A new report highlighted how traditional small businesses may no longer thrive in modern California as they once did.
California is well known for being one of the most expensive states in the country, whether for small businesses or residents, especially after the coronavirus pandemic. A Los Angeles Times article on Monday looked at the struggles of small business owner Karen Kropp and her bookstore Book Rack as she prepares to close.
“After 40 years, the last half under Kropp ownership, the beloved used bookstore nestled between a stew restaurant and a chiropractor's office in Arcadia will close this week,” wrote journalist Marisa Gerber. “Slowed by consumers' shift to online shopping and further decimated by falling sales during the pandemic, the store has been hanging on by a thread in the months since Kropp cashed in on its life insurance policy to keep it afloat”.
Gerber recalled how Kropp once said that “the miracle is coming” and that “when you're in a bookstore, you have to be a dreamer.”
A bright sky provides a colorful backdrop to the downtown Los Angeles skyline as seen from Boyle Heights on Tuesday, March 15, 2022 in Boyle Heights, CA. (Myung J. Chun/Los Angeles Times via Getty Images)
DENNY'S SHUTTERS ONLY LOCATION IN OAKLAND AFTER OVER 54 YEARS DUE TO HIGH CRIME
“But the miracle never came, and Kropp, who will turn 79 later this year, knew that even if he couldn't really afford it, it was time to retire,” the LA Times report stated. “She plans to live off her monthly Social Security check (about $1,200 after deducting insurance premiums) and can't afford to stay in Southern California. Instead, she will move in with her younger sister in Albuquerque once she finish cleaning the store.”
The report adds: “Kropp's situation reflects that of many aging small business owners who, unless they have a relative eager to take over, face complex questions about their legacy and finances.”
The LA Times pointed to an estimate calculated with a tool from the University of Massachusetts Boston that “Someone in Kropp's situation, a single renter living in Los Angeles County, needs $2,915 a month to cover basic needs.”
Karen Kropp, owner of The Book Rack bookstore in Arcadia, works at the bookstore in Los Angeles County, the United States, on October 13, 2020. ((Photo by Zeng Hui/Xinhua via Getty) (Xinhua/Xinhua via Getty Images))
COMPANY OWNER SAYS HE'S “DONE” WITH SAN FRANCISCO, CLAIMS GOVERNMENT CARE MORE ABOUT INJECTION SITES
Nari Rhee, director of the Retirement Security Program at the UC Berkeley Labor Center, said that amount is “basically double the average Social Security benefit in California” and that many elderly Californians have fallen into poverty and homelessness.
In the 2000s, when Kropp bought the bookstore after working there, the business often made more than $10,000, but the rise of Amazon and the pandemic in the 2020s changed that considerably.
“Then, during the closures, sales fell to almost zero. Invoices were still due, as was rent for the store and the fee for a storage unit where he kept excess books, which together cost about $2,000 a month “Gerber wrote. “Sales eventually picked up again, but never fully recovered; now, she said, it sometimes takes two days before sales reach $200.”
Kropp's friend Peter Tran, who sometimes volunteered at the bookstore, lamented its upcoming closure as “the end of the chapter.”
CLICK HERE TO GET THE FOX NEWS APP
In many high-cost cities in California, an annual salary of $150,000 is financially insufficient and qualifies as a “lower middle class” income, according to a recent GOBankingRates analysis.
But even for businesses that had previously thrived in the state, restaurants and event venues have complained that state regulations hamper their ability to do business.
The LA Times has covered Californians' struggles with rent and state policies before, including Krystle Meyer, a 40-year-old lawyer who moved to Florida after decades in California, having been “driven out, she said, by financial pressures, homelessness and deep frustration with California's COVID-19 restrictions.”
“My pay increases didn't exceed my rent increases,” he told the LA Times. “I was losing money every year.”
After an encounter with a machete-wielding homeless man drove her out of an area of California, it was the state's reaction to the COVID-19 pandemic that ultimately inspired her to move to Florida.
Fox News' Kristen Altus contributed to this report.
