).

dangerlibrary2• 11 years ago

If they have a strong argument that they will be able to come back after being marginal, they can take out a loan or seek investment.

Otherwise, it's just a matter of delaying the inevitable.

hnnewguy• 11 years ago

should know better than to generalize from one sample

It isn't simply looking at one data point; there are economic fundamentals that demonstrate that this will occur. Just grab any Econ 101 textbook. Granted, it isn't a straight-up loss, as there is some income re-distribution that occurs, putting more money in the pockets of low-wage earners.

It's never been clear to me why this is so controversial. If I have organized my business around the fact that I am getting $10.50 worth of production from workers that I pay $10.00, then suddenly I have to pay those same workers $14.00, the math no longer works. Someone will be out of work, or I'll be out of business, period.

pbh101• 11 years ago

The implicit assumption as far as I can tell is that you, as "nasty business owner", are making much more than 50 cents of margin on your employees' hourly labor and that minimum wage hikes will make you eat that cost. I haven't looked closely into the studies put forth, but it is repeatedly mentioned that studies show that unemployment (and partial employment) doesn't go up when the minimum wage increases.

pixl977• 11 years ago

Someone will be out of work, or I'll be out of business, period.

Incorrect, unless you're very inefficient and your competitors are efficient. If you are operating at maximum efficiently, you'll raise your rates to $14.50 and your customers will pay it or go without, no other competitor will be able to sell for less than that without losing money. It's more likely you'll go out of business because your competing businesses allocate their capital more effectively, surviving on smaller profit margins. At worst for the customer they will pay the same effective rate after the wage increase.

vii• 11 years ago

This is a deliberate attempt by the owners of the bookstore to make press about the minimum wage causing them to close down. As apparently Alan and Judy are owner operators, doing very little business so hopefully not requiring much external labour, this is a slightly contorted argument. Who would complain that they are not paying themselves the minimum wage and couldn't they structure it so they were not employees of their own partnership?

The unfortunate fact is that the owners have so far been able to exploit this location poorly. Valencia St around that block is now very highly sought after with numerous new glitzy businesses opening up in the last few years. If they were lucky enough to own the property or have a transferable lease they would now have an opportunity to make a huge profit on selling it to someone willing to cater to the yuppie crowd. The fact that this is not referred to in the blog post is quite disingenuous.

Another bookshop that closed down in SF was much more honest about the reasons without a weird political agenda: http://missionlocal.org/2015/01/a-heaven-for-books-moves-on/

If one takes a right wing point of view then the fact that the space will now be used more efficiently is definitely beneficial, so if the minimum wage were to blame then must be good ;)

From the point of view of the left, the question might be whether the bookstore should be subsidized to provide a living wage to its employees and owners. This is rather difficult to support as it is unclear that there is any benefit accrued to anybody beyond a sort of nostalgic effect of having a rather empty bookshop on a busy street, and if that space should be subsidized it should be made more widely useful.

masterleep2• 11 years ago

The minimum wage is a cruel policy that makes it unprofitable to employ low skilled workers. It's great for Silicon Valley robotics engineers, and terrible for disadvantaged urban teenagers.

So, great job San Francisco voters; your ignorance of economics is exacerbating the inequality you complain about.

yequalsx• 11 years ago

There are lots of profitable companies that hire low skilled workers at minimum wage. Given this fact it is not possible that your first sentence is true. Perhaps you meant something different.

masterleep2• 11 years ago

If it makes it clearer, please insert a "sufficiently" before the low in that sentence.

listic• 11 years ago

How did the US publishing industry found itself in a situation that the book price is fixed and printed on the book?

walterbell3• 11 years ago

Royalties are tied to list price.

This avoids accounting shenanigans of the kind observed in music and film, where creative properties with millions of dollars in revenue somehow make little profit, reducing payments to the talent.

A fixed list price means that royalties can be calculated based on unit sales, rather than unit sales times a variable price (even within one outlet) at thousands of retail outlets. Shenanigans are then limited to inventory accounting.

schaeffer_x• 11 years ago

"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."

