Bookstore Owner Describes How San Francisco’s Minimum Wage Increase Killed His Small Business

What happens when the minimum wage is raised to double the current federal level? San Francisco is providing a perfect example–and the results are not all that surprising.

Alan Beets, founder of independent bookstore Borderland’s Books, is closing his doors because the city raised the minimum wage to $15.

The bookstore, which employs five people, has weathered challenges such as bigger bookstores and online shopping, but the minimum wage hike proved too much to overcome.

“It’s not that I can’t afford to pay higher than minimum wage, but I can’t afford to pay minimum wage that gets that high,” Beets said.

Raising the minimum wage is a challenge for all small businesses, but the increased cost for owners is especially troublesome for bookstores. Beets said that while other businesses mark up their prices, shifting the cost to consumers, his product, books, has a price labeled on it so he cannot do the same.

“The long-term costs just end up getting too high,” Beets said. “About two years from now, I will be running in the red. It will get worse from there.”

The Minimum Wage and Magical Thinking

If all other factors remain equal, the higher the price of a good, the less people will demand it. That’s the law of demand, a fundamental idea in economics. And yet there is no shortage of politicians, pundits, policy wonks, and members of the public who insist that raising the price of labor will not have the effect of lessening the demand for workers. In his 2014 State of the Union Address, for example, President Barack Obama called on Congress to raise the national minimum wage from $7.25 to $10.10 an hour. He argued that increasing the minimum wage would “grow the economy for everyone” by giving “businesses customers with more spending money.”