Progressive Business Standards
Scale obligations with a company's capacity and market power
- Difficulty
- Advanced
- Time to result
- ~months to results
- Steps
- 4
- Confidence
- 92%
Nick Hanauer proposes applying labour standards progressively rather than imposing an identical burden on every company. Large firms would face the highest minimum wage and the strictest compliance expectations, medium-sized firms somewhat less, and small businesses a more flexible regime while remaining subject to baseline protections. The mechanism tries to preserve worker dignity without giving dominant firms another advantage over local operators with thin margins and little administrative capacity. A workable version needs objective size bands, anti-avoidance rules, and outcome monitoring. The aim is not to exempt small businesses from all responsibility; it is to align the intensity of an obligation with the firm's capacity and power while protecting people in every tier.
Origin
Extracted from The Diary of a CEO
Core principles
- 01A uniform rule can impose unequal burdens on differently sized firms
- 02Larger firms can carry stricter standards than small proprietors
- 03Basic protections still matter at every level
How to run it
- 1
Set the baseline
Define the minimum protection that applies to every worker or customer regardless of company size.
Watch out Flexibility must not erase the baseline.
- 2
Create capacity bands
Group firms using transparent measures such as headcount, revenue, or market power.
Pro tip Use more than one measure if a single threshold is easy to game.
- 3
Scale the obligation
Raise wage, reporting, or compliance requirements as business capacity increases.
Watch out Avoid abrupt cliffs that punish a firm for crossing one threshold.
- 4
Measure side effects
Track worker outcomes, hiring, closures, prices, and movement between size bands, then revise the design.
Pro tip Treat the policy as an experiment rather than a finished answer.
In the wild
During the discussion of a loss-making local pub competing with Starbucks, Hanauer suggests that the biggest companies could pay the highest minimum wage, medium-sized firms slightly less, and small businesses less again.
→ The proposal aims to preserve a wage floor while recognising unequal business capacity.
Common mistakes
Turning flexibility into exemption
A progressive rule still needs a defensible floor for workers and customers.
Using one gameable threshold
A sharp headcount or revenue cutoff can encourage firms to split or suppress growth to stay in a lighter tier.
Is it for you?
Best for
It is best for policymakers designing wage, labour, or compliance standards across firms of very different sizes.
Not ideal for
It is not ideal where company size is a poor proxy for capacity or firms can easily manipulate their classification.
From the transcript
“The biggest companies have to pay the highest minimum wage.”
“For a small business, you have a lot more flexibility.”
From the episode
Death of the Middle Class: Billionaire vs Entrepreneur DEBATE - Daniel Priestley v Nick Hanauer