In a bid to ensure that their employees have a greater investment in the place where they work, Porter Square Books owners Dina Mardell and David Sandberg are selling half their stake in the Cambridge, Mass., bookstore to their senior staff members.
The ten-year financing agreement is intended to pave the way for nine veteran employees to buy the bookstore when Mardell and Sandberg decide to retire. “It’s amazing,” said marketing director Josh Cook, who has been with the bookstore for 13 years and is a member of the group buying in. Before this, Cook added, “I didn’t even have a retirement plan.”
Through the arrangement, the owners have loaned the group the money to buy half the store. With support from the profits of their ownership stake, the employees will contribute to an escrow-like fund that pays down the loan over the next decade. By the time Sandberg and Mardell are ready to retire, which they say is not anytime soon, the staff will be in a position to complete the purchase of the store, acquiring the other half of it. Employees who leave before the term of the loan expires will also have the option to cash out their share.
Given the low wages for booksellers and the rising cost of living in the Boston area, Cook said it would be impossible for someone in his line of work to become a local bookstore owner without a plan like this in place.
The Bureau of Labor Statistics estimates that the median hourly wage in the Boston Metropolitan Area is $25.37, but it is 20% lower for retail supervisors and only $11.54 for retail salespeople.
The fact that booksellers cannot afford to buy the stores where they work has been a concern for Sandberg and Mardell since they purchased the 13-year-old bookstore from Jane Dawson, Carol Stoltz, Jane Jacobs, and Dale Szczeblowski in 2013. Szczeblowski stayed on as the store's buyer and is now part of the group of employee-owners.
Like many who have bought existing stores over the last decade, Sandberg and Mardell had no experience in bookselling when they purchased PSB. (They got the capital to fund the deal after Sandberg’s company was sold to Google.) Sandberg, who said that the store has thrived since they took it over, was skeptical about the prospect of simply putting the store on the market when he and his wife decide to sell it. He said he worried that such a move might not serve the store, its employees, or the community.
“We’re going to be in bad shape if the only people who own bookstores are the ones who have the money [to buy them],” he said.
Few bookstores have made a similar transition to employee ownership. Over a ten year period beginning in 1999, three employees of San Francisco’s Green Apple Books purchased the store from its original owner. In late 2016, bookseller Samantha Haskell purchased Blue Hill Books, in Blue Hill, Maine, in a managed transition that partly relied on support from the previous owners.
However, succession remains a problem for many independent bookstore owners amid growing concerns about wages and sustainability in the trade. “The [booksellers] can’t come up with the money, and owners want to get a fair price,” said Sandberg. “With those two boundaries I think we came up with something that will work well.”
Sandberg then added: “We don’t want to take a chance that we’re not going to find the right person [later], when the right people are here now. The people who should be owning this bookstore are the ones who are most responsible for it being what it is, and those [people] are the staff."