[hackunomatter]

I never bought this "minimum wage increase destroyed us" story when it came out. The minimum wage increased from $11.05/hr to $12.25/hr. That's an increase of $1.20/hr.

They claim this will cost them an additional $30,000/year. Let's consider that. Assume that their employees are all current minimum wage employees (otherwise they would not be affected). Given that they're open for 8 hours/day (which works out to 56 hours/week), it would mean that their additional cost would be an additional $3500/employee; so an additional cost of $30000 means they have 9 employees working all the time. Anyone who has been to Borderlands (and I have been a few times) can see that they do not have 9 employees all the time. Max I've seen are about 4. It's a bookstore, not an oil change place!

In any case: whatever floats their boat. If sponsorships help them stay afloat, so be it. But they shouldn't blame the minuscule wage increase for their woes.

[icelancer]

You are not factoring in benefits that increase as a result of the minimum wage hike, vacation time that acts as employees working on the floor even when they are not, and the fact that while the store is "open" 56 hours per week, that is certainly not the number of hours that people work there. Inventory, store cleanup, store redesign, meetings, any number of things go on before and after hours.

[hackunomatter]

Typically you get 2 weeks of vacation a year. That's 4% of the cost. Not a significant amount.

As for work outside store hours: sure, there is some. But it's not a restaurant where you have to sterilize everything in the kitchen. It's a bookstore. At most you have to sweep the floors, maybe re-shelf some misplaced books, and shelf the newcomers. It's not a tremendous amount of work that has to be done before opening or after close.

[ArchReaper]

I'm sure your armchair math is much more valid and accurate than their own projections. You should go over there and shower them with your perfect knowledge of the inner workings of their business.

[hackunomatter]

That is assuming they're telling the truth. Won't be the first time a business blames "overpaid labor" for its woes.

[icelancer]

>Typically you get 2 weeks of vacation a year

Even for those who work 10 years for a company, like Borderlands has?

I also don't think you've run retail operations at any sort of scale, given your comments.

[tehwebguy]

Yeah there are definitely off hours when employees still need to work. But I would guess that hourly employees earning minimum wage are almost never given vacation or sick time.

[icelancer]

>But I would guess that hourly employees earning minimum wage are almost never given vacation or sick time.

Why? Just because they make ~$12/hr? I have employees making $15/hr (lowest we pay) who have 2-4 weeks of PTO plus flex days, and I don't consider myself exceptionally generous.

[tehwebguy]

> Why? Just because they make ~$12/hr?

Yes, if the employer is paying the minimum wage my guess is they are also paying for the minimum number of hours.

[splonk]

That's not their claim. Their claim is that they would have lost $30k/year after the last year of known minimum wage increases, which is $15/hr in 2018. (Prop J also requires further annual increases indexed to inflation afterwards.)

From the blog post: "by way of example, once the final wage increase rolled out in 2018, we would have been losing around $30,000 per year"

[snarf21]

Or they could just impose a 10% price hike on all of their products and services to cover the cost. The thing that becomes clear is that greatly raising the minimum wage mostly affects poor people and the lower middle class. It reduces their buying power. It also greatly devalues the $15/hr woman who went to trade school to be an EMT for several years.

EITC is a much better way to redistribute this wealth and it puts money in the people's pockets who need it most.

[exolymph]

> Books have the prices printed on them, and we can't raise those prices, and we couldn't lower our expenses, so . . . math.

From the post.

[snarf21]

That was meant to be sarcastic because essentially that is what they did. The "sponsorships" are more like a VIP membership with lots of extra services. These services have a high margin (unlike books where they compete with Amazon) and now they are more profitable.

[falcolas]

I always have to raise a questioning eyebrow when "we couldn't lower our expenses" comes about.

And they couldn't sell anything in addition to books? Or change their selection to reduce their overhead? Or buy/sell used books?

I don't know, I'm not them. But "we can't raise those prices, and we couldn't lower our expenses" always sounds like a bit of a copout.

[sparky_z]

> And they couldn't sell anything in addition to books?

