[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]

THE SHARING ECONOMY: CREATING
OPPORTUNITIES FOR INNOVATION AND FLEXIBILITY

=======================================================================

HEARING

BEFORE THE

COMMITTEE ON EDUCATION
AND THE WORKFORCE
U.S. HOUSE OF REPRESENTATIVES

ONE HUNDRED FIFTEENTH CONGRESS

FIRST SESSION

__________

HEARING HELD IN WASHINGTON, DC, SEPTEMBER 6, 2017

__________

Serial No. 115-26

__________

Printed for the use of the Committee on Education and the Workforce

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COMMITTEE ON EDUCATION AND THE WORKFORCE

VIRGINIA FOXX, North Carolina, Chairwoman

Joe Wilson, South Carolina Robert C. ``Bobby'' Scott,
Duncan Hunter, California Virginia
David P. Roe, Tennessee Ranking Member
Glenn ``GT'' Thompson, Pennsylvania Susan A. Davis, California
Tim Walberg, Michigan Raul M. Grijalva, Arizona
Brett Guthrie, Kentucky Joe Courtney, Connecticut
Todd Rokita, Indiana Marcia L. Fudge, Ohio
Lou Barletta, Pennsylvania Jared Polis, Colorado
Luke Messer, Indiana Gregorio Kilili Camacho Sablan,
Bradley Byrne, Alabama Northern Mariana Islands
David Brat, Virginia Frederica S. Wilson, Florida
Glenn Grothman, Wisconsin Suzanne Bonamici, Oregon
Elise Stefanik, New York Mark Takano, California
Rick W. Allen, Georgia Alma S. Adams, North Carolina
Jason Lewis, Minnesota Mark DeSaulnier, California
Francis Rooney, Florida Donald Norcross, New Jersey
Paul Mitchell, Michigan Lisa Blunt Rochester, Delaware
Tom Garrett, Jr., Virginia Raja Krishnamoorthi, Illinois
Lloyd K. Smucker, Pennsylvania Carol Shea-Porter, New Hampshire
A. Drew Ferguson, IV, Georgia Adriano Espaillat, New York
Ron Estes, Kansas
Karen Handel, Georgia

Brandon Renz, Staff Director
Denise Forte, Minority Staff Director

---------

C O N T E N T S

----------
Page

Hearing held on September 6, 2017................................ 1

Statement of Members:
Foxx, Hon. Virginia, Chairwoman, Committee on Education and
the Workforce.............................................. 1
Prepared statement of.................................... 3
Scott, Hon. Robert C. ``Bobby'', Ranking Member, Committee on
Education and the Workforce................................ 4
Prepared statement of.................................... 6

Statement of Witnesses:
Beckerman, Mr. Michael, President and CEO, Internet
Association, Washington, DC................................ 41
Prepared statement of.................................... 43
Block, Ms. Sharon, Executive Director, Labor and Worklife
Program, Harvard Law School, Cambridge, Massachusetts...... 29
Prepared statement of.................................... 31
Johnson, Mr. Jonathan, Founder, Snapseat, LLC, Hartford,
Connecticut................................................ 24
Prepared statement of.................................... 26
Sundararajan, Mr. Aran, Leonard N. Stern School of Business,
Kaufman Management Center, New York, New York.............. 8
Prepared statement of.................................... 11

Additional Submissions:
Question submitted for the record by Sablan, Hon. Gregorio
Kilili Camacho, a Representative in Congress from the
Northern Mariana Islands................................... 78
Ms. Block's response to question submitted for the record.... 79

THE SHARING ECONOMY: CREATING.
OPPORTUNITIES FOR INNOVATION AND FLEXIBILITY

----------

Wednesday, September 6, 2017

House of Representatives,

Committee on Education and the Workforce,

Washington, D.C.

----------

The committee met, pursuant to call, at 10:04 a.m., in Room
2175, Rayburn House Office Building, Hon. Virginia Foxx
[chairwoman of the committee] presiding.
Present: Representatives Foxx, Roe, Thompson, Walberg,
Guthrie, Rokita, Byrne, Brat, Grothman, Stefanik, Allen, Lewis,
Smucker, Estes, Handel, Scott, Davis, Grijalva, Fudge, Polis,
Sablan, Wilson of Florida, Bonamici, Takano, Adams, DeSaulnier,
Norcross, Blunt Rochester, Krishnamoorthi, and Espaillat.
Staff Present: Bethany Aronhalt, Press Secretary; Courtney
Butcher, Director of Member Services and Coalitions; Michael
Comer, Press Secretary; Ed Gilroy, Director of Workforce
Policy; Rob Green, Director of Workforce Policy; Callie Harman,
Professional Staff Member; Amy Raaf Jones, Director of
Education and Human Resources Policy; Nancy Locke, Chief Clerk;
Kelley McNabb, Communications Director; Rachel Mondl,
Professional Staff Member and Counsel; James Mullen, Director
of Information Technology; Krisann Pearce, General Counsel;
Brandon Renz, Staff Director; Molly McLaughlin Salmi, Deputy
Director of Workforce Policy; Olivia Voslow, Legislative
Assistant; Joseph Wheeler, Professional Staff Member; Lauren
Williams, Professional Staff Member; Tylease Alli, Minority
Clerk/Intern and Fellow Coordinator; Kyle deCant, Minority
Labor Policy Counsel; Denise Forte, Minority Staff Director;
Christine Godinez, Minority Staff Assistant; Carolyn Hughes,
Minority Director Health Policy/Senior Labor Policy Advisor;
Eunice Ikene, Minority Labor Policy Advisor; Stephanie Lalle,
Minority Press Assistant; Kevin McDermott, Minority Senior
Labor Policy Advisor; Kiara Pesante, Minority Communications
Director; and Veronique Pluviose, Minority General Counsel.
Chairwoman Foxx. Good morning. A quorum being present, the
Committee on Education and the Workforce will come to order.
I would like to begin by welcoming our guests and
witnesses. Thank you for joining the committee today for an
important discussion relating to the future of our nation's
workforce. America has always led the world in innovation and
technology. It is the ingenuity of the American people that has
helped create the most prosperous nation in the history of the
world. That same ingenuity is what led to the rise of the
sharing economy, which is changing the way we live, work, and
connect.
The growth of the sharing economy may be relatively recent,
but the idea behind it really isn't a new concept. For quite
some time, people have exchanged goods and services or shared
their skills, time, or resources for a fee. Think about it. For
decades, people have found ways to earn extra income through
babysitting, renting property, dog walking, holding garage
sales, cleaning homes, or mowing a neighbor's lawn. What is
taking place in the sharing economy isn't much different. But
the internet has brought this type of economic activity to a
whole new level, and it has empowered people from all sorts of
backgrounds to put their entrepreneurial ideas into motion.
There is no question that this growing economic sector has
improved the American quality of life. Consumers have more
choices. People in need of transportation have more options.
Families can easily rent out their home to help pay their
mortgage. Individuals have a new way to sell their homemade
goods and crafts. The sharing economy has also helped startup
businesses get off the ground, and it has created new job
opportunities that didn't exist before. Not everyone is looking
for a 9-to-5 job. More and more people are increasingly drawn
to flexible work arrangements, and that is what attracts them
to the sharing economy. They want to be their own boss, control
their own schedule, or earn extra cash while pursuing an
education.
The sharing economy has provided thousands of hard-working
men and women the opportunity to do just that. Today, there is
an estimated 3.2 million people working in the sharing economy,
79 percent are doing so on a part-time basis.
This is an industry that has really taken off. And, as we
have seen throughout our history, innovation often occurs and
flourishes during challenging economic times, which is
remarkable and should be celebrated. It is a testament to the
strength of our economy and the resilience of the American
people.
As the sharing economy continues to grow, we need to make
sure outdated federal policies don't stand in the way. The
self-employed individuals who rely on the sharing economy for
work don't fit neatly into obsolete job categories defined in
another era. So there are important questions over how we can
modernize policies to meet the needs of the future. There are
also questions over how sharing economy workers can gain access
to affordable healthcare and prepare for a secure retirement.
Not every answer can or should come from Washington. Innovation
outside of Washington is needed to help tackle these
challenges, and I have no doubt that the same creative minds
behind the sharing economy will rise to the occasion.
Earlier this year, a bipartisan group of committee members
visited the San Francisco area to meet with leaders in the
technology industry. We saw the operations of sharing economy
companies firsthand. It is my hope that today's conversation
will build off that experience, inform our future policy
discussions, and help all of us better understand the realities
of this emerging workforce.
Before we get started, I would like to recognize and say
farewell to a member of our committee staff who has dedicated
more than 20 years of public service to the people's House,
including 16 years of service as the committee's director of
workforce policy. This is Ed Gilroy's final hearing with us. Ed
loved this job and put his all into it. It is only fitting that
his last hearing is about the future of America's workforce
because he is always forward-looking and focused on policies
that will have a positive impact on the lives of working
families, not just today but for generations to come.
Ed led our efforts to protect the rights of workers and
employers, provide moms and dads more flexibility in the
workplace, expand access to affordable healthcare for small
business employees, preserve access to affordable retirement
advice, and so much more. When we think about the success we
had with the passage of the bipartisan Pension Protection Act
in 2006 and with the Multiemployer Pension Reform Act in 2014,
we have to think of Ed. He has guided us through countless
hearings, markups, floor debates, field hearings, member
briefings, roundtable discussions, and stakeholder meetings.
And through it all, he's been a trusted adviser, dedicated
public servant, distinguished colleague, and an invaluable
member of our committee family.
People come to work on Capitol Hill because they want to
make a difference. And Ed can leave here knowing that he did.
Ed, we're deeply grateful for your many years of service to
the American people and to the House, and we wish you all the
best in the years ahead.
[Applause.]
Chairwoman Foxx. We are really grateful to you.
With that, I yield to Ranking Member Scott for his opening
remarks.
[The statement of Chairwoman Foxx follows:]

Prepared Statement of Hon. Virginia Foxx, Chairwoman, Committee on
Education and the Workforce

America has always led the world in innovation and technology. It's
the ingenuity of the American people that has helped create the most
prosperous nation in the history of the world.
That same ingenuity is what led to the rise of the sharing economy,
which is changing the way we live, work, and connect.
The growth of the sharing economy may be relatively recent. But the
idea behind it really isn't a new concept. For quite some time, people
have exchanged goods and services, or shared their skills, time, or
resources for a fee.
Think about it. For decades, people have found ways to earn extra
income through babysitting, renting property, dog walking, holding
garage sales, cleaning homes, or mowing a neighbor's lawn.
What's taking place in the sharing economy isn't much different.
But the Internet has brought this type of economic activity to a whole
new level, and it has empowered people from all sorts of backgrounds to
put their entrepreneurial ideas into motion.
There is no question that this growing economic sector has improved
the American quality of life. Consumers have more choices. People in
need of transportation have more options. Families can easily rent out
their home to help pay their mortgage. Individuals have a new way to
sell their homemade goods and crafts.
The sharing economy has also helped start-up businesses get off the
ground, and it has created new job opportunities that didn't exist
before.
Not everyone is looking for a 9-5 job. More and more people are
increasingly drawn to flexible work arrangements, and that's what
attracts them to the sharing economy. They want to be their own boss,
control their own schedule, or earn extra cash while pursuing an
education.
The sharing economy has provided thousands of hardworking men and
women the opportunity to do just that. Today, there are an estimated
3.2 million people working in the sharing economy. 79 percent are doing
so on a part-time basis.
This is an industry that has really taken off. And as we have seen
throughout our history, innovation often occurs and flourishes during
challenging economic times, which is remarkable and should be
celebrated. It's a testament to the strength of our economy and the
resilience of the American people.
As the sharing economy continues to grow, we need to make sure
outdated federal policies don't stand in the way. The self-employed
individuals who rely on the sharing economy for work don't fit neatly
into obsolete job categories defined in another era. So, there are
important questions over how we can modernize policies to meet the
needs of the future.
There are also questions over how sharing economy workers can gain
access to affordable health care and prepare for a secure retirement.
Not every answer can or should come from Washington. Innovation outside
of Washington is needed to help tackle these challenges. And I have no
doubt that the same creative minds behind the sharing economy will rise
to the occasion.
Earlier this year, a bipartisan group of committee members visited
the San Francisco area to meet with leaders in the technology industry.
We saw the operations of sharing economy companies firsthand. It's my
hope that today's conversation will build off that experience, inform
our future policy discussions, and help all of us better understand the
realities of this emerging workforce.
______

