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Saul Kaplan: Raise The Minimum Wage: It’s Innovation Policy

Thursday, March 12, 2015

 

Raising the minimum wage across the U.S. may be our best innovation policy. You wouldn’t know it from either our current innovation policy or the partisan catfight, cable news talking heads, and tired political arguments about minimum wage. A higher minimum wage is a good thing. It puts more pressure on companies to innovate to increase the value of their products, services, and business models.

I can’t believe I’m saying this! I have never thought the government should set wages. I have always believed that the market should determine wage levels. But the market is cruel and getting crueler. Far too many people are left with either no job or a job that pays a sub-living wage. Most low wage jobs are not ladders to better paying jobs but traps, ensnaring too many people in a vicious cycle of poverty. Maybe I’m getting old, soft or both but my views on minimum wage are changing. I have zero interest in the empty political arguments from either side of the aisle. I’m thinking about it from the perspective of my normal mantra that our economic future has to be about entrepreneurship and innovation. It’s the only winning strategy. Raising the minimum wage should be cast as an innovation policy.

Government Isn't Helping

I give government, both federal and state, poor grades in the innovation policy department. Neither political party has a coherent and actionable innovation policy as the North Star we need to move together toward a more innovative and competitive America. What government leaders offer as innovation policy is really better described as invention policy. The current innovation narrative would have us believe that if we keep inventing more technology eventually we will solve all of our social challenges and lots of great high wage jobs will be created along the way. We already have more technology than we humans could ever absorb or use and our economy isn’t producing good high wage jobs. I love invention and hope we continue to be great at it but innovation is about delivering value and solving the big social challenges we face. Innovation is about more than technology.

We need an innovation conversation more about how people fit into new and emerging models for delivering value. We need a more inclusive innovation conversation that leverages our most important asset, our people. We need to shift the balance from the use of technology to do what we already do today to how people and technology together can enable entirely new ways to create and deliver value and to solve our social challenges. If we create the conditions for more organizations to innovate they will create more good jobs. Increasing the minimum wage will put pressure on more organizations to innovate and it will help more people survive the transition we all must face head on.

Create and Deliver More Value

I no longer buy the argument that we shouldn’t increase the minimum wage because companies will be forced to reduce jobs, increase their use of technology to replace jobs, offshore more jobs, or to go out of business. All of these things are happening already and will continue to happen regardless of the minimum wage level. I also don’t buy the argument suggesting that companies can just increase their prices or will have to live with lower profit margins and absorb higher wage costs. The only way to sustainably increase prices and to absorb higher wages is to create and deliver more value. We need more companies to get better at innovation in order to create more good jobs, not just entry-level jobs. If increasing the minimum wage forces more companies to innovate sooner that’s a good thing.

Much of the push back on our current innovation policy is the belief that government isn’t good at and shouldn’t be in the business of picking the winners. Instead of innovation policies and programs that try to pick which industries and companies will create the most high wage jobs why not pick our most important asset, our citizens. Not just some of our citizens, all of our citizens. We should invest in education and life long learning and set minimum living wage requirements to catalyze innovation. Skill levels will increase and more companies will innovate. Both will become more relevant to a rapidly changing economy resulting in a more competitive America. An America where everyone can participate in an innovation economy designed for all of us not just the fortunate few.

We are wasting time with partisan bickering and gridlock while our national competitive position is eroding. Citizens are paying the price, and no citizens are paying a steeper price than the growing population of people locked in a downward cycle of poverty. Our public innovation policy must include strategies for accelerating innovation and doing it in an inclusive way that brings all of our citizens along for the ride. I still can’t believe I’m saying this, but raise the minimum wage!

Saul Kaplan is the Founder and Chief Catalyst of the Business Innovation Factory (BIF). Saul shares innovation musings on his blog at It’s Saul Connected and on Twitter at @skap5.

 

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