Commentary

Minimum Wage Increase Kills Local Book Store [UPDATED]

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Tell me if you’ve heard this one.  A self-identifying progressive city, a home to a vibrant community of artists and a cultural mecca to many, has pity on its poorest, hardest working denizens and attempts to bring them out of poverty by raising the minimum wage.

No, this isn’t Portland—it’s San Francisco.

While Portland is currently debating a minimum wage increase, San Francisco already took that step in November when voters approved an initiative to increase the minimum wage to $15 an hour by 2018.

Many in Portland would look to San Francisco as a role model.  After all, what could be more noble than to bring our fellow citizens out of poverty by compensating them adequately for the hard work they already put in?

However, San Francisco’s noble goal could destroy the artistic culture they so cherish.

In response to the minimum wage increase, Borderlands Books, a locally owned and operated book store, is shutting its doors.

The shop which has survived numerous challenges, including the 2009 recession, competition from Amazon and online marketplaces, and the introduction of e-books, cannot survive this final blow.

“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,” wrote the owners, “Borderlands Books as it exists is not a financially viable business if subject to [a $15 per hour] minimum wage.”

What the people of San Francisco and like-minded progressive cities are forgetting in their incessant crusade for higher pay is that a higher minimum wage doesn’t hurt the big box stores that they vilify.  Giant chains like Wal-Mart can absorb the increased labor costs, while remaining competitive.

However, small mom and pop shops, the kind of stores that give cities like San Francisco and Portland their unique and vibrant appeal, don’t have the flexibility to adjust to the increased costs imposed by a higher minimum wage.  They are the ones that suffer when the minimum wage goes up.

“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%,” said the owners.  “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 owners of Borderlands Books considered cutting staff and taking on more responsibilities themselves.  However, they quickly found that they actually would make more money working full time at an easier job at the new minimum wage than continuing to run their small business.

This is a small example of what’s in store for the arts and cultural communities in San Francisco, Portland, and similar cities across the nation.  As progressives pass further “reforms,” they’ll continue to kill the small shops and markets that give cities their respective identities.  In the end, all that will be left are the big box stores, sapping the character and uniqueness of each city.

The closing of Borderlands Books serves as a cautionary tale to Portland residents seeking to raise the minimum wage.  It’s easy to see the theoretical benefits of raising the minimum wage, but it’s vital to remember the real life consequences.

Policies like this will kill the very artistic and cultural centers that progressives treasure.

 

[UPDATE]

Thanks to their loyal and generous customers, Borderlands Books has been able to stay open.  The owners created a sponsorship program which allowed them to compensate for increased labor costs.  Of course, none of this would have been necessary if the minimum wage hadn’t been raised.

About Nathan Strout

Nathan Strout is a Development Associate with The Maine Heritage Policy Center as well as a staff writer for The Maine Wire. Born and raised in Portland, Strout is a graduate of Eastern University with a B.A. in Political Science and a minor in Legal Studies.

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