Mr. Scott. Well, thank you, Madam Chairman.
I'd like to start by echoing your comments about Ed Gilroy.
Ed has worked for several chairs and ranking members of the
committee, and throughout that time, he's been accessible and
open in discussion with Democratic staff and our members. And
because of that, the committee has been able to work very well,
and I want to express my appreciation and applaud his years of
service. My staff and I wish Ed well as he departs from the
committee.
Thank you, Ed.
I'd like to also offer my thoughts and prayers to the
people of Texas, particularly those who have lost loved ones as
well as those who remain displaced.
Madam Chair, our colleagues stand ready to work with you to
ensure that Texas has the resources it needs to recover and
rebuild. A lot of those resources will be in areas under the
jurisdiction of this committee. And so we look forward to
working with you as we decide what our response will be.
Today the committee is convening a hearing on the sharing
economy. This term encompasses the marketplace of companies
that use smartphone apps and technology platforms to connect
consumers with goods and services. The sharing economy has
revolutionized the way we live our lives. By just touching an
app on our phones, we can get a ride, we can purchase
groceries, find a plumber, and much more. In many ways, the
sharing economy serves as another example of how America's
brightest minds can create and build innovations that shape our
world.
But that's not the entire story. Today's hearing is not a
victory lap because too many workers are still struggling to
make ends meet. They have not received a raise. Their wages are
not keeping pace with productivity. They and their families are
not economically secure. The central question before us is
whether the sharing economy's employment model helps reverse
this trend or exacerbates the loss of worker protections.
When businesses categorize their workers as employees,
they're entitled to a range of statutory benefits and
protections. For example, these workers as employees will be
compensated for injuries sustained on the job under workers'
compensation. They're protected against discrimination. They
can join a union and collectively bargain with companies with
which they work..
The employee/employer relationship has been fundamental to
building and sustaining America's middle class. A few sharing
economy companies treat their workers as employees. The CEO of
one such company said that the higher costs of doing so are
offset by the company's ability to attract and retain high-
quality employees. She said consumers want to pay for the labor
they believe in.
However, most sharing economy companies do something else.
They classify and sometimes misclassify their employees as
independent contractors. As a result, these workers do not have
access to overtime pay, a minimum wage, family and medical
leave, paid sick leave, unemployment insurance, workers'
compensation, retirement benefits, health and safety
protections, and the right to unionize.
Today's hearing presents an opportunity to explore whether
it is fair, appropriate, and even legal for the sharing economy
companies to classify workers as independent contractors.
Today's hearing also challenges us to consider whether the
independent contractor paradigm that is being used in the
sharing economy and other industries reflects what the future
of work will look like in the United States. And let's be
clear, it's just not service-oriented work that's being
threatened and displaced by the sharing economy. Traditional,
steady, well-paying jobs are at risk of becoming just another
temporary gig. For example, accounting and legal services are
being advertised on a for-hire basis,placing in jeopardy the
livelihood of local CPAs and law offices. X-rays can be read
remotely, and that poses challenges to hospital radiologists.
Other employees can simply advertise just-in-time temporary
services and go from gig to gig or be placed on temporary
assignment by an agency.
The sharing economy appears to be leading us towards a
future where Americans perform temporary jobs rather than
fulfill lasting careers where they're not part of an employer/
employee relationship. If that's the case, and if the sharing
economy does reflect the future of work, we must ask whether we
want our children and grandchildren to inherit a future where
workers lack the most basic employment protections.
When it comes to the sharing economy, Congress must strike
the right balance. Our guiding principle should be who wins and
who loses. And we can support growth while still maintaining
what should be a bipartisan commitment to workers' rights to a
fair wage, safe workplace, and an ability to organize and
collectively bargain. Any suggestion that we can do only one
and not the other represents a false choice.
Finally, I want to agree with Chairwoman Foxx that the
sharing economy warrants the committee's focus. I appreciate
you convening today's hearing. But on this side, we believe
that there are other issues impacting workers that are equally
deserving of the committee's attention. For example, 2.2
million workers earn at or below the federal minimum wage of
$7.25 an hour. It's been 10 years since Congress increased the
minimum wage. We need to address the minimum wage. These
workers deserve our attention. It's estimated that 2.4 million
low-wage workers in the 10 most populous states lose $8 billion
annually because their employer paid them less than the state
or federally mandated minimum wage. These workers and other
workers are victims of wage theft, and they also deserve our
attention. An estimated 4.2 million workers would be newly
eligible for overtime pay under the rules put forward during
the past administration. However, this administration is moving
ahead to weaken those overtime eligibility rules. We must fight
to continue the overtime rule and codify it because workers
deserve that attention.
In the coming weeks, I hope that we can address these other
issues as well as the important issue of the sharing economy.
Thank you, Madam Chairman. I yield back.
[The statement of Mr. Scott follows:]

Prepared Statement of Hon. Robert C. ``Bobby'' Scott, Ranking Member,
Committee on Education and the Workforce

Madam Chair, I would like to start my echoing your comments about
Ed Gilroy. Ed has worked for several Chairs of this Committee.
Throughout that time, he has always been accessible and open to
discussion with Democratic staff and our Members. We appreciate that
and applaud his years of public service. My staff and I wish Ed well as
he departs the Hill and returns to the American Trucking Association.
I also would like to offer my thoughts and prayers to the people of
Texas, particularly those who lost loved ones as well as those who
remain displaced. Madam Chair, my Democratic colleagues and I stand
ready to work with you to ensure that Texas has the resources it needs
to recover and rebuild.
Today, the Committee is convening a hearing on the sharing economy.
This term encompasses the marketplace of companies that use smartphone
apps and technology platforms to connect consumers with goods and
services.
The sharing economy has revolutionized the way we all live our
lives. Just by touching an app on our phones, we can get a ride,
purchase groceries, find a plumber, and much more. In many ways, the
sharing economy serves as another example of how America's brightest
minds can create and build innovations that shape our world.
But that is not the entire story; and today's hearing is certainly
not a victory lap. Too many workers are struggling to make ends meet.
They have not received a raise, and their wages are not keeping pace
with productivity. They and their families are not economically secure.
The central question before us is whether the sharing economy's
employment model helps reverse that trend or exacerbates the loss of
worker protections.
When businesses categorize workers as employees, they are entitled
to a range of statutory benefits and protections. For instance, these
workers will be compensated for injuries sustained on the job; they are
protected against discrimination; and they can join a union and
collectively bargain with the companies for which they work.
The employer-employee relationship has been foundational to
building and sustaining America's middle class.
A few sharing economy companies treat their workers as employees.
The CEO of one such company said that the higher costs of doing so are
offset by the company's ability to attract and retain high quality
employees. She said, ``consumers want to pay for labor they believe
in.''
However, most sharing economy companies do something else. They
classify and potentially misclassify their employees as independent
contractors. As a result, those workers do not have access to overtime
pay, a minimum wage, family and medical leave, paid sick leave,
unemployment insurance, workers compensation, retirement benefits,
health and safety protections, and the right to unionize.
Today's hearing presents an opportunity to explore whether it is
fair, appropriate, and legal for sharing economy companies to classify
workers as independent contractors.
Today's hearing also challenges us to consider whether the
independent contractor paradigm being used in the sharing economy and
other industries reflects what the future of work will look like in the
United States. And - let's be clear - it's not simply service-oriented
work that are being threatened and displaced by the sharing economy.
Traditional, steady, well-paying jobs are at risk of becoming just
another gig.
For instance, accounting and legal services are being advertised on
a ``for hire'' basis, placing in jeopardy the livelihood of local CPAs
and law offices. X-rays can be read remotely, and that poses challenges
to hospital radiologists. Other employees can simply advertise just-in-
time, temporary services and go from gig to gig, or be place on
temporary assignment by an agency. The sharing economy appears to be
leading us toward a future where Americans perform temporary jobs
rather than fulfill lasting careers; and where they are not part of an
employer-employee relationship.
If that's the case, and if the sharing economoy does reflect the
future of work, we must ask whether we want our children and
grandchildren to inherit a future where workers lack the most basic
employment protections.
None of us wants that.
When it comes the sharing economy, Congress must strike the right
balance - and our guiding principle should be who wins and who loses.
We can support its responsible growth while still maintaining what
should be a bipartisan commitment to workers' rights to a fair wage,
safe workplaces, and their ability to organize and collectively
bargain. Any suggestion that we can only do one or the other represents
a false choice.
Finally, I want to agree with Chairwoman Foxx that the sharing
economy warrants the Committee's focus. I appreciate you convening
today's hearing. But my Democratic Committee colleagues and I believe
there are other issues impacting workers are equally deserving of our
Committee's attention.
For instance, 2.2 million workers earn wages at or below the
federal minimum wage of $7.25 per hour. It has been over ten years
since Congress increased the minimum wage.
That is unacceptable.
An estimated 2.4 million low-wage workers in the ten most populous
states lose $8 billion annually because their employer paid them less
than the state or federally mandated minimum wage.
These workers and the others who are victims of wage theft deserve
our attention.
An estimated 4.2 million workers would be newly eligible for
overtime pay under the rules put forward by the Obama Administration
last year. The Trump Administration is moving ahead with a new and
likely far weaker rule.
We must continue to fight for the Obama Administration's rule and
codify it because these workers deserve our attention.
In the weeks and months ahead, I hope these workers and others get
the attention they deserve from this Committee. I yield back my time.
______

Chairwoman Foxx. Thank you, Mr. Scott.
And I want to thank you for your comments about working
together to help the victims of the hurricanes across the
country. We certainly send our sympathies out to those people,
too, and we'll do whatever we can in this committee to assist
them.
Pursuant to committee rule 7(c), all members will be
permitted to submit written statements to be included in the
permanent hearing record.
And, without objection, the hearing record will remain open
for 14 days to allow such statements and other extraneous
material referenced during the hearing to be submitted for the
official hearing record.
I now turn to introductions of our distinguished witnesses.
Dr. Arun Sundararajan is a professor and the Robert L. &
Dale Atkins Rosen Faculty Fellow at New York University Stern
School of Business.
Mr. Johnson is the founder of SnapSeat, LLC, a photo booth
company operating in the Connecticut area.
Ms. Sharon Block is executive director of Harvard Law
School's Labor and Worklife Program.
Mr. Michael Beckerman is the president and CEO of the
Internet Association, a trade association representing leading
global internet companies, including Airbnb, Etsy, Lyft,
SideCar, and Uber.
I now ask our witnesses to raise your right hand.
[Witnesses sworn.]
Chairwoman Foxx. Let the record reflect the witnesses
answered in the affirmative.
Before I recognize each of you to provide your testimony,
let me briefly explain our lighting system. We allow five
minutes for each witness to provide testimony. When you begin,
the light in front of you will turn green. When one minute is
left, the light will turn yellow. At the five-minute mark, the
light will turn red, and you should wrap up your testimony.
Members will each have five minutes to ask questions. And I
think everybody knows we're probably going to have votes around
11:45 or 12:00. I hope very much we can get through the hearing
and be respectful to our witnesses before we have to go vote.
Dr. Sundararajan, you're recognized for five minutes.
Mr. Sundararajan. Thank you. Chairwoman Foxx --
Chairwoman Foxx. Turn on your mike.