They do that. In the bookselling business, these are called "sidelines". Borderlands has several, including postcards, greeting cards, small gifts, journals, local art, etc. They've tried many others as well that haven't been profitable for whatever reason (which they then have to eat the cost of.) New sidelines are a gamble for that reason.

> Or change their selection to reduce their overhead?

This is an oversimplification, but selection doesn't involve overhead in the usual sense because unsold books can be returned to the publisher. Anyway, their focus on sci-fi/fantasy and mystery books is a large part of what makes them special and beloved, rather than just another generalist bookstore.

> Or buy/sell used books?

They do that.

> I don't know, I'm not them. But "we can't raise those prices, and we couldn't lower our expenses" always sounds like a bit of a copout.

I've been to several of their sponsor meetings and spoken with the owner on a few occasions. Alan is very open and transparent about the bookstore's finances. If I recall correctly, because of the way publishers eat of the cost of unsold books, the store's expenses are dominated by labor and rent in that order (with utilities and credit card processing fees a distant 3rd and 4th). Everything else is basically rounding errors in the store budget. It's like trying to cut the Federal Budget without touching healthcare entitlements or defense - there's no way to make a meaningful dent. See also: Amdahl's Law.

When labor makes up about half of your costs, changes to the minimum wage affect you disproportionately compared to many other kinds of business.

[rhizome]

But "we can't raise those prices, and we couldn't lower our expenses" always sounds like a bit of a copout.

Is it, though? Isn't it what kills freemium websites?

[gboudrias]

Doesn't this seem like a major problem with the business model? Of course you're going to have flexibility problems if you don't decide your own prices...

[monocasa]

Do you have any studies that back up your claim? Most actual peer reviewed work I've seen on the subject suggests that

A) Minimum wage increases helps everyone overall by increasing the wage floor.

B) Increases in minimum wage are correlated with greater disposable income, even when put into context with inflation and goods prices increases (basically price of goods may go up a little, but labor wasn't a large portion of their cost to begin with).

[snarf21]

Not saying your wrong but if labor isn't a large portion of most goods then why are all the jobs in China or being automated?

Here are some articles after a brief search: [https://www.forbes.com/sites/timworstall/2015/05/25/warren-b...] [http://www.ncpa.org/sub/dpd/index.php?Article_ID=25936] [https://www.bostonglobe.com/opinion/editorials/2014/04/02/mi...] - a little either or but EITC does more to amplify small increases to minimum wage than the opposite.

I do think the minimum wage should be increased but by a more reasonable amount and then track inflation every five years or something. I just think EITC is a much more targeted tool. Additionally, raising minimum wage doesn't help if most of the jobs are automated away but EITC still helps.

[lsiebert]

Borderlands competes with Amazon, so a 10% price hike means they are much less competitive, plus books have prices on their covers from the publisher.

You make several statements I can take issue with, but the most interesting is to imply that if someone else makes more money, other people are devalued.

I think that's an interesting argument in a world where executive compensation has grown continually, and workers income has decreased, while GDP has continued to shrink. http://www.epi.org/publication/ceo-pay-continues-to-rise/

http://www.tradingeconomics.com/united-states/gdp-growth-ann... (click max, then trend under the bar graph button)

I urge you to look at the non partisan Congressional Budget Office's discussion of a federal minimum wage hike. https://www.cbo.gov/publication/44995

[caryhartline]

So you're saying that employers should introduce a price hike that they don't need to make so that it can prove your theory that it devalues buying power?

[snarf21]

Not sure where you got that. There are two conflated issues. One, if they are not profitable and can't cut costs, then they need to raise prices or go out of business. This is essentially what they did. They offered "sponsorships" which are more like VIP memberships and people paid money for things that used to be free or not exist.

Separately, there is a separate question of the (many) consequences or raising the minimum wage. A lot of smart people think that EITC and other programs are a better way to redistribute wealth. I happen to agree. If a small business has to raise prices, that doesn't generally affect the upper middle class and wealthy. They don't tend to shop at Walmart.