Closure of beloved California bookstore highlights struggles of small businesses in expensive state

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A new report highlighted how time-honored small businesses may no longer thrive in modern California as they once did.

California is well known for being one of the country's most expensive states, whether for small businesses or residents, especially after the coronavirus pandemic. A Los Angeles Times story Monday discussed the struggles of small business owner Karen Kropp and her Book Rack bookstore as it prepares to close.

"After 40 years — the last half under Kropp’s ownership — the beloved used-book store tucked between a hot pot restaurant and a chiropractor’s office in Arcadia is closing this week," reporter Marisa Gerber wrote. "Slowed down by the consumer shift to online shopping and further decimated by cratering sales during the pandemic, the shop held on by a thread in the months since Kropp cashed out her life insurance policy to keep it afloat."

Gerber recalled how Kropp would once say the "miracle is coming," and that "when you’re in a bookstore, you have to be a dreamer."

A glowing 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)

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"But the miracle never came, and Kropp, who turns 79 later this year, knew that even if she couldn’t really afford to, it was time to retire," the LA Times report stated. "She plans to live off her monthly Social Security check — around $1,200 after insurance premiums are deducted — and can’t afford to stay in Southern California. Instead, she will move in with her younger sister in Albuquerque once she finishes clearing out the shop."

The report added, "Kropp’s situation mirrors those of many aging small-business owners who, unless they have a relative eager to take over, are faced with complex questions about their legacy and finances."

The LA Times noted one estimate calculated with a tool from University of Massachusetts Boston that "Someone in Kropp’s situation — a single renter living in L.A. County — needs $2,915 a month to cover their basic necessities."

Karen Kropp, owner of The Book Rack bookshop in Arcadia, works in the bookshop in Los Angeles County, the United States, on Oct. 13, 2020. ((Photo by Zeng Hui/Xinhua via Getty) (Xinhua/Xinhua via Getty Images))

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Nari Rhee, director of the Retirement Security Program at the UC Berkeley Labor Center, commented that such an amount is "basically twice the average Social Security benefit in California" and that many elderly Californians have fallen into poverty and homelessness.

Back in the 2000s, when Kropp bought the bookstore after having worked 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 shutdowns, sales dropped to almost zero. Bills still came due, as did the shop’s rent and the fee for a storage unit where she kept overflow books, which together cost about $2,000 a month," Gerber wrote. "Sales eventually crept back up but never fully recovered; now, she said, it sometimes takes two days before sales hit $200."

Kropp’s friend Peter Tran, who volunteered on occasion at the bookstore, lamented its coming closure as "The end of the chapter."

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In many high-cost cities in California, a $150,000 annual salary is stretched financially thin and qualifies as a "lower middle class" income, according to a recent analysis from GOBankingRates. 

But even for businesses that have previously thrived in the state, restaurants and event venues have complained of the state's regulations hindering their ability to do business.

The LA Times has addressed Californian's struggles with rent and state policies before, such as Krystle Meyer, a 40-year-old attorney who moved to Florida after decades in California, having been "driven out, she said, by financial pressures, homelessness and a deep frustration with California’s COVID-19 restrictions."

"My salary increases were not outpacing my rental increases," she told the LA Times. "I was losing money every year."

After an encounter with a machete-wielding homeless man drove her from one 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.