TESTIMONY OF ARUN SUNDARARAJAN, LEONARD N. STERN SCHOOL OF
BUSINESS, KAUFMAN MANAGEMENT CENTER, NEW YORK, NEW YORK

Mr. Sundararajan. Chairwoman Foxx, Ranking Member Scott,
I'm delighted to have been invited to speak to you about the
sharing economy, innovation, flexibility, and the future of
work and education. Thank you for convening this important
hearing.
The sharing economy means different things to different
people. The label departs from our everyday use of the verb
``sharing,'' and I'm unaware of any consensus on a definition.
In my 2016 book, which I nevertheless decided to title ``The
Sharing Economy,'' I discuss why I find the term ``crowd-based
capitalism'' more precisely descriptive.
American capitalism has progressed over the last 200 years
from markets that relied on Adam Smith's invisible hand to the
visible hand of large 20th century corporations. As digital
technologies blur boundaries between institutions of differing
scale that have historically facilitated the provision of trust
and the use of intellectual capital, what emerges are new ways
of organizing economic activity that involve hybrids of markets
and organizations. This is the sharing economy.
They have five characteristics: first, exchange facilitated
by a platform which aggregates demand, matches customers with
providers, and provides some digitized form of trust; second,
high-impact capital and asset-light or shared consumption;
third, the supply of capital and labor coming from
decentralized and heterogeneous crowds of providers; fourth, a
blurring of lines between personal and professional; and,
finally, blurring lines between compensated and casual labor,
between work and leisure, between independent and dependent
work relationships.
As Chairwoman Foxx pointed out, full-time jobs evolve into
a dizzying array of non-employment work arrangements featuring
a continuum of levels of time commitment, granularity, capital
ownership, economic dependence, and entrepreneurship. Home- and
ridesharing examples are well known. But the sharing economy
spans industries as diverse as commercial real estate, retail,
food, healthcare, and energy.
Of special interest are platforms for diverse
entrepreneurial services. Some, like Upwork and Thumbtack, span
a broad range of professions. Others, like Handy, focus on
clusters like cleaning, moving, and home maintenance. Newer,
specialized professional services platforms, like Catalant for
management consulting and Gigster for high-end software
engineering, are growing very rapidly. For example, today over
20,000 highly qualified lawyers generate their income through
the legal services platform UpCounsel.
Its recent dramatic expansion not withstanding, the sharing
economy represents but a fraction of our country's
nonemployment or contingent work arrangements. Today, 20
percent of our workforce generates all its income from non-
employment work and an additional 20 percent uses non-
employment work to supplement income from a full-time job.
Also, many aspects of crowd-based capitalism predate the modern
sharing economy. YouTube, whose content is provided by a
distributed and heterogeneous crowd of creators, has more
viewers than any television network in the world. eBay was a
pioneer in digital peer-to-peer commerce in 1995 and has 25
million sellers. Over 50 percent of Amazon's estimated U.S.
sales of 125 billion are from a distributed and heterogeneous
crowd of small businesses selling through the platform. This
crowd-based transformation of retail is accelerated by
platforms like Postmates and DoorDash that are, in a sense,
digitally indexing what's in everybody's local physical world
business.
Crowd-based capitalism thus creates significant
opportunities for small business growth. My academic research
on the economic impacts indicates that, in the long run, the
sharing economy will not just contribute to economic growth but
may also reduce any economic inequality. My written testimony
has the details.
With these opportunities, however, come new challenges.
When coupled with the rise in the cognitive capabilities of AI
and robotics technologies, the sharing economy will transform
how workers organize. And today's dominant model being a salary
provided of labor and talent will be progressively less viable.
In my last minute, let me focus on four challenges. First,
the promise of lower economic inequality requires that we guide
our new entrepreneurial and freelance workforce towards having
genuine capital ownership, entrepreneurs running actual branded
businesses, however small, that perhaps use their own time and
talent but doesn't relegate them to being faceless, on-demand
labor. Favoring platforms that are committed to this vision
reflects smart capitalist government policy.
Second, an economy with millions of microbusinesses
operating through digital platforms requires a very different
regulatory approach, one that must frequently delegate
responsibility to where the data resides.
Third, absent a well-defined employer, many facets of the
social safety net need a new funding paradigm. New multi-
stakeholder partnerships, along with a fundamental reworking of
many aspects of labor law are necessary.
Finally, we must shift the focus of higher education,
catalyzing the emergence of new institutions that support mid-
career transitions for displaced workers while shaping career
paths for a more entrepreneurial workforce. Such education
cannot be mere re-skilling. It must catalyze finding a new
professional network, access to new opportunities, the ability
to relocate, imbuing workers in flux with a new identity,
rebuilding self-worth to allow transition with dignity.
Templates for these institutions are likely to emerge from
large corporations managing workforce transitions. Such
forward-looking policy about education and the workforce that
anticipates and reacts to these changes is central to the
future competitiveness and stability of the country.
Thanks again for inviting me to share.
[The statement of Mr. Sundararajan follows:]
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Chairwoman Foxx. Thank you very much.
Mr. Johnson, you're recognized for five minutes.

TESTIMONY OF JONATHAN JOHNSON, FOUNDER, SNAPSEAT, LLC,
HARTFORD, CONNECTICUT

Mr. Johnson. Thank you, Chairwoman Foxx, Ranking Member
Scott, and members of the Committee, for the opportunity to
share my story. My name is Jonathan Johnson, and I am here to
speak on behalf of individuals who have been able to start
their businesses and find success in the new economy.
My story started in October of 2013 when, in the same
month, I found out the good news that my wife was pregnant with
our first child and the less good news that I was being laid
off from my full-time job as an accountant. It took a couple
weeks for the initial shock of losing a full-time income for my
family to pass. But what I couldn't shake was seeing a photo
booth at an event just one month before. I had been fascinated
with photography since I was in high school. When I was laid
off, I had the time to research what was happening in the photo
booth industry and realized there was entirely new market of
people and events looking for photo booths. So I decided to
take a risk and start my own business called SnapSeat. I
started SnapSeat with a partner and every spare dollar we could
find. To fundraise the venture, I sold a coin collection, sold
items from around my house on eBay, and took a good part of my
personal savings.
One thing I learned from this business is that we didn't
need a big loan, a fancy business plan, or the most
sophisticated equipment to get a business going. We needed a
minimum viable product, the determination to go out and find
our first customers, and to learn along the way.
We made the investment. We took the risk. And we built a
photo booth that mostly worked. It took me three months to
discover what would lead us to our first real customers and be
responsible for 80 percent of our business in our first year.
On a friend's advice, I checked out and registered as a service
provider on Thumbtack.com.
Thumbtack is an incredible mechanism for both local
customers and local service providers to create a market.
Customers can go on Thumbtack, create a request for an array of
services from plumbers, to website designers, photographers and
more, and be contacted by local professionals with quotes for
these services. For professionals like me, we receive real
leads from real customers looking for our services. After
registering, I started receiving leads the same day. Shortly
after, I landed my first paying customer for a small birthday
party 40 minutes away. It sounds cliche, but I really did drive
both ways in a snowstorm to that first event. I was able to
successfully complete my first job, get my first positive
online review, and have some money to put into landing my next
client. In that first year, I completed 47 events. And, most
importantly, my wife gave birth to a healthy baby boy,
Jeremiah, in May of 2014.
In just three years, SnapSeat has grown from one photo
booth to five photo booths and five employees. We have served
over 600 clients in three states.
One of the best parts of establishing a business is
creating jobs. In addition, starting a project-based business
has given me the flexibility to grow my business on my schedule
and be home for my family. I truly believe that the only limit
on the amount of success for my business is how hard I'm
willing to work.
In today's rapidly changing economy, it seems that more
people are looking to make ends meet in the gig economy. I
believe our public policy needs to reflect this with laws that
help every person with an idea that is willing to risk their
time, talent, and resources to succeed.
Thank you for your time and allowing me to speak today. I
am truly honored to be part of this discussion and be able to
share my story.
[The statement of Mr. Johnson follows:]
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Chairwoman Foxx. Thank you, very much, Mr. Johnson.
Ms. Block, you're recognized for five minutes.

TESTIMONY OF SHARON BLOCK, EXECUTIVE DIRECTOR, LABOR AND
WORKLIFE PROGRAM, HARVARD LAW SCHOOL, CAMBRIDGE, MASSACHUSETTS

Ms. Block. Chairwoman Foxx, Ranking Member Scott, and
members of the committee, thank you for this opportunity to
testify today on the important subject of the sharing economy
and its impact on people who earn income from it, the
workforce, and the broader economy.
As you said, my name is Sharon Block, and I'm the executive
director of Labor and Worklife Program at Harvard Law School,
which is Harvard's center for research, teaching, and creative
problem solving related to the world of work and its
implications for society.
I would imagine that everyone in this hearing room has used
the services of an online platform at some point and most
probably use some regularly. I know that I do. We value the
ease that they bring to our lives in procuring goods and
services with just the click of a button or the touch of a
finger.
The ability to order food, call for car service, or sell
our unwanted stuff without interacting with a person, however,
can allow us to forget sometimes that there are real people
behind these platforms.
I appreciate the committee's interest in exploring the
standard of living for these workers and how our labor and
employment laws do and should apply to this sector.
One key question that the committee can address is whether
the innovation and flexibility that marks the online platform
economy is consistent with our historical structure of labor
and employment laws that we enacted to ensure a basic level of
economic security for American workers. I believe that it does.
The framers of our basic labor and employment laws drafted
statutes that did not define their scope in reference to the
particulars of the jobs that were familiar to them at the time
but rather in accordance with the timeless principle that the
norm for workers in our nation should be the ability to earn a
fair wage, be safe on the job, save for retirement, and avoid
destitution during periods of unemployment. Although there are
always new challenges arising from technological and business
innovation, I see nothing inconsistent between the principle of
decent labor standards and the dynamism that has always marked
the American economy.
The digital age of the American economy need not be any
different. Online platform companies have a choice. They can be
innovative and flexible while creating good jobs or while
destroying good jobs. While the outcomes of employee status
cases are dependent on the particular facts and circumstances,
my observation is the business models premised on the need to
provide a consistent branded service tend to require a level of
integration and control of the workers involved that is
indicative of employee status. This observation then raises the
question of whether the application of current law stifles the
innovation and impedes the flexibility that we all value in the
online platform economy.
The companies in the online platform economy are among the
most innovative in history, and I have confidence that they can
develop technological and entrepreneurial solutions to adapt to
our nation's basic labor and employment laws, such as the need
to track hours for purposes of calculating minimum wage or
overtime or to engage in the give-and-take of collective
bargaining. The proof that labor standards need not be an
impediment to innovation can be seen in the online platform
companies that are embracing employee status for their workers
and continuing to thrive.
In assessing the compatibility between the flexibility
afforded by the online platform economy and our current labor
and employment laws, I think that there are two important ideas
to keep in mind. First, flexibility is not inconsistent with
employee status, especially the flexibility about which we hear
so much from online platform workers, which is the ability to
work when and how much they want.
Second, any assessment of how much online platform workers
value flexibility must be made in the context of understanding
the lack of basic labor standard protections that come along
with that flexibility if it means giving up employee status.
The high turnover rates in the sector suggest that many workers
don't want to forego those protections for the long term.
Finally, it's critical to examine what we risk if we make
it easier to classify workers as independent contractors. Many
workers in the online platform economy are low-wage workers:
drivers, cleaners, home care workers. They have little ability
to shoulder the risks to their livelihoods and their families
that comes with the loss of the basic social safety net that we
built in this country around the idea of being an employee.
Moreover, we have to be very careful not to create an incentive
for other employers outside of the online platform economy to
downgrade the status of their employees, depriving them of
previously enjoyed protections.
I believe that the choice between the positive attributes
of the platforms and maintaining decent labor standards is a
false choice. We should all share the goal of growing the
American economy in a way that creates a better future for
everyone involved in this sector, platform owners, consumers,
and workers.
Thank you.
[The statement of Ms. Block follows:]
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Chairwoman Foxx. Thank you, Ms. Block.
Mr. Beckerman, you're recognized for five minutes.

TESTIMONY OF MICHAEL BECKERMAN, PRESIDENT & CEO, INTERNET
ASSOCIATION, WASHINGTON, D.C.