I would love to know why Borderlands thinks "it's possible that the new law will be good for San Francisco" considering other employers like them will be closing down because of it. Low wages > no wages.

jforman• 11 years ago

They had prime real estate that a more robust business will pick up. The jobs will be replaced.

Whether this is good social policy is a much more complicated question.

chrisBob• 11 years ago

I am surprised. I always thought that increasing low salaries was good for the economy because those people generally put 100% of their take home pay back into the economy. On the other hand I put a large percentage of my pay into savings (including 100% of the differenc when I get a raise) which has a much smaller benefit to the local economy.

aidenn0• 11 years ago

But in this case, if they buy books, they will buy from Amazon, which won't have to increase its prices when San Francisco raises minimum wage, as that will have 0 effect on their costs.

perlgeek• 11 years ago

So the minimum wages will rise by 2018, and they are closing now (read, March 2015)? Why 2.75 years earlier? Why not wait?

amadeus• 11 years ago

They addressed this in the article.

rjett• 11 years ago

This is complete spit-balling here, but:

Does anyone know whether bookstores like Borderlands sell their inventory on consignment, similar to newspaper/magazine stands? Or does the business purchase books at a wholesale price and hold that inventory on the balance sheet?

If it's the latter, it would seem like a wise move to reduce inventory by x% and re-allocate the space/funds towards the more profitable cafe, where prices have a better elasticity.

Another thought would be to re-orient the inventory towards self-published works (where there's no publisher setting a price), rare edition classics (where there's higher markup due to low supply), and pop-culture best sellers (which have high turnover). I think that a brick and mortar bookstore is as good as the people working there: if you can find one with an employee that's engaging, extremely well-read, and can recommend books, you could conceivably make a bookstore geared towards self-publishers work. Bonus points if you could provide services to self-published authors to print their works in a beautiful, professional, yet economical package.

hullo5• 11 years ago

Books (from major publishers at least) are generally purchased at wholesale and held - but (and this is a big but) they're generally returnable to the publisher. Individual store and publisher terms may and will vary.

minikites• 11 years ago

If you can't sustain a business paying people a living wage then the market will find someone who can.

If you argue that businesses can't function without the ability to pay people poverty wages then that's essentially saying capitalism can't function without a permanent underclass.

coolsunglasses• 11 years ago

That underclass work kept me alive when I was homeless. The work let me eat and keep my dignity.

If you illegalize low-wage labor, only scoundrels will hire the young and the desperate.

SSH007• 11 years ago

I don't think anyone is saying that. There's plenty of proof that lots of businesses that function...even thrive by paying people poverty wages. The question however is...is that right? Are you okay climbing to the top on the back of someone else? If you are, then you'll do well. If you aren't then your hike up will be difficult and slow.

smsm424• 11 years ago

If by "underclass" you mean people that work on low value jobs - yes, these people exist and will always exist, unless you figure out how to make everyone be born with equal skills and immediately be ready to take any job and do it equally well. Then, of course, you could pay everybody the same and be content that nobody is paid below average. Fortunately, this particular nightmare society would never happen.

In real world, people have different skills, and they start with low to no skills and then develop them. In the process, they progress from low wages to high wages. When I was young and uneducated, I worked low-wage jobs like cleaning the floors in local supermarket or looking after the conveyor in local bakery. If these job were forced to have wage anywhere close to what I ask for now, these jobs wouldn't exist. And I, as a poor student, would not have a possibility to study, since I would literally have no money to buy food with, let alone pay other bills. Yes, that's how capitalism works and I'm not sure how could it work differently and remain capitalism. If you prefer the other option - taking the money to central authority and then let it provide for the food to the students, the education, the wages and so on - that's not capitalism and the experience shows that idea doesn't really work out.

hackuser• 11 years ago

Are there any economists reading this who can comment on the state of research and theory on this matter? (This question also raises the issue of posting a story about minimum wage on HN.)

Many here are applying a few concepts from Econ 101, often with surprising confidence in their own analysis. I expect economists have studied these questions extensively.

pbhjpbhj• 11 years ago

http://www.uh.edu/~adkugler/Neumark%26Wascher.pdf might be a good place to start, perhaps search for citations of that, to get info. They concluded that for every 10% increase in the min wage the primary effect was -1% to -2% drop in teenage employment rates (in USA).

gyardley2• 11 years ago

Borderlands surprises me - I thought any business made unprofitable by San Francisco's minimum wage hikes would close up shop quietly, or just blame the evil landlord. After all, they've still got inventory to sell before they close, and there's no percentage in pissing people off.

