Week in review: dying for a living wage

Andy Matthews

Every week, NPRI President Andy Matthews writes a column for NPRI's week-in-review email. If you are not getting our emails, which contain our latest commentaries and news stories, you can sign up here to receive them.

Last August, I had some fun in this space responding to a recently released video of actress/singer Kristen Bell, who had parodied the Mary Poppins tune “A Spoonful of Sugar” in calling for a three-dollar increase in the federal minimum wage.

Her video was indeed humorous (if economically incoherent), and I’ll admit to taking a lot of enjoyment from writing my rebuttal column. But you know what they say — it’s all fun and games until someone loses a job.

Or, as in a recent example, an entire business.

The Daily Signal reports on Borderlands Books, a San Francisco bookstore that announced it will shut its doors next month “despite having its ‘best year’ in 2014.” How could a business coming off a banner year suddenly find itself closing up shop? “According to the bookstore,” writes the Signal’s Kate Scanlon, “it’s because of San Francisco’s upcoming minimum wage hike.”

Last year, San Francisco voters approved raising the city’s minimum wage to $15 an hour by 2018, a wage Borderlands can’t afford to pay. …

… [Store owner Alan] Beatts writes that a $15 wage would result in a 39 percent increase in wages — an expense he would have to make up elsewhere.

But he can’t. Unlike other businesses that can raise the prices of their goods and services in the face of a higher wage, bookstores have to grapple with the fact that books have a fixed price.

One is inclined, of course, to feel sympathy for Mr. Beatts over his store’s pending death — that is, until one reads this delicious nugget from the story, quoting a Borderlands-issued statement: “Although all of us at Borderlands support the concept of a living wage in [principle] and we believe that it’s possible that the new law will be good for San Francisco — Borderlands Books as it exists is not a financially viable business if subject to that minimum wage. Consequently we will be closing our doors no later than March 31.”      

I know schadenfreude can be a bit off-putting, but come on. Here we’ve got a proponent of a minimum-wage increase (or, as progressives have taken to calling it, a “living wage”) seeing his own beloved idea come back to bite him, and hard. And in San Francisco, no less. OK, suddenly this is back to being fun again.

I have to admit to feeling at least a certain level of admiration for Mr. Beatts. After all, he’s doggedly sticking to his principles, misguided as they may be, even as those principles hurt him personally when put into action. It’s certainly a welcome departure from the popular progressive two-step of waging rhetorical class warfare while pushing the bounds of the ethical in order to amass enormous personal wealth (I’m looking at you, Hillary Clinton).

But the problem is, it’s not just the noble Mr. Beatts who will be harmed by San Francisco’s new policy. When Borderlands closes, the people who work there will lose their jobs, and those workers’ families will suffer as well. And that’s to say nothing of the unknown number of other businesses that are similarly situated. (The latest development in this story is that Borderlands may be able to survive at least a bit longer thanks to sponsorships and donations. That seems unlikely to last — and even if it does, it’s hardly a business model that can be replicated easily by many other companies.)

As is the case with so many progressive policy ideas, it is those they are designed to help who will end up hurting the most. And Scanlon misses something when she distinguishes bookstores from other businesses that, in her words, “can raise the prices of their goods and services in the face of a higher wage.” The implication is that those businesses can simply do so without consequences. But of course, assuming those businesses can indeed find a way to raise prices without incurring some harm to their bottom line (a highly dubious assumption in its own right), those higher prices will have a direct and negative impact on the customers that pay them. Anywhere you look, someone’s losing.

There are countless examples of government busybodies paving roads with seemingly good intentions, only to end up making life hell for those who are forced to live under the resulting rules. Yet no example serves to juxtapose and illuminate the competing philosophies of governance as well as the debate over minimum-wage laws. And none better clarifies the tragic human toll that results when the state unduly interferes in the marketplace.

Hollywood socialites like Kristen Bell may never understand that truth — but Mr. Beatts’ soon-to-be former employees certainly will.

Thanks for reading, and I’ll see you next time.

Andy Matthews
NPRI President

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