Mr. Beckerman. Thank you. Chairwoman Foxx, ranking member
Scott, members of the committee, thank you for inviting me to
testify. My name is Michael Beckerman. I'm the president of the
Internet Association, which represents the world's leading
internet platforms. Included in our membership are more than 40
of the world's most innovative companies, including sharing
platforms such as Airbnb, Doordash, Handy, HomeAway, Lyft,
Thumbtack, Turo, Uber, and Upwork.
As an advocate for these companies at the local, state, and
federal level, the Internet Association has witnessed firsthand
how the tremendous economic opportunity of a sharing economy
has been embraced by individuals and communities across our
country. In some communities, policymakers and regulators have
embraced new technology and recognized the consumer benefit
from increased competition. In these communities, which span
across all 50 states, we have seen a massive increase in income
opportunities directly as a result of the sharing economy
platforms, and communities are stronger when the sharing
economy is also strong.
In areas where policymakers and regulators have put up
roadblocks to consumer choice and competition, the community is
worse off. Opportunities are lost, competition is stamped out,
and growth is stifled. The Internet Association suggests the
following points to guide the committee as you look at these
issues. Number one, it's critically important to recognize the
sharing economy is diverse, it's rapidly growing, it's creating
new economic opportunities with clear benefits to workers and
other individuals. And, two, in listening to the grievances
against sharing company platforms and considering proposed
legislation and regulatory action, it's fundamental to assess
whether these complaints capture genuine concern for worker
protection safety rather than simply being complaints from
incumbent industries against increased competition. There's a
growing body of evidence and data that show that these
complaints do not play out. I'll elaborate on each of these as
I go on in my oral testimony and in greater detail in my
written, which has been submitted for the record.
First, the sharing economy is increasingly diverse in
bolstering economic opportunity. There's new data collected and
analyzed by the I.A. that shows that there are approximately 24
million individual work opportunities across the country. Just
two years ago, when I last testified on this topic, the number
was between 1 and 3 million. The same I.A. research estimates
that the sharing economy adds tens of billions of dollars in
real income to hard-working individuals, even when we use our
most conservative of figures. Other research from Brookings and
others show that these economic gains are new and not coming at
the expense of existing industries. Rather than cannibalizing
markets, the sharing economy is opening up whole new markets
and new demand that didn't previously exist. Evidence is
mounting that participating in the sharing economy is a net
positive for the micro entrepreneurs who participate in it.
Research also shows that individuals are craving a
different type of work arrangement which allows for fewer hours
of work, for more time for their family and friends, and
lifestyle, and on, an hourly basis, the sharing economy workers
average approximately $34 an hour for work compared to $26 for
payroll workers with the flexibility that doesn't otherwise
exist.
But more than simply an income source, the other side of
the sharing economy is local opportunity. These platforms
create new demand and bring tens of millions of dollars to
local communities and individuals rather than to corporations.
Online platforms are helping to eliminate prejudices and biases
in work fields as well as serve otherwise underserved
communities.
One of the great things about the sharing economy, what
makes it valuable and life-changing, is the flexibility. You're
working for yourself. You're not working for a technology
platform that's connecting you. Workers are not required to put
in a set number of hours or show up at predetermined locations.
Platforms don't tell their partners when they have to work,
where they have to work, how they have to work, or if they have
to work at all. You can simultaneously engage with multiple and
competing platforms without any prior approval.
Despite the dramatic growth of the sharing economy and the
millions of participants who continue to benefit from it, the
evidence is clear that incumbent industries have not been hurt.
Brookings' research showed no evidence of harm to the taxi or
hotel industry as a result of ridesharing and short-term
rentals, and evidence from Thumbtack has shown that the sharing
economy platforms are opening up opportunities to women and
minorities in fields that have otherwise been closed off.
Lastly, the Internet Association would encourage the
committee to think about whether arguments against sharing
economy platforms truly reflect genuine concern for worker
protection safety or whether they're, in fact, complaints
against increased competition. The internet has, since its
inception, lowered entry barriers for new entrants, lowered
cost for consumers, which is a positive. As with the early
internet, today's sharing economy platforms are spurring
increased competition and worker/consumer choice in our
economy.
In summation, the sharing economy is an exciting innovation
that collapses the distance between those offering services and
those consuming services. The sharing economy provides clear
benefits, and evidence of this fact must be taken into account
before taking legislative or regulatory action. I appreciate
the time to testify and look forward to answering your
questions. Thank you.
[The statement of Mr. Beckerman follows:]
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Chairwoman Foxx. Again, thanks to all the witnesses for
your excellent testimony.
Dr. Roe, you're recognized for five minutes for questions.
Dr. Roe. Thank you, Madam Chairman. First of all, thanks
for having this hearing.
And I think this is a very exciting time in the American
economy. And I actually see this almost as a new industrial
revolution. Technology is allowing us to do things we didn't
imagine just 20 short years ago.
And, Mr. Johnson, you took me back about 40 years when I
hung a shingle out and just had a few employees. And now that
small medical practice has several hundred employees now,
providing good jobs for people and good services in our
community, and particularly your comment about taking risk. You
put everything you had on the line, everything you had down,
and signed the note, and started your business. And I admire
you for that. And I think one of the things that people have
never done, that there's great joy in that -- and no one ever
asks how many hours a week you work. I can assure there are
many nights and days that you worry about whether you're going
to make payroll or whether you're going to be able to keep your
business afloat. So congratulations on that.
One of the things we can do to stop the sharing economy and
this growth, this incredible growth, is to regulate it to
death. And that's basically what ends up happening here in
Washington. To fix a small problem, we end up stomping out an
entire way to make a living.
Mr. Beckerman, I want to ask you a couple of questions
briefly. As you well know, some policymakers have expressed
support for classifying all workers as employees. Some
companies, including Managed by Q and Hello Alfred, have
already decided to classify their workers as employees. What do
you think would happen to the sharing economy if companies --
in general, if legislation were enacted to classify all workers
as employees, not just contractors?
Mr. Beckerman. Thank you for the question. I do think it's
problematic. As I stated in my testimony, one of the great
things about these platforms is you're really working for
yourself. The traditional model does not necessarily apply
here. You're certainly not an employee, and I think the
independent contractor model is working for the individuals
that choose to engage on a multitude of these platforms.
Mr. Roe. I agree with you, because in our business we use
both employees and contractors. We use both. And not everybody
who came to work at our office was an employee. Some were
contractors.
And, Dr. Sundararajan, I wanted to ask a question. Each
year, with the new advances in technology which allow
individuals to connect in ways that we didn't imagine a few
years ago, some State and local governments are not embracing
these advancements. Instead, they are beginning to implement
policies to regulate many aspects of the sharing economy. What
do you think are the implications of regulating so early, and
will it have an effect on impeding growth? And will these
policies become outdated even before they take effect?
Mr. Sundararajan. I think that the transition to a sharing
economy requires an entirely new approach to regulation, one
that redefines the boundaries between what government entities
do and what is delegated to platforms. And so, you know, it's
not surprising that we see a regulatory response to the sharing
economy, because it is creating new ways of providing familiar
things. But I think in the long run, the right solution would
be to examine whether the reason for regulating in the first
place still exists now that you have a third party that might
be mitigating market failure, and if there is a need for
regulation, whether some of that responsibility can be ceded to
the platform that has historically -- that generally has better
data than the government entity for enforcing and for actually
conducting the regulation.
Mr. Roe. Mr. Johnson, would you care to make a comment
about if you were -- I don't know whether you're -- are
employees or contractors. Would you like to jump in and answer
that, respond to that?
Mr. Johnson. Currently, the people that -- the people on my
team are hourly employees.
Mr. Roe. In your case, they are.
Madam Chairwoman, I'd like to yield back. I know we have a
vote in just an hour.
Chairwoman Foxx. Thank you very much for being such a good
role model.
Mr. Grijalva, you're recognized for five minutes.
Mr. Grijalva. Thank you. Thank you, very much, Madam Chair.
Let me ask all the panels a topical question. We're talking
about online platforms and sharing economy in this hearing, and
it's an important hearing. And the question to the panel is
just that 800,000 members of our country, the DACA recipients,
which as of Monday find themselves in great peril and risk
regarding their protection and indeed their very presence in
the country, given the Trump's administration decision to end
the DACA executive order and laying that on Congress to codify
into law DACA within six months or less -- I think there's much
more urgency than waiting around for six months, an iffy
situation at best. During this process, 400 industry leaders
sent Trump and congressional leaders a letter pleading that
Trump preserve the DACA program and that Congress pass a Dream
Act as a permanent solution. In that letter were the leading
online platform enterprises, for lack of a better word: Lyft,
Uber, Airbnb, and 19, 20 additional ones who are considered the
pioneers of the successes of online platforms and sharing
economy.
Studies have been done empirically that talk about the
contributions to the economy. Putting aside the humanity issue
here, as difficult as it is, but let's just talk about the
economy: Ending the ability to work legally in this country for
these DACA recipients, of which 97 percent are in school or
working, 5 percent have started their own business, 16 have
purchased their first home, 65 percent have made major
purchases like vehicles, and the GDP over 10 years, their
contribution is $460.3 billion and about $25 billion in taxes
to Social Security and Medicare. So my question, as we talk
about the economy as a whole -- but given that we're talking
about this -- do you feel or do you believe that DACA needs to
be a program that is preserved, protected, that we do something
fair and just, not just for the 800,000 and the 685,000 that
are working or going to school right now but, more importantly,
in this topic, for the economy?
So it's to all the panelists, whoever wants to give the
committee an opinion.
Mr. Beckerman. I'd be happy to jump in, Congressman. Thank
you for the question. I think it's an incredibly important
topic. Certainly, we would encourage Congress on codifying DACA
immediately. The Internet Association member companies have
been very, very vocal on this, and our CEOs have been very
vocal on this for a while. And, frankly, I'm really proud of
the leadership role that our CEOs and companies have taken on
this important issue. Certainly, it's a human issue. But to
your question, it's vital to our economy, and we'd urge
Congress to act immediately.
Mr. Grijalva. Anyone else?
Ms. Block. And I would just say I certainly appreciate
those remarks. And I don't think anybody could say it better
than you did about the contributions of these people who are
affected by the DACA decision. So, again, appreciate the
leadership of some of these companies in coming forward to
speak up on this issue.
Mr. Grijalva. I yield back, Madam Chair.
Chairwoman Foxx. Thank you, Mr. Grijalva.
Mr. Walberg, you're recognized for five minutes.
Mr. Walberg. Thank you, Madam Chair.
And thanks for the panel being here.
This is just a really exciting topic to deal with as we see
it growing in front of our eyes.
Mr. Beckerman, individuals who are participating in the
sharing economy are coming from a variety of situations, as has
been very clear. If you watched it or heard your testimony
today, some may already have full-time employment, providing
them access to health benefits and other benefits. Others
participate in sharing economy as a replacement income, part-
time income, don't have access to retirement benefits, health
benefits, and the like. Do you have a sense of how many in the
sharing economy desire health and/or retirement benefits, at
least options through their participation in sharing economy
platforms? And then, secondarily, do the benefits sought by
different workers vary depending on the type of sharing economy
they engage in?
Mr. Beckerman. Yeah. Thank you for the question. We'd be
happy to share with you the reports and data we've put out on
this. It does vary based on platform. But I believe a majority
of participants are doing so part-time as side income and as
they need it. But to your -- the second part of your question,
there are different platforms, and there's some where people
are using their time, others where folks have underutilized
assets, such as Airbnb or Turo, where if your car is sitting
now in the parking lot of Rayburn, you can be renting it out as
you sit here through this platform. And so there's differences
on the platform. So we'd be happy to share our data that we
have --
Mr. Walberg. So those specifically wouldn't necessarily be
looking for benefits?
Mr. Beckerman. Exactly.
Mr. Walberg. Mr. Sundararajan, do you have anything you'd
add to that?
Mr. Sundararajan. There are many businesses that run
through the sharing economy where the resemblance to what we
used to think of as, like, you know, the traditional model of
work, full-time employment, is somewhat tenuous. You know, I
mean, running a business through Etsy, running a business
through Airbnb, or renting out your cars on Getaround or Turo,
these don't have as much resemblance to a traditional model of
earning a living. And so, in thinking about how we are going to
fund the social safety net and provide benefits to people, most
of whom -- most human beings aspire to these, sort of to
stability, to be getting the same amount of money every month,
to different kinds of workplace protections. It's just that the
-- sort of going back to a model where someone called the
employer is providing all or part of the funding is no longer
viable as more and more of the workforce are entrepreneurs like
you see on Turo or --
Mr. Walberg. So encourage that entrepreneurialism and let's
see what happens.
Mr. Sundararajan. Encourage it, but also start to think
about, like, you know, what kinds of multi-stakeholder
partnerships, what kind of partnerships between the platforms,