It'll be interesting to see what replaces the business, when the retail space eventually becomes available. It'll have to be something high-margin enough to afford the labor costs, so I believe there's now an increased likelihood that it'll be a chain store catering to the well-off - something like a Lululemon. There's now a decreased likelihood that it'll be one of the quirky new businesses that make a city unique, since start-up costs have increased and businesses with unknown economics are therefore riskier.

If things in San Francisco work out like I suspect, this'll be a pretty good example of the law of unintended consequences - the 77% of voters who wanted to increase the pay of the lowest-paid workers didn't realize they were also voting for increased chain-ificiation and homogenization of their city. (If they did realize that, would they have still voted for the measure?)

rsync• 11 years ago

"There's now a decreased likelihood that it'll be one of the quirky new businesses that make a city unique"

As an aside, I was reminded this past weekend that there is an honest to god gun store, in the mission:

http://www.highbridgearms.com/english.htm

I don't know what's more surprising and unlikely in 2015 ... the surviving bookstore on Valencia or a store stocking AR-15s right on Mission.

acdha2• 11 years ago

The gun shop makes more sense to me: the average sale price is much higher and unlike the case of a bookstore, you're talking about highly regulated market which happens mostly offline and, I suspect, a higher percentage of customers like to physically inspect something before buying.

DrDanDLyons3• 11 years ago

"I believe there's now an increased likelihood that it'll be a chain store catering to the well-off"

The Mission Merchants Association has a standing ban on chain stores. It is more likely to be a trust-fund enabled quirky new business. Not saying there is anything wrong with that, but it is very unlikely a chain would be able to move in.

fencepost3• 11 years ago

It might even be possible that they'll be able to keep the cafe, maybe even with a few books, possibly even still bringing in authors, etc. for events. It wouldn't still be a bookstore and it might end up as a sad ghoulish reminder of what once was, but they might pull it off.

BigBlockO'Salt: I'm 2000 miles away and have no idea whether this is something they're considering

bhauer2• 11 years ago

(I don't live in San Francisco, and I don't know Borderlands from Borders.)

Borderlands surprises me - I thought any business made unprofitable by San Francisco's minimum wage hikes would close up shop quietly, or just blame the evil landlord. After all, they've still got inventory to sell before they close, and there's no percentage in pissing people off.

Who in their right mind would be "pissed off" by Borderlands' conduct here? Are you suggesting that their customers are going to be offended that they are placing the blame on the minimum wage law? Are people in San Francisco so politically insular?

gyardley2• 11 years ago

Oh, I'm not merely suggesting it.

San Francisco is an extremely unfriendly place to people known to have the wrong politics.

carapace• 11 years ago

I'm from here, I grew up here, and I love this town, but yes let me tell you the people in San Francisco are politically insane. (Not wrong necessarily, but totally nutty.)

netinstructions• 11 years ago

And in Seattle there's bookstore owners/managers who attribute their success specifically to the high-wage earners who come to the local independent bookstores to shop[1]. Think of highly paid Amazon workers (or perhaps even folks with higher minimum wages) having extra money to spend... on local bookstores.

But then the same bookstore mentioned in the NY Times article[1] goes on to say a higher minimum wage could be fatal.[2]

Either theres some hypocrisy going on or the people with the newer, higher minimum wages are not spending their money on bookstores. I'd guess the latter. But at what point are wages too high or too low so we can have local bookstores and support them? Should we even be encouraging that in the first place?

Or look at it another way: How and why are successful bookstores being successful?

[1]http://www.nytimes.com/2014/04/12/us/bookstores-in-seattle-s... [2]http://www.thestranger.com/slog/archives/2014/03/03/elliott-...

greggman• 11 years ago

I'm curious if they could just become 100% cafe. I've got to assume it would be successful. They're in a great location. There's plenty of other cafes in SF that are doing fine. I suppose maybe they don't want to run a cafe? Although they are already running a cafe. What about just making it a SciFi themed cafe? They could still put a few books out. They could still invite authors and have SciFi / Fantasy speakers.

