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).

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

Also: If you shoot someone, you can't defend yourself against murder by saying "his death was inevitable anyways".

Perhaps we differ in our understanding of the meaning of "marginal business"? Do you anticipate that a book store operating at the margins of profitability will weather all price shocks, legislated or otherwise, indefinitely? I do not. I would consider a marginal, struggling business's demise to be inevitable unless it is able to recover and become a thriving enterprise.

A particular price shock may be the last one the marginal business is able to weather, but it's more like the last wave in a long storm drowning a business, not a bullet to the head. You can blame that last wave, but the truth is that at some point, you need to be able to float.

Regarding the impossibility of predicting how long this business might continue with no meaningful profit margin: I would argue that Poisson distributions are pretty well understood at this point.

This is not necessarily true. A more accurate statement would be: If a business is likely to repay an investor at a reasonable market rate (discounted for risk), it should be able to secure a loan or investment. These are not necessarily the same thing, especially in a business where "success" may be defined by the owners as merely holding a steady state. Borderlands is a labor of love for the owner, but we cannot expect investors to feel likewise.

You seem to have a very "industrial" view of business. It's my anecdotal observation that many sole-proprietorship lifestyle businesses are run with less-than-perfectly-rational economic motives. Borderlands is clearly like this. While this does not optimize for macro statistics like GDP, it does seem to optimize for the happiness of the people involved, which is why I think it's a shame that it's being arbitrarily forced under. An 18% increase in total expenses is not just a wave, but a tsunami.

Bike shops sort of have that limitation, the big vendors pick the prices, but they're like 30% over wholesale and so the bike shops get 30% for assembling the bike and selling it. I can't imagine that book stores are prevented from selling books at a higher price.

Why not. Inflation doesn't increase on product evenly. If book sales prices do not inflate, but property and fuel costs do expenses increase but profits do not.

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.

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.

Source: the article.

Note: The raise to $11.05 is a 2.9% increase, and from $10.74 to $12.25 is a 14.1% increase. The 3% won't kill them right away, but the 14% would hurt quite a bit more.

"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."

Which isn't a livable wage in SF, right? At some point businesses that can't survive cost inflation, either due to worker costs, government regulation, or energy cost must give up their space for those that can.

Minimum wage went up by $0.31 on January 1. That's a 3% increase; not the 39% the post is whining about.

It will go up to $12.25 on May 31.

And to $15 in 2018; which is a significant jump, I admit. But long overdue.

And using derogatory terms like "whining" towards people trying to run real business and explaining their real-life challenges in factual manner only betrays your utter unwillingness to consider the subject seriously. No wonder you're using a throwaway account.

And, the unfortunate reality is that if the community thought the bookstore was valuable, then they wouldn't be closing. Which makes me sad, I love bookstores.

I should probably go visit one of my local ones today.

Alternately, put out a physical tip jar for showroomers.

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.

ps -- some of that serendipity is available online too; see eg the big ideas -- authors talking some aspect of their novels -- on John Scalzi's site. Of the fiction books I've read in the last 3 years, probably 80% of them have come from reading these posts. http://whatever.scalzi.com/category/big-idea/

While I buy math books in paper, for fiction I only buy ebooks. The backlight for reading in a shared bed without a lamp on is a killer feature for me and probably many others.

I like the "treat it as a cultural institution and charge admission" solution, if that's what it takes to avoid closing. A few dollars would totally be worth it for an hour-long leisurely browse.

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

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

I'm sure there is. Having said that, the Bay Area has at least a dozen public libraries, large and small. Add in public university and community college libraries, and that number could be as high as 20. It's not inconceivable that 20 libraries could absorb a single bookstore's inventory. The inter-library loan system works well enough that those books are effectively available to the entire Bay Area community.

That's not counting all the books they'll sell to private individuals in their going-out-of-business sale, and of course the libraries will pass up buying things they already have.

If you're going to buy something in the sale anyway, it might make sense to contribute that money to a common fund so libraries can buy those books and make them available to the community. Win-win.

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).

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.

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.

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.

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.