the government, and the individuals, can be put in place that
allow for the money to be allocated to providing these benefits
and stability.
Mr. Walberg. Thank you.
Mr. Johnson, thank you for sharing your personal story
about becoming an entrepreneur. Many who work on sharing
economy platforms cite flexibility as one of the benefits of
this work arrangement. Could you cite some examples for us how
flexibility has improved the quality of life for you and your
family?
Mr. Johnson. Thank you for your question.
I'm very grateful for the flexibility that I have being a
small business owner and entrepreneur. Specifically, also, my
particular industry allows me flexibility. When I serve my
customers isn't necessarily typically even on a Monday through
Friday, 9 to 5 timeframe. We are serving customers on nights
and weekends and at events and parties, and that allows me a
lot of flexibility to create my own schedule. I also have
flexibility to decide when I'm going to punch in and punch out
and work on my business and developing my business.
And the other great thing about my particular company is
I'm able to extend that to some of my employees, where one of
my employees is my office manager and she's allowed to work
virtually from home. And I can enable them to kind of set their
own hours or be flexible in taking shifts as these events are
happening. It's been a great joy for me to see Jeremiah be at
home, starting a business, and my son was born. And now I have
-- also have a five month old, Paul, and it's been a really
special experience to be able to spend this time at home with
my family around starting my business.
Mr. Walberg. Well, thank you. Wish you all the best. Many
more questions to ask, but I'll relinquish and yield back.
Chairwoman Foxx. Thank you.
Mr. Takano, you're recognized for five minutes.
Mr. Takano. Thank you, Madam Chair.
And thank you to our witnesses this morning.
Ms. Block, in your testimony, you mentioned that the size
of the sharing economy -- or, as you call it, the online
platform economy -- is estimated to be less than 1 percent of
the workforce. Instead of focusing on this small sector, our
time could be better spent focusing on policies that will raise
wages and reduce income inequality for millions. And I
wholeheartedly agree.
I have been a champion of the Obama administration's rule
to update the overtime protections for millions of workers. In
1975, more than 60 percent of salaried workers fell under the
income threshold and qualified for overtime pay. Now, less than
10 percent do. The rule has suffered recent setbacks in the
courts, but I still believe that this is one of the best
policies to significantly improve wages of millions of workers.
Can you talk about the overtime rule and other areas this
committee should be focusing on to raise wages for workers?
Ms. Block. Sure. And thank you for the question. And,
again, I think it's well documented now that we have a real
problem in this country with wage stagnation and increasing
income inequality. And so I think policies designed to address
those really critical problems are of the utmost urgency. So
certainly the overtime rule is an important piece of that to
ensure that people aren't compelled to work for free in their -
- you know, in those hours beyond 40 hours, certainly for that
segment of the population that's below the overtime threshold.
I think what Ranking Member Scott raised is the importance
of raising the minimum wage. I mean, I had the honor of working
for Senator Kennedy who floor managed the last increase in the
minimum wage in the Senate. And the Senator has been gone for
eight years, which suggests it's been a very long time since we
raised the federal minimum wage. So I think that's also
critically important in finding ways to raise American workers'
wages.
I think, also, the right to collective bargaining is a huge
piece of finding ways to make the economy more fair and work
for everybody. And so I think, you know, we need solutions that
also help bolster that right. And I those are the primary
policies that we need to focus on to address these really
critical and urgent issues of wage stagnation and income
inequality.
Mr. Takano. Thank you, Ms. Block.
Ms. Block, in his testimony Professor Sundararajan argued
that minimum wage laws do not easily apply to the platform-
based world. But in your testimony, you argue that current
labor laws can apply to these businesses, and they can still
thrive. Can you respond to Professor Sundararajan's claim about
minimum wage laws?
Ms. Block. Sure. I mean, I think a critical part of the
answer is that there is no one answer just as, in the non-
online platform economy, there are different business models.
But I think we have a danger here of putting the online
platform economy in one category and saying that our labor and
employment laws don't fit. And I think if you look at the
specifics of many of these businesses, which is what the law
compels you to do, to look at the particular facts and
circumstances, in fact, our current labor and employment laws
fit quite nicely.
You know, one issue that comes up often is it's difficult
to track hours of workers in these online platform companies.
But, again, we're talking about some of the most
technologically advanced companies in history. So the idea of
bringing that entrepreneurial spirit to that question, that
there aren't solutions there, I find hard to believe. And I
actually think what Mr. Johnson just shared with us was really
instructive, the fact that he treats his workers as employees
and has found a way within the confines of our traditional
employee-status law to afford them flexibility. So, again, I
think there are a lot of false choices that dominate this
conversation, and that choice between flexibility or the
protections of employee status I think is one example of that.
Mr. Takano. Well, you mentioned Managed by Q was a
successful business that has incorporated labor protections in
its business model. Can you highlight a few other success
stories?
Ms. Block. Sure. There are a number. There's a company,
Hello Alfred, which provides sort of personal home services.
I've had the opportunity to be on panels with companies led --
companies that do -- deliver flowers, that have been really
successful in having employee status. So, again, it's a matter
of looking at the business model. I think we need to remember
that these entrepreneurs have a choice when they create their
business model, when they create their companies, to create
good jobs and to embrace the basic labor standards that come
with employee status or not.
Mr. Takano. Thank you. My time is up.
Thank you, Madam Chair.
Chairwoman Foxx. Mr. Smucker, you're recognized for five
minutes.
Mr. Smucker. Thank you, Madam Chair.
Mr. Beckerman, I'd like to just follow up to that line of
questioning that Ms. Block just answered. And I'll just echo
some of the comments that were made earlier. I think the
sharing economy is almost revolutionary in the opportunities it
provides both for entrepreneurs, people who want to work part-
time, as well as consumers. And so, you know, I know -- you
know, we have to be careful that whatever we do in terms of
regulation doesn't stymie the development of the industry. We
don't really know where it's going yet at this point. It could
go a lot of different directions.
So, again, as a follow-up to the conversation we had, some
were interested in applying traditional labor laws, such as the
Fair Labor Standards Act, maybe the National Labor Relations
Act, to the sharing economy companies. I wonder if you could
elaborate on the implications that this would have both for
workers, in particular what effect would it have on lesser
skilled workforce? For example, would you think they would have
the same flexibility to work the hours they want? And could you
also talk about how it would affect the companies? How would
they be able to adapt to what I think would be a pretty vastly
different regulatory structure than we have today?
Mr. Beckerman. Thank you. First off, I think it's important
to note that the question of independent contractors is not a
new one and not one that has just come up with the advent of
the sharing economy. And a lot of these issues that are being
discussed are broad and impact a wider group of companies and
individuals beyond just sharing economy companies. And, thus,
probably that debate should be a broader one and not one just
focusing on the sharing economy.
But when you look at it, there are fundamental differences
between arrangements when people are employees versus engaging
with opportunities on various sharing economy platforms. For
one, just the full flexibility, as you mentioned, being able to
decide exactly your work schedule, exactly your work location,
being able to engage on multiple and competing platforms
simultaneously and back and forth, which doesn't exist in other
employment models. I can't think of another example where you
can just decide one day if you're not going to show up to your
job or pick your hours exactly or, you know, work
simultaneously for competing companies. That doesn't exist in
the sharing economy. And it's important that whatever policy
conversations that take place don't end up hurting the people
that you're trying to help by adding new regulations or things
that don't necessarily apply here.
Mr. Smucker. I think Mr. Johnson's written testimony
earlier pointed to numerous tax employer and business formation
of filings and registrations that entrepreneurs must complete
to register a business on the state, local, and federal levels.
And, again, Mr. Beckerman, a question for you. As the
Internet Association has reviewed these and other regulations
across the country, can you point to specific states or
localities that have been the friendliest to entrepreneurs and
workers in the sharing economy? Is there anything that we can
learn as legislators at the federal level from these states?
Mr. Beckerman. I think that's a great question, actually.
We have a report that we can submit to the committee that lists
various states showing who has been friendly to internet-type
businesses and others. And you can have lessons learned from
that. I think some of the things that we see on the negative
side, often policies or regulations are put in place that don't
benefit consumers or the economy or workers but rather are put
in place solely for the purpose of keeping out new entrants,
and that exists too, and I think that's something that is
important that the committee steer clear of as well.
Mr. Smucker. Thank you.
I yield back.
Chairwoman Foxx. Thank you very much, Mr. Smucker.
Ms. Blunt Rochester, you're recognized for five minutes.
Ms. Blunt Rochester. Thank you, Madam Chairwoman, and
Ranking Member Scott. And I really want to thank the panel.
This is a very timely and interesting conversation.
You know, when we talk about these issues, a lot of times
people either see the glass half empty or half full. It really
is about challenges and opportunities, and it's a great
opportunity for some people to live their dream and to have
flexibility. But there are a lot of people that I know that are
actually having to patch together multiple temporary jobs,
whether they're driving an Uber and they're doing other things.
And so I think it's really timely that we're having this
conversation now.
I want to talk about and ask questions about the future of
work. And, Ms. Block, you mentioned in your oral testimony the
critical issues that are facing the online platform economy and
innovation in this digital age. And so what can Congress do to
make sure that workers in the online platform economy have
access to workplace protections, such as minimum wage,
unemployment insurance, and safe workplaces. I see the
potential, but I also want to make sure that those who don't
have a glass, let alone half full, have the protections. Can
you talk about that?
Ms. Block. Sure. Thank you for the question.
I mean, I think one really important piece is to make sure
that the laws that we have on the books now are enforced. I
mean, the Department of Labor needs to be able to look at these
issues for all employees in the sharing economy but also more
broadly. You know, we're talking today about the sharing
economy because it's interesting, it's growing. But, in fact,
these issues are very present in much greater numbers for
workers outside this sharing economy or online platform
economy. There's actually more research about how fast other
kinds of contingent work relationships are growing. And the
problem of misclassification or payroll fraud, as some of us
like to call it, is a very serious problem and much bigger
outside of the platform economy. So I think making sure that
there are resources to fulfill the intent of these statutes,
which is to create this really basic level of protection, this
basic social safety net.
You know, I personally don't like to call things like
minimum wage and overtime protections, workers' comp benefits.
They're not benefits. They're not extras. They're not luxuries.
These are things that the law and Congress for decades have
said are really a fundamental part of making our economy work.
And so ensuring that the law is able to do that I think is
really critical for the Congress.
Ms. Blunt Rochester. Thank you.
Dr. Sundararajan -- did I say that correctly? You mentioned
multi-stakeholder platforms. Can you talk briefly about that?
Mr. Sundararajan. Well, what I mean is that, you know,
we're entering a future in which more and more of the workforce
are not going to have a well-defined entity that they call the
employer that is responsible for some of the protections that
full-time employees get today. It's not so much a
classification issue. It's just the reality of the future
workforce is one in which a majority of them are going to be
independent in some way.
And so when I talk about multi-stakeholder partnerships, I
think of the individual having some incentive to contribute
towards these benefits. If there's an institution involved,
like a platform, them having some incentive to also contribute.
And then the government sort of laying the foundations,
creating the infrastructure that allows people, giving them tax
breaks and so on, that allows this kind of new funding model
for the safety net to emerge.
Ms. Blunt Rochester. Great. Thank you.
Mr. Sundararajan. Because the -- and in many ways, many of
the platforms that have chosen the full-time employment model
for their providers have done so in part because that model is
well aligned with their business model.
Ms. Blunt Rochester. My time is short. I'm sorry.
One last quick question, and I have 40 seconds. Ms. Block,
it's really regarding employees' approach to retirement. Can
you quickly talk about the risk associated there?
Ms. Block. Sure. So, if I understood the question, how
employees can save for retirement?
Ms. Blunt Rochester. Or just that -- the risk of this new
online. We have 20 seconds.
Ms. Block. Obviously, being outside of the structures that
were set up to ensure that workers, after a lifetime of work,
have a basic level of security in retirement creates a big
risk. And, again, putting that risk on employees to take care
of that completely on their own is sort of contrary to the idea
of the safety net.
Ms. Blunt Rochester. Thank you so much.
I yield back.
Chairwoman Foxx. Thank you.
Mr. Guthrie, you're recognized for five minutes.
Mr. Guthrie. Thank you very much. It's interesting, and
just the last comment that my friend, Ms. Blunt Rochester said,
I was thinking in my head, just before I get to my question,
was, you know, we had a world where a lot of these laws were
put into place where a bell would ring and a thousand people
would walk into a Ford plant and a thousand people would walk
out. And a bell would ring eight hours later and a thousand
would walk in and out walk. And it was just this big industrial
machine. We had a lot of these protections in place. And then
we went to where I was just thinking where people -- they
worked 30 years and retired. Then I remembered, not too long
ago, people say: Well, nobody works for somebody for 30 years.
They're going to rotate. And so you have 401(k) where people
can move their retirement around. And so it just seems like
people are making different choices. And that's what we have to