Just a thought.

karmacondon• 11 years ago

It seems like a lot of people aren't mentioning the fact that a minimum wage increase cuts both ways. Small businesses must pay more, but low end consumers should now have more money to spend. Raising the minimum from $11 to $15 is a roughly 30% increase that will affect roughly 5% of Americans. The question is, what will those people spend that extra money on? I'm guessing it won't be books, or at least not vintage or trendy books. It will most likely being low end food, clothing and entertainment (mcdonalds, walmart, dvds) and childrens' needs of all varieties.

If stores have to raise their prices to cover higher employment costs, then the worst case will be a push for the lowest income Americans. They make 30% more and pay 30% more for most goods. But every walmart/mcdonalds/redbox employee doesn't earn minimum wage and their labor costs don't scale linearly, so the most likely outcome is that those earning minimum wage will get a small effective price break, the middle class will pay slightly more for things and the wealthy will also pay more but not really notice it. Bookstores and other middle class oriented businesses will be forced to close, while businesses that cater to minimum wage workers will see slight profit increases.

I'm not sure if this is an ideal situation not, or if it represents an intended or unintended consequence. But under a certain set of assumptions it could be viewed as this particular bookstore closing so that someone who is barely getting by has a few extra dollars to live on each month. It's a shame when any marginal business is forced to meet its fate, but it might be the best thing for the economy over all, or at least for the people who have benefited least from the recent recovery.

protomyth4• 11 years ago

What drew me to this article is the general trend of the marginal, but loved, businesses being forced out of business. It's amazing how many small businesses that allow folks to do what they love, provide part-time work for people needing the experience, and contribute to the general "happiness / uniqueness" of an area are basically one storm away from disappearing.

I'm sure they'll be replaced by a Starbucks or other big company place that knows the tax system and can bring their scale to bear. Might even employee more people, or maybe one of those companies doing some automation since the cost of the worker is higher than the profit they generate.

Regardless, your cool area looks more and more like a strip mall. The strange and unique mostly lives at the margins.

pixl977• 11 years ago

Live by the margin, die by the margin. You do realize by changing the margins, you've only moved them somewhere else, not killed them off. Also, it's a strange metric to say business serviced by mostly middle income earners generates more happiness than a few hundred/thousands low end employees being able to pay their bills or afford slightly more.

protomyth4• 11 years ago

"Live by the margin, die by the margin."

I'm not sure what to say to this one. Uncaring seems to be the word.

"You do realize by changing the margins, you've only moved them somewhere else, not killed them off."

Looks like it killed a bookstore. Probably killed a few more businesses in the area.

"Also, it's a strange metric to say business serviced by mostly middle income earners generates more happiness than a few hundred/thousands low end employees being able to pay their bills or afford slightly more."

Your statement of the choices. One which I don't believe are the only choices. Seems like these folks are going to be out of work now, so they might have some problem paying their bills.

The whole thought process that people should be "minimum wage workers" as a continuing, long term condition is misguided and foolish. Its more platform building just above the water instead of building a way farther up. It also kills off entry level jobs and part-time jobs for teenagers. Its the wrong policy and just ignores the real problems.

GFK_of_xmaspast• 11 years ago

Thought #1: bookstores go under all the time, specialty bookstores even more so.

Thought #2: google maps has a 'see inside' feature, and that store looks like a little tiny place, I don't work in SF any more but if I did and made time out of my commute to go there, odds are I'd be disappointed.

I shopped at City Lights up on Kearny, and that always seemed to be doing a pretty good business, and after I quit that SF job I worked in Mountain View which has a pretty good used bookstore right downtown, and a decent new bookstore right next to it, both of which seem to be moving lots of product.

fubarred• 11 years ago

Sad to see another awesome bookstore go.

First Bogey's Books in Davis, then even Borders. :(

From what I heard at the time, Powell's (one of the bookstore others would sell their inventory to) was overwhelmed with shipments from closing bookstores and the market rate for used domestic books was quite low for a long time. Has this changed?

Borderlands Books is Closing

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