The innovation economy has technology firms vying to be the go-to app for sushi deliveries and dry-cleaning pickups. It has produced breakthrough drugs that cost a quarter-of-a-million dollars annually and opportunities for homeowners to rent out their downtown condos to vacationers.
But can technology lift low-wage and middle-income workers and narrow the income equality gap?
The Massachusetts Institute of Technology’s Sloan School of Management on Tuesday awarded $1 million to companies that are trying to do just that, in an effort to highlight partnerships between man and machine and drive more innovation to under-served communities.
The four winners of the school’s first Inclusive Innovation Competition were announced at an event Tuesday night as part of HUBweek, Boston’s weeklong arts, science, and technology festival. They are: 99Degrees Custom, an apparel manufacturer in Lawrence; Iora Health, a Boston-based health care company; Year Up, a skills training nonprofit in Boston; and Laboratoria, an organization that teaches women to code in South and Central America.
Each winner will receive $125,000. Twenty other finalists received $25,000 each.
“Technology is creating enormous wealth and curing diseases,” said Erik Brynjolfsson, director of MIT’s Initiative on the Digital Economy who helped launch the competition. “But a lot of people aren’t sharing in that bounty. It’s been easier to think, ‘how do I take an existing task and automate it?’ We are trying to change the conversation.”
Brynjolfsson, who co-authored “The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies,” has been bullish about the potential of technological advancements. But he has warned that in a field that values highly-skilled workers, those who had jobs with clerical and rote duties are losing out.
Economists suspect technology is partly to blame for the long stagnation of middle-class wages. While median household income jumped 5 percent in 2015, or nearly $3,000, from 2014, the Census Bureau recently reported, when adjusted for inflation it still lags behind levels in the late 1990s.
Iora Health chief executive Rushika Fernandopulle said improving technology can help create jobs for workers who have just high school diplomas. Iora manages primary care services by deploying technology to help patients with conditions such as diabetes and heart disease. It also provides health coaches who make sure patients are doing regular blood pressure check-ups, following their diets, and exercising. These coaches don’t have doctoral degrees but require strong communication skills, Fernandopulle said.
Iora employs about 250 coaches with starting salaries of between $35,000 to $45,000 annually, he said.
“We didn’t start the company to help low- and middle-income people. We couldn’t do it without the technology,” Fernandopulle said. “When you’re using people with less education, you need to guide them more.”
In Lawrence, 99Degrees Custom uses advanced manufacturing equipment to automate many of the tasks on the factory floor. The workers who once performed those tasks are now trained to operate and oversee the machines, said founder Brenna Schneider.
“You hear a lot of fear about machines replacing our jobs and excitement about robots,” Schneider said. “But I see there is an incredible sweet spot between the machine and human side.”
That collaboration can lower the cost of making clothes in the United States and could bring manufacturers who have relied on overseas labor and factories back to this country, she said.
Year Up is a 16-year-old nonprofit that works with community colleges to provide low-income adults training for the skills that companies desire. The fourth winner, Laboratoria, helps young women from low-income backgrounds work in the digital sector by teaching them coding.
MIT, which is a founding member of HUBweek, along with The Boston Globe, received financial backing for the prizes from several nonprofits, including Chicago-based Joyce Foundation and the Rockefeller Foundation, and from Google founder Eric Schmidt and his wife, Wendy.
One competition is unlikely to drive companies to change their focus and build technologies that help workers at the lower end of the income ladder, said Ellen Alberding, president of the Joyce Foundation.
But it could get more nonprofits and private investors involved and thinking about how to ensure that the innovation economy works for all, she said.
“We have a sense of the country, with winner-take-all economy, that there has to be something that pulls the haves and have-nots together,” Alberding said.