look at as we move forward. I'm not saying that the old
traditional industrial model is still there anyway, but people
are making different -- completely, but people are making
different choices.
So Dr. Sundararajan, you said -- and there's a[VO1] --
there's a JPMorgan Chase that noted most of the people in the
shared economy are looking for a second income. That's
typically who is in it. However, I think you mentioned in your
testimony of places like UpCounsel and Gigster.
Are you seeing or do -- are you seeing a shift where this
is becoming a prime -- people are using this as their primary
source of income?
Mr. Sundararajan. Definitely. There seems to be a trend
towards two things. One is an increasing dependence on this
kind of platform-based economy as your primary rather than your
secondary income and, secondly, an expansion in the set of
professions that are associated with these platforms. It's not
merely driving a taxi or providing sort of, like, you know,
home services: management consulting, legal services, high-end
software engineering. The platform model seems to be well
suited to these professions that have sort of lived on the
fringes of companies anyway.
And, you know, I think that the issues of, like, you know,
how do we structure labor law to recognize that, like, you
know, more and more of the workforce is not going to fit well
into that full employment -- full-time employment bucket across
a spectrum of professions is a critical one.
Mr. Guthrie. Thank you very much.
And, Mr. Johnson, in your testimony, you referenced the
need for entrepreneurs to have better access to compliance
assistance related to tax and regulatory requirements. We're
bringing a lot of people into the entrepreneurial world with
these kind of platforms, but not necessarily they have the -- I
mean, when you first started with your first booth, you
probably had to figure out exactly all the regulatory
requirements that you had and local licensing.
Did you receive any advice when you were setting up and
hiring your first employees? And do you think currently that
these provider platform companies would be good for giving you
advice in the regulatory world?
Mr. Johnson. Thank you for your question.
I do think the platforms would be a great resource. This
seems to be -- well, for me it was, on Thumbtack.com, a place
where I did find my first customers. And to combine that with a
place where they could help entrepreneurs have more resources,
get more information. Even without -- the streamline -- the
process of registering your business and all the different
places that registration needs to happen both local, state,
federal, the platforms would make a great place to provide that
information and assistance.
Mr. Guthrie. Because I just recently talked with some
executives at Airbnb, and I think they were very cognizant of -
- you know, you have this -- groups of people out there
participating in, essentially, the hospitality industry. And
they were very, very cognizant of making sure that the people
that signed up with them complied with local -- because there
are a lot of local taxes and stuff related to hospitality. And
that was the attitude I felt there that Airbnb had, that was
part of their role to make sure that took place, which I
compliment them from that -- for that.
And, Mr. Beckerman, I have about a minute left.
One of the biggest challenges for policymakers is a lack of
understanding who exactly takes part in and what their goals
and desires are in this area. As you know, no data currently
exists that definitely answers these questions.
However, your testimony underscores the very diverse nature
of both the sharing economy companies themselves and
individuals who work on the platforms. Could you provide some
insight related to the goals and desires of individuals
participating on various platforms, for example, a ridesharing
driver versus a seller on Etsy or a service provider on
Thumbtack?
Mr. Beckerman. Thank you.
Yeah. Obviously, each individual is different, and the
platforms that you're engaging on is very different for
somebody that has a creative talent and wants to make something
and sell it on an Etsy or eBay versus somebody that wants to
drive part-time or someone that has an underutilized asset,
like their apartment or home or car.
But, largely, I think people like the flexibility, and they
like the choice. And for many, this is a second income and an
opportunity that they have and they like to engage in and
choose to engage in. So I think it's important that we help
these platforms grow and not overly regulate them or have some
burdensome new law that would take the opportunities away from
the individual that are getting so much out of this.
Mr. Guthrie. I yield back.
Chairwoman Foxx. Thank you, Mr. Guthrie.
Mr. DeSaulnier, you're next, for five minutes.
Mr. DeSaulnier. Thank you, Madam Chair.
I want to thank you and the ranking member for this
hearing. It's a wonderful follow-up to the meeting I was --
meetings that I was happy to be part of in the Bay Area when
you came out. I want you to know I'm still recovering from your
observation that I sounded like a Republican. Not helpful in
the Bay Area to be -- and I also want to mention that, during
that wonderful trip, I want to remind one of my colleagues from
the other side that he threatened not to leave the Bay Area,
that he was going to come live with me. So it was a wonderful
trip.
I think this is a very, very, very important discussion we
have. And how this committee gets it right and to the industry
being part of that I think is really the preeminent question
for the Congress in the next couple of decades.
Having -- living in the San Francisco Bay Area, working
with many of these companies, trying to deal with these issues
forthrightly, but having grown up -- and I'm reminded of this
by Congressman Roe's comments about the Industrial Revolution -
- in Lowell, Massachusetts, where I listened to my
grandparents' generation talk about the joys and the horrors of
working in those textile mills, I'm reminded of how long it
took us as a culture to figure out how we should have minimum
wage, we should have child labor laws, that we should protect
workers. And that was good for everyone.
So, Mr. Johnson, I do also want to say that you reminded me
vaguely, as I can remember, of myself when I was 26 and I
opened my first restaurant and how wonderful it was. There is a
cynical expression in the Bay Area restaurant business: ``Enjoy
it while you can.'' That's not to presume that you won't
continue to do well.
But I do want to ask you a question. You're doing the right
thing; you're the model we want of protecting your employees.
So how will you feel if you -- and maybe this has already
happened -- you have competitors in this industry in the shared
economy who don't treat their employees as you are doing, and
wouldn't you want to have some kind of threshold to make sure
that you're competing fairly with them?
Mr. Johnson. Thanks for your question.
I think that -- there are these labor laws that do exist.
And I really realized early on in my business that complying
with the regulations that do exist are the minimum threshold of
what I need to do with the business because, at any point, not
complying with them could derail my entire endeavor. So that's
how I decided to run my business.
I think my -- the main point is -- for -- that I'm trying
to communicate is that making it easier for businesses to
comply with those regulations will help them succeed in the
long term.
Mr. DeSaulnier. I think that's a great answer.
Mr. Beckerman, I engaged in some really wonderful
conversations with many of your most important clients in the
Bay Area to deal with both regional and international global
issues. And one of my admonitions to them is you don't want the
pitchforks to be coming after you, that some of the social
displacement that your innovation is causing, you've got to be
part of the solution. So you have a big constituency. Some of
your clients probably feel that they should be part of that
discussion; some of them shouldn't -- or won't be -- avail
themselves to that open-mindedness.
But people like to compare this to the Industrial
Revolution, and I get frustrated with people who sanitize how
long it took us in Congress and in this country to deal with
the downside of the Industrial Revolution.
So here we have an opportunity to not go through decades of
struggle and strife and people losing their lives, having the
Supreme Court say that the minimum wage was against the
Commerce Clause, having them say that child labor laws
similarly were against the violation of the Constitution. So
people forget what a struggle this was.
So here's an opportunity for us to have a meaningful debate
with diverse opinions but recognize that we can't sanitize the
fact that there's going to be social displacement. And right
now, there are people who are suffering both because of the
innovation. But if we don't address that forthrightly so.
My question to you is: What I'm hearing individually from
your companies, and do you get a sense from your -- all of your
companies that there's a real initiative to embrace bipartisan
discussion about how we deal with these social issues?
Mr. Beckerman. Thank you. I'm going to appreciate that's an
important question and topic.
I'm really proud of our member companies on their social
conscience and what their contributions are to their local
communities and also our national economic community.
These are companies that are providing a tremendous benefit
for individuals and local economies in every --
Mr. DeSaulnier. Mr. Beckerman, if you could make it a
little brief, I've got 28 seconds.
Mr. Beckerman. We're always happy to engage in a
conversation.
Mr. DeSaulnier. You're a professional.
Ms. Block, in the remaining time, could you talk about -- a
little bit about preemption. We're in a period where we want
states to be innovators. For us in the Bay Area, we have this -
- we've innovated, but we want to protect our employees as
well.
How important is it for Congress to set a base level but
let states go ahead and innovate?
Ms. Block. Thank you. I think, you know, if you look at the
Fair Labor Standards Act, that's how it has functioned for all
this time. I think the troubling trend is that we're starting
to see States preempt local minimum wage ordinances, which is
rolling -- in fact, in some instances, rolling back protections
for workers and decreasing their wages. But I think setting
that national floor again for the minimum wage, we're just
having a problem right where it's been so long, that Federal
floor is so out of date that you're creating these huge
disparities, and you really do have workers in many States
being left behind.
Mr. DeSaulnier. Thank you.
Chairwoman Foxx. Thank you, Mr. DeSaulnier.
Mrs. Handel, you're recognized for five minutes.
Mrs. Handel. Thank you, Madam Chairman.
First of all, Mr. Johnson, hats off to you starting a small
business let alone one in this new economy is not only
exciting, but being able to be successful at it is an
incredible mark to your ability to identify a needed service
product and your perseverance.
You talked a little bit about the need to make it easier
for companies to navigate through the regulatory climate. It
strikes me that as both a small business person and in this new
economy that you, perhaps, faced some unique regulatory
challenges in trying to navigate through.
Can you just briefly talk about a few that you felt were
particularly onerous as you tried to get up and running and
keep moving forward to be a successful company?
Mr. Johnson. When starting SnapSeat -- and, you know, my
background in accounting is kind of more focused in some
business management at a nonprofit. That's really where my
last, like, regular job was. I had some exposure to compliance
and the, you know, insurance needed as a business entity in
that end of a business. So, from my experience, that gave me a
little bit of a leg up into understanding that there was this
whole back end that was needed as far as compliance went.
I only can imagine what it would be like for somebody who
maybe has a skill or a service they want to provide and doesn't
necessarily have that much exposure or experience with
compliance with State, local, and Federal regulations and
registering a business and paying -- remitting sales tax and
all the things; that would be really challenging.
So whatever we can do to kind of make it more clear for
business owners, entrepreneurs, to have the info, the
information they need on how to comply with those regulations I
think would be very helpful.
Mrs. Handel. One followup. Any particular area of labor law
that was particularly onerous that you'd like to share comments
on so that we could take that into consideration as we move
forward as a committee?
Mr. Johnson. Not really sure there's anything necessarily
in particular. I mean, even just, you know, understanding how
to become an employer in my state, you know, what was required
of me to do that was, as I said, a challenge to navigate. And
making it easier to do would be helpful.
Mrs. Handel. Super. Thank you. Well, best of luck.
Dr. Sundararajan, real quickly, you testified that it was
critical to review how employer benefits, workers' comp,
vacations, et cetera, are determined and paid within this
sharing economy as it continues to grow and expand. Do you have
any specific thoughts or ideas for this committee that we
should keep in mind, again, as we do our work around this
issue?
Mr. Sundararajan. Thank you. Yeah.
I think sort of like the touchstone should be to look for
partnership models. You know, there was talk about, you know, a
world in which you would work for 30 years and then you'd get a
pension. And we don't live in that world, sort of like -- you
know, that industrial world anymore. But, you know, the 401(k)
has emerged as a way of, you know, incenting the individual to
save towards retirement, providing the company with some way of
contributing towards that while not taking complete
responsibility and the government saying, ``Well, if you do
this, you can tax defer your money.'' So that's the kind of
partnership model -- that's the kind of template that you
should be using to think about new ways of funding other slices
of the safety net that used to be either provided through,
like, employers responding to the market or through someone
being a full-time employee.
Mrs. Handel. All right. Thank you very much.
Madam Chairman, I yield back.
Chairwoman Foxx. Thank you.
Dr. Adams, you're recognized for five minutes, but we'd
appreciate if it went less.
Ms. Adams. Yes, ma'am. Thank you, from one teacher to
another.
Thank you, Madam Chair, and ranking member for convening
the hearing.
And thank you very much for your testimony.
Let me just get right to my questions then. So, Mr.
Beckerman, you claim that online platforms are helping to
eliminate prejudices and biases in the work fields. However,
this statement is a contradiction by the fact that members of
African Americans, Hispanics, and women in the tech industry
lag behind those of their peers. So do you have any suggestions
on how to ensure that diversity is not just reflected in the
demographics of independent workers but also in the boardroom
as well?
Mr. Beckerman. Thank you. That's a great question.
I think that's an issue that our companies and industry as
a whole take very, very seriously and are certainly working on.
And there's a lot of progress that needs to be made. And it's
something at the association that we've been working on to
help, you know, build a stronger pipeline of diverse candidates
for jobs in our industry. And so, you know, we appreciate you
working with us on that.
On the other part of my testimony of opening up
opportunities in underserved communities from the sharing
economy platforms and -- they do certainly do that. There have
been many instances from -- you can look in the hotel industry
-- certain areas where there are no hotels or areas where taxis
haven't served. A lot of those issues have been resolved
because of the sharing economy platforms, and that's a real
positive as well.
Ms. Adams. Thank you.
Ms. Block, we've heard a lot of discussion today about
raising the wage. And I worked in the legislature for 20 years,
