Money Doesn’t Grow on Trees

Growing up, you might have heard your mother or father saying something like that when you wanted some expensive toy. Maybe you listened to them and learned something about where money does come from. The progressives who are pushing for minimum wage increases do not seem to have listened to their parents. At least it doesn’t seem to occur to them that if the government creates an increase in the cost of business, such as raising taxes or requiring higher wages, the money to pay for the increased costs has to come from somewhere. Either a business must pass on the increased cost to its customers by increasing prices, adjust its practices to reduce impact of the higher costs, perhaps by employing fewer workers, or accept a reduction in profits. For many of the unthinking, the last option is the most desirable, since it is all too commonly believed that profits are somehow selfish and evil. They do not realize that a business’s profit is what the owners of that business get to meet their own expenses and is the repayment for the expenses and risks of starting and running the business. This is especially true for the small business person who is the sole owner of his business, but it is also true for the stock holders of a major corporation. It a business cannot make a profit it must eventually cease to operate and close its doors. It really doesn’t require a PhD in economics or business administration to understand all of this, only the ability to think things through, an ability sadly lacking in all too many. Consider this example, brought by ABC News, of a bookstore in San Francisco, closing due to an increase in the city’s minimum wage.

Independent bookstores have faced tough times for quite a while. In San Francisco, neighborhood businesses have been passionately protected, so it’s hard to believe that an initiative passed by voters to raise the minimum wage is driving a Mission District bookstore out of business.

San Francisco’s minimum wage is currently $11.05 an hour. By July of 2018, the minimum wage in San Francisco will be $15 an hour. That increase is forcing Borderlands Bookstore to write its last chapter now.

When actor Scott Cox took a job at Borderlands Books he didn’t do it for the money.

“I’ve been a longtime customer of the store,” he said. “I love the people, I love the books.”

The work let him squeak by while nourishing his passion for sci-fi and fantasy.

“Everyone who works here does this because they love books, they love stories, and they love being booksellers,” said book store owner Alan Beatts.

That’s why store owner Beatts found it so tough to post a sign in the front window that the store is closing. “We’re going to be closing by the end of March,” he said.

Borderlands was turning a small profit, about $3,000 last year. Then voters approved a hike in the minimum wage, a gradual rise from $10.75 up to $15 an hour.

“And by 2018 we’ll be losing about $25,000 a year,” he said.

Money doesn’t grow on trees. Alan Beatts cannot simply go to his money tree and shake off a few extra bills. He must come up with the money to pay the higher wages somehow. He cannot increase his prices. Small, independent book stores have long been squeezed by large chains such as Barnes & Nobles who are now being squeezed by Amazon, so any increase in prices will simply drive customers away. I doubt it his bookstore is so overstaffed that he can afford to let many employees go. He cannot continue to run his bookstore if it loses money, so the bookstore must close.

This doesn't really exist.

This doesn’t really exist.

The next part of this article is priceless.

It’s an unexpected plot twist for loyal customers.

“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.”

I would say that Mr. Vallecillo wasn’t thinking at all, but then neither were the people in San Francisco’s Board of Supervisors when they decided to let people vote on increasing the minimum wage.

Though it’s caught a lot of people off guard, one group that wasn’t completely surprised was the Board of Supervisors. In fact, they say they debated this very topic before sending the minimum wage to the voters.

“I know that bookstores are in a tough position, and this did come up in the discussions on minimum wage,” San Francisco supervisor Scott Wiener said.

Wiener knows a lot of merchants will pass the wage increases on to their customers, but not bookstores.

“I can’t increase the prices of my products because books, unlike many other things, have a price printed on them,”

Wiener says it’s the will of the voters. Seventy-seven percent of them voted for this latest wage hike.

“Borderlands Books is an phenomenal bookstore, I was just in it yesterday,” Wiener said. “I hope they don’t close. It’s an amazing resource.”

But Alan Beatts said he can’t see a way to avoid it.

Mr. Wiener should have thought of that before, unless they repeal the increase in the minimum wage, Borderlands Books will have to close. The voters voted for the increase. Now, they will have to deal with the consequences.

Business owners don't really have money bins.

Business owners don’t really have money bins.

 

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One Response to “Money Doesn’t Grow on Trees”

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