10 of those trying to get the state minimum wage increase. And
that was in 2006. We did $1. And then, of course, the federal
government did what it did. And nowhere did we index it. And so
people are still struggling because at $7.25, you can't
survive.
But you mentioned that we should be focusing on enacting
policies that raise the wage and increase the overtime
threshold and to encourage full-time employment. But based on
what we know about the composition of the workforce, isn't it
true that doing so better serves minority groups and the youth
than focusing on regulation of the shared economy?
Ms. Block. As we talked about before -- and thank you for
the question. I mean, it is, to me, the most urgent question
that faces us right now is, how do we raise wages? And as you
mentioned, it is a particular challenge for minority work
populations. And we still have an unemployment rate for black
workers that is significantly higher than for the general
population. And so, you know, I think looking at full
employment is important for the economy generally. But it is
obviously even more important for those populations that are
still facing unacceptably high levels of unemployment. So I
would agree with you.
Ms. Adams. Thank you.
Mr. Sundararajan -- if I mispronounced it, excuse me. What
role should --
Mr. Sundararajan. -- every congressional hearing with my
name.
Ms. Adams. I tried to do it by syllables, you know.
What role should government play in ensuring opportunities
in what you call ``crowd-based capitalism'' reach the
economically disadvantaged?
Mr. Sundararajan. I think that government should favor
those platform models that have -- that imbue sort of a genuine
decentralized ownership. And what I mean by that is, rather
than the individuals who are connecting to the platforms just
providing labor, we should really encourage those platforms
that are inducing the creation of tiny businesses where people
are making pricing decisions, they're making inventory
decisions, they're merchandising, they're building a brand
through the online reputation system.
And the reason why I think this is particularly important
is because, as we increase the fraction of the workforce that
genuinely owns capital, that will naturally reduce inequality
and increase sort of equitable access in the long run.
Ms. Adams. Thank you.
Madam Chair, I'm going to yield back.
Chairwoman Foxx. Thank you very much.
Mr. Allen, you're recognized for three minutes.
Mr. Allen. Okay. Thank you.
Madam Chairman, and -- boy, we got a lot of challenges in
solving this issue with employment. Just from the standpoint of
my time in my district, everywhere I would go, there were job -
- jobs -- lots of jobs. In fact, I believe there's like 6-1/2
million jobs open in this country right now. The jobs in my
district were in the $20 to $30 per hour range, with full
benefits, by the way.
And, of course, Mr. Beckerman, you testified that -- and I
think there's over a million gig jobs open today, and you are
saying that they're $26 do $34 an hour or more. Yet we've got
45 million people in this country on government assistance and
-- meaning healthcare and benefits and whatnot that the
government's paying for. And then we have this massive teacher
shortage in this country; why people don't want to become
teachers. I think we got a lot of questions we got to ask about
what in the world is this government doing and how do we
correct this problem that we've got in this country, and how we
can get our workforce participation rates up.
Like -- one of the issues that did come out of my district,
Mr. Sundararajan, is some fear innovations like the home-
sharing platforms are -- have an advantage over traditional
hotel and lodging arrangements. One concern that comes to mind
is the fact that the hotel industry is highly regulated while
home-sharing platforms are not. To what extent do you think
such concerns are founded? In other words, the Airbnbs are not
regulated; the hotel industry is heavily regulated. And the
hotel industry thinks that's a bit unfair.
Mr. Sundararajan. Well, I think that we have to recognize
that a lot of the regulations that apply to the hotel industry
have been developed specifically for the hotel industry's
business model. And the fact that not all of them are imposed
immediately on an Airbnb host is important because an Airbnb
host is not a large, sort of, multinational hotel. And so, you
know, we will go through a transition period during which, you
know, there will be an imbalance in the extent to which these
different sectors of short-term accommodation are regulated.
Mr. Allen. Yeah. Well, the issue is there are folks who are
developing Airbnbs rather than just private homeowners who are
doing it.
Mr. Sundararajan. Yeah.
Mr. Allen. And so, obviously, you know, they've got some
real concerns there.
Any suggestions on how we address the hotel industry
concerns in this?
Mr. Sundararajan. Well, I think that a good way to move
forward would be to look at policy where people who are running
what looks like a large hotel through the Airbnb platform,
those are people who should be cracked down on, and we should
restrict Airbnb to be genuinely sort of individuals who are
sharing their homes.
Mr. Allen. Okay. All right. Well, Chairlady, I'll yield
back.
Chairwoman Foxx. Thank you, Mr. Allen.
Ms. Wilson, you're recognized for three minutes.
Ms. Wilson. Thank you, Chairman Foxx and Ranking Member
Scott, for holding today's hearing. And I also want to thank
our witnesses for sharing your perspectives with us today.
Today we are discussing the subject of extreme importance
for our Nation's economy and our Nation's labor force,
particularly those workers employed by way of technology -- a
technology platform or smartphone app, which is being referred
here today as the sharing economy.
As a Representative from the city of Miami, certainly,
businesses such as Airbnb, Uber, and Lyft are critical. Indeed,
the sharing economy has dramatically improved our Nation's
standard of living, both in south Florida and across the United
States, and has become an integral sector of the American
economy and spurred business growth while also benefiting
consumers nationwide.
Decades ago, hardly anyone would have imagined a day when,
at the touch of a button on one's phone, it was possible to
hail a ride, purchase groceries, or find a plumber with
relative ease. Yet although the shared economy has brought
tremendous benefits to our Nation, those who work in this
sector still -- are still in need and deserve basic workforce
protections. Indeed, unemployment insurance and workers'
compensation should not disappear merely because one is
employed in the sharing economy.
Unfortunately, we have seen in many cases that the
companies that participate in the sharing economy classify
their employees as independent contractors. And as such, these
workers are denied key work protections, such as the statutory
right to the minimum wage, overtime pay, OSHA protections, or
unemployment insurance, among others.
This practice I believe is unfair. Moreover, the same thing
has been happening in the construction industry and other
related industries for years. Congress must put an end to the
practice of wrongfully classifying employees as independent
contractors. That is why I reintroduced legislation that seeks
to improve the tools available to address this problem.
The Payroll Fraud Prevention Act, House Resolution 3629,
which I encourage all of my colleagues to cosponsor, is a bill
which requires employers to accurately classify their workers
and provide employees with notice of that classification. If
passed, it will strengthen the Fair Labor Standards Act to
ensure that more American workers, businesses, and taxpayers
receive the fair treatment they deserve. Currently, there are
simply too many workers being classified as independent
contractors when in reality they are employees of a specific
company.
I would like to address a few questions to our esteemed
witness --
Chairwoman Foxx. Ms. Wilson, I'm afraid your time is up.
Ms. Wilson. Oh, my time is up.
Chairwoman Foxx. Thank you.
Ms. Wilson. I yield back.
Chairwoman Foxx. Mr. Thompson, you're recognized for three
minutes.
Mr. Thompson. Thank you, Chairwoman.
Mr. Beckerman, I want to thank you for being an advocate
for the sharing economy. As co-chair of the Career and
Technical Education Caucus in the House, I often highlight the
rapid pace at which our 21st century economy, driven by
technology advances, and, in turn, our 21st century workforce
is changing. You and I seem to be on the same page about that
fact, but we need to make sure our federal policies reflect
those changes.
Now, you mentioned that state and local regulations have
the potential to stifle job growth, especially in the sharing
economy when they are misplaced or misguided. I do believe that
overregulation can discourage bright entrepreneurs with
valuable skill sets from joining certain industries.
Can you explain how this would be detrimental to our global
economy?
Mr. Beckerman. Yeah. Thank you for the question.
One, a lot of these platforms are global. And it's
important, and the United States I think certainly has been a
role model for the world in the policies we've had and the
growth of these platforms being born in the United States.
On some of the local laws and regulations that have come
up, a lot of them, frankly, have just put been in place, the
new ones, to keep out competition. And I think that's something
that's certainly harmful to the global economy and the U.S.
economy.
Mr. Thompson. Thank you.
Mr. Johnson, I want to thank you for sharing your personal
story with us. And congratulations on both sons that you and
your wife have had. Congratulations on your many successes.
The fact that you were able to start and run a small
business with few hiccups and no debt really is incredible. It
certainly helps to demonstrate the benefits of the sharing
economy.
Now, you briefly mentioned the difficulty you encountered
forming and registering your business on the local, state, and
federal level. Can you elaborate on your experience perhaps
with the Small Businesses Administration? Were you referred to
the Small Business Administration or Small Business Development
Centers, or did you seek out their help on your own? And what
support do you feel they should offer entrepreneurs that they
were unable to offer you?
Mr. Johnson. Starting a business is definitely an
overwhelming -- it can been an overwhelming endeavor. There's a
lot of things you have to consider, whether it's financing and
pricing, how much to charge, you know, what you're going to
offer for services, and how to get your business off the
ground, how to register it. You know, I'm just an advocate for
seeing some mechanism that would enable business owners and
entrepreneurs starting out to have the resources they need to
be successful. I don't think it's necessarily like having to be
capital and money or loans. I think that having educational
opportunities and better understanding of what the legal
requirements are, the laws they need to comply with, you know,
a lot of things that we've -- have been discussed today. If you
can give those -- these entrepreneurs like me more resources to
comply, I'm going to imagine that they would.
Mr. Thompson. And a lot of those are out there, to a large
degree, through the Small Business Administration, specifically
Small Business Development Centers. So I just encourage
entrepreneurs to look there.
Thank you.
Chairwoman Foxx. Thank you very much.
Mrs. Davis, you're recognized for three minutes.
Mrs. Davis. Thank you, Madam Chair.
Thank you to all of you for being here today.
I know that we're talking about a piece of the economy
that's relatively small, quite small. And yet many of the
issues that are occurring are -- have been coming over a
greater period of time, not just with the sharing economy. And
so I appreciate that we need to really focus more broadly
sometimes and not necessarily just targeting. But this is a
very good conversation.
Could you speak -- maybe, Mr. Beckerman, you could pick up
on this. Traditionally companies, as you know, have played a
key role in training and development for their workforce. And
so, as we see increasing automation in some of the spaces
within the sharing economy, what role do you think companies
should still be playing in helping workers grow so that they
don't really get left behind in the technology of the future?
How can they play maybe even a different role than
traditionally has been played?
Mr. Beckerman. Certainly, well, certainly broadly, all
companies, regardless of industry, have an important role to
play in educating the workforce and ensuring that, you know,
future generations have the skills they need to compete in an
evolving economy.
Specifically, when you look at these platforms, I mean,
really, what they are, they're just connecting supply and
demand. And so I think that does create a lot of opportunities
for people with varying skill sets to be able to compete in the
economy in ways that they previously couldn't.
Mrs. Davis. Do you -- as we talk, you know, about
apprenticeships, in even a new way today, do you see a role for
them, or are they really so small in many ways that that's not
a possibility to even think in terms of, how would you create
those? How would you attract young people who, you know, are
making some of their decisions as they're leaving high school?
How does that work?
Mr. Beckerman. Certainly, actually, it's something at the
association that we worked on with organizations like After-
School All-Stars that do STEM and computer science programming
for young people in middle school. And that's something that we
have worked on and many of our companies have worked on, which
is important for -- regardless of the job people are taking.
Mrs. Davis. Anybody else want to comment on how they see
that role?
Mr. Sundararajan. I can -- so I think the role of a
traditional large company shifts a little on the training front
because what the humans do in the company is going to change
quite significantly over the coming decades. And so a forward-
looking large company would not just be thinking about
enhancing the skills of their workers to help them do their
current jobs better but thinking about, how do I retain the
talent that I have acquired if the work that this talented
person does today is no longer something that a human being has
to do? How do I transition them into doing something different?
Mrs. Davis. And you see conversations.
Mr. Sundararajan. Yes.
Mrs. Davis. -- about that.
Mr. Sundararajan. Absolutely.
Mrs. Davis. That's great. I think my time is up.
Thank you so much.
Chairwoman Foxx. Thank you, Mrs. Davis.
Mr. Grothman, you're recognized for three minutes.
Mr. Grothman. A couple questions. I know one of our goals
in the new economy is obviously -- you hear about lack of
family-supporting jobs out there. And it would certainly be
great if more people could make -- I suppose it depends around
the country, the cost of living, whether a family-supporting
job is 40,000 or 60,000, or what it is.
But could you comment -- and I'll ask, you know, any one of
the three. I'll give a question to Ms. Block later -- as to --
give some samples of earnings people are participating in the
new economy and how those earnings would be affected if we
regulated things a little bit more.
Anybody here have any anecdotal evidence about how much
people make at given jobs in --
Mr. Beckerman. Sure. Go ahead.
Mr. Sundararajan. I was just saying that there's so much
diversity in the sharing economy that it's hard to come up with
a meaningful average of, like, you know, this is how much
someone makes.
Mr. Grothman. Go with anecdotes. I would say probably the
ability in the new economy to make $10,000 a year, and there
are probably abilities to make a few hundred thousand a year. I
just want some anecdotes.
Mr. Sundararajan. I think the majority of people who
participate in the sharing economy today and are running these
tiny businesses are earning in the tens of thousands. But I
think as we transition into the these platforms covering, you
know, a wide range of professional services -- legal services,
consulting, software engineering -- we are going to see a lot
more of people earning in the hundreds of thousands rather than
the tens of thousands.
Mr. Grothman. Is there a lot more flexibility in the new
economy for people who maybe don't want to work during the day
or want to work on weekends or want to work at night or maybe
because of their family situation only want to work 20 hours a
week or people who need money a lot and want to work 70 hours a
week? Could you elaborate on the flexibility in the new
economy, and is this a good or bad thing?
Mr. Sundararajan. There does seem to be far greater
flexibility in the work arrangements that the sharing economy
has created. I do acknowledge that, even within the confines of
a full-time employment model, you can provide some flexibility.
But the kind of absolute flexibility that you get from
connecting to a platform when you want and completely setting
your own work schedules, that is new.
Mr. Grothman. It's a tremendous thing, because if I want to
work 15 hours a week, I can. If I want to make a lot of money,
I can work 60 hours a week.
I will give one question to Ms. Block. And I'm not sure
you'll really feel comfortable answering it, but it's just
something that, looking at the four of you up here and this
obviously the only hearing you've testified on, but over a
period of years -- been here a few years -- it's not unusual to
have four people before us. And the one person -- and I love
the Democrats. I love you all. But the one person that the
minority picks is the college professor. I notice that it's not
the first time that's happened.
Do you want to take a stab as to why it happens to work out
that way?
Ms. Block. Well, first, I'm actually not -- I'm sorry. I do
work in a university. But, actually, the bulk of my career has
been in government. And I've also been in this committee room
many, many times sitting right there supporting my colleagues
in different government agencies.
But I do think that being in a university gives you an
interesting perspective and a broader perspective, and you have
the freedom to talk to lots of different people in a different
way. So that I think that witnesses from academia can bring an
interesting perspective to these conversations.
Mr. Grothman. Thanks for coming over again.
Chairwoman Foxx. Thank you, Mr. Grothman.
Mr. Polis, you're recognized for three minutes.
Mr. Polis. Thank you, Madam Chair and Ranking Member Scott.
I'm very excited about this important hearing following up
on the work of this committee. And I joined my colleagues on
both sides of the aisle in California visiting and learning
about this a few months ago.
My first question for Dr. Sundararajan. In Denver, in
Colorado, there's a new business model within the sharing
economy of employee ownership. A good example is a co-op called
Green Taxi. Drivers work flexible hours, and they enjoy
ownership in the co-op, the taxi co-op. Employee ownership has
potential across a number of different industries. There's a
home care worker co-op, also in many ways part of the sharing
economy.
And employee ownership is a very good thing. It allows
companies to invest in employees, expands business ownership
opportunities, make sure that workers can share in the value
they create.
In your testimony, you spoke about the value of employee
ownership programs like Green Taxi. Can you talk about how the
sharing economy can foster an increase in capital ownership
from workers, how value can be created on the capital side for
participants in the shared economy, and how the Federal
Government can encourage employee ownership along those lines?
Mr. Sundararajan. Well, I certainly think that there is a
long history of cooperative work arrangements working --
cooperative ownership arrangements working in certain sectors
where you didn't have the need for a great amount of capital,
where technological progress was relatively slow, and where the
contributions of each individual were relatively equal. So
taxis work better than, say, software engineering.
I think that there's a unique opportunity to encourage the
ownership of business by allowing providers to own slices of
equity in the platforms that they provide towards, so provider
stock ownership programs, so to speak. Because this would take,
like, you know, sort of, like, you know, the digital enabling
capability and the global scale of the large platforms and
combine it with the decentralized ownership that we've
historically seen in cooperatives. So I certainly encourage
Congress and the government to look to ways to encouraging
provider stock ownership programs.
Mr. Polis. And to what extent can that occur today and to
what extent do we need to change laws here to facilitate that
kind of employee ownership for co-ops.
Mr. Sundararajan. I think that the infrastructure for
provider stock ownership, especially for companies that are
privately held -- for platforms that are privately held -- is
very challenging. As some of these companies go public, we may
see some more of these emerge.
Mr. Polis. Okay.
And for Ms. Block, in the last 30 seconds, you may be
familiar with blockchain and distributed ledger technologies
that allow transactions to be made between individuals without
the need for a middleman or a centralized server.
How are you seeing blockchain or other innovations apply to
the sharing economy?
Ms. Block. So, other than that, I'm not particularly
familiar. But I'm happy to look into it and get back to you.
Mr. Polis. Great. Well, you only had five seconds anyway.
So I will look forward to a written response.
And I yield back.
Chairwoman Foxx. Excellent timing.
Ms. Stefanik, you're recognized for three minutes.
Ms. Stefanik. Thank you, Madam Chairwoman.
Our workforce is changing. As of April 2015, the millennial
generation is the largest generation in our workforce. And in
that generation, we have a few key differing characteristics.
We're the most well-educated generation. We're also the most
diverse education. We also tend to be more mobile in terms of
moving where we live. We also face unique challenges, whether
it's our entitlements crisis, whether it's our retirement
savings crisis, or our student loan crisis.
I'd be curious, Mr. Beckerman, if you could discuss how
opportunities in the sharing economy specifically provide
economic opportunity for millennials. And then, beyond that,
how does it impact other generations beyond millennials?
Mr. Beckerman. Thank you. Great question.
All the points that you laid out is exactly why these
platforms are, you know, tailor made for millennials and why
millennials are using them.
In my written testimony, I don't have the number right in
front of me, we break -- I break down the percentage of people
that are using the platforms to earn money, from millennials to
baby boomers. And it's pretty well spread out. I don't know if
-- I don't think the millennials are the bulk of it, but it's
being used by a pretty diverse age group. But it's good for
everybody, and millennials, in particular, like it.
Ms. Stefanik. Other comments?
Mr. Johnson, as -- I'm not sure how old you, but you look
somewhat in my age range. Talk to me why you chose -- you know,
you're not an employee of Thumbtack. You are a business owner
and use Thumbtack as a service.
How did that work for you? Why did you make that decision?
Mr. Johnson. I'm very impressed with what Thumbtack has
done as a business itself. And for me, it really enables a
marketplace for people who are looking for local services to
find local service providers, and for a local service provider,
it allows me to find new customers daily based on the clients I
know I can serve best. And what's really interesting about
Thumbtack is that -- you know, you kind of talked a little bit
about mobility or -- I mean, I could maybe pick up and start a
photo booth company in New York City with, really, just a
couple clicks. Or if I wanted to use some business coaching and
help some other business owners based on my experience, I could
start a business coaching profile on Thumbtack and start
receiving leads in my inbox to do something like that.
So it really is a mechanism for people to create small
businesses and microbusinesses and generate more revenue or
income for themselves.
Ms. Stefanik. Great. Thank you.
And one additional question.
Mr. Beckerman, do you have data on the gender breakdown?
How -- what percentage of the sharing economy is made up of
women, for example?
Mr. Beckerman. Yeah, I would be happy to get that to you. I
don't have the number off the top of my head, but we have that
in our datum reports, and we could share that with you.
Ms. Stefanik. Okay. Thank you very much.
I yield back.
Chairwoman Foxx. Thank you.
Ms. Bonamici, you're recognized for three minutes.
Ms. Bonamici. Thank you very much, Madam Chairwoman. This
is a good discussion and an important discussion.
It's clear that our economy is changing rapidly. This
conversation and others we've had about the sharing economy
show that it changes much more rapidly than our workplace
policies.
I think we have to keep in mind what it means to our
constituents when they go to a job that provides security and
dignity and a living wage. In my home State of Oregon, the
state legislature has enacted many policies that help with that
security and dignity from increasing the already indexed
minimum wage to giving workers access to paid sick days to
easier ways to save for retirement and to scheduling
predictability. All of those things help.
But I wanted to talk about access to healthcare. And I know
Mr. Johnson mentioned that in his written testimony how
important that is. For people starting a small business,
recognizing the importance of that access. Of course, before
the Affordable Care Act, if someone had a preexisting condition
and there was -- they could be denied. They were either in a
job lock or stuck in an insurance policy and couldn't take a
risk or start a new business or go somewhere because they were
stuck if they or someone in their family had a preexisting
condition.
We've had a lot of conversations here on the Hill about
repealing the Affordable Care Act. People across the country --
in fact, many small business owners -- spoke up. About one in
five of the marketplace customers is a small business or a
self-employed individual.
So I want to ask you, Ms. Block, to talk about the
importance of the Affordable Care Act, which we all acknowledge
isn't perfect but is providing that opportunity for individuals
and small businesses, talk about the importance of the ACA to
workers in the sharing economy.
Ms. Block. Sure. Thank you for the question. I'm happy to
talk about the importance of the Affordable Care Act. And, you
know, I think you really articulated it. If part of what's
important in our economy is to have dynamism and people being
able to move from opportunity to opportunity, the Affordable
Care Act is a really critical piece of that. And, again, in
thinking about creating a safety net so that people can have
the dignity of work and be able to continue to participate in
the economy, being able to have reliable healthcare is --
seems, obviously, a really important piece of that. So
incredibly grateful that the Affordable Care Act is still
there. But I think that's -- all of the factors are as true for
people working in the sharing economy as they are for anybody
else.
Ms. Bonamici. Right. Thank you.
And my time is about to expire. I yield back.
Thank you, Madam Chairwoman.
Chairwoman Foxx. Thank you very much.
Mr. Espaillat, you're recognized for three minutes.
Mr. Espaillat. Thank you, Madam Chair, Ranking Member
Scott.
Certainly, the sharing economy is revolutionizing economies
all over the planet. And, obviously, it's a very exciting time.
But with that comes some concerns. And I wonder, Ms. Block, if
you can shed some light on what measures can be taken to ensure
that consumers are protected in initiatives such as Airbnb,
Uber with regards to, for example, safety, liability issues.
There's a great deal of concern that that's not being really
looked at in a comprehensive way, the impact that it may have,
that, in fact, the sharing economy may try to circumvent some
of these regulations that are so important to consumers.
And the second question is for any of you if you like to:
Do you see any danger in the sharing economy sort of like
turning its head on encouraging or strengthening monopolies.
For example, will Uber rule the world? Will they take out
yellow cabs, livery cabs, that are smaller mom-and-pop
operations that provide significant economic traction in
neighborhoods? Because of their economic power, will they rule
the world, and is there a danger for monopolies as well?
Ms. Block. Sure. Thank you for the question.
And starting first with consumer regulation, though it's
not my field of expertise, I think a lot of the issues that you
want to look at in that sector -- in that area are the same
that you look at in terms of labor and employment law. It is --
the fact that the service is being enabled through technology
really make a difference in the application of the law. What
was the intent of the consumer protection law, and is it
equally applicable to a ridesharing service where you just
happen to call the car through an app as it is through a taxi?
I think often that answer is going to be no, just as for labor
and employment. It doesn't really matter to a driver whether
they got that assignment to pick up somebody through a
telephone call from a cab company or through an app. What they
are doing in their relationship to the company that made the
assignment is the same. So I think you just want to go back to
not being necessarily distracted by the fact that it's
technology. I mean, companies evolve over time throughout the
history of our economy. It doesn't mean that the basic values
embedded in either consumer protection law or in employment law
don't apply anymore.
And, again, I'm not an antitrust expert, so I'd be really
careful about talking about the role that Uber plays in terms
of whether there's a danger of monopoly. But I do think your
question brings up an important issue over whether there's a
level playing field. And, again, this comes back to this same
issue of whether regulations should apply in the same way to
different actors in an industry just because they are
technology-enabled and what impact that has on that company's
ability then to compete in that sector.
Mr. Espaillat. Thank you.
I yield my time.
Chairwoman Foxx. Thank you very much. I will now recognize
myself for three minutes.
Dr. Sundararajan, thank you again for being with us today.
Again, thanks to all the witnesses.
You mentioned in your testimony the sharing economy means
different things to different people. But if you read our
legislation, you see we're very keen on having standard
definitions around here for what we do and what kind of public
policy we want to put in place.
You have alluded in your comments to the need to determine
some standard definitions and to define what is it we want to
accomplish in order to decide what regulations. And Mr.
Beckerman has talked a little bit about data.
What data do you think would be most important to determine
who's participating in the sharing economy and for what
purpose?
Mr. Sundararajan. You know, I certainly think that we could
benefit from having clear numbers on the number of people who
are participating across different industries, the amount of
time that they are spending on these activities, and not
everybody's contribution is best measured in time. You know, a
lot of it is in capital, but also, you know, what revenue they
are generating from these activities.
Chairwoman Foxx. Are you doing any of that research, or do
you know anyone who is?
Mr. Sundararajan. Well, I've been working for the last four
years on trying to convince different privately held sharing
economy platforms to sort of create a way of reporting this
information. I think I'm making some progress. But a little bit
of encouragement from you would certainly not hurt.
Chairwoman Foxx. Thank you very much.
Mr. Johnson, again, thank you very much for being with us
and sharing your personal story. You mentioned about using
Thumbtack's platform connecting with -- you with your first
client.
Did you -- what alternatives did you have to using
Thumbtack, and do you think you would have been as successful
without Thumbtack?
Mr. Johnson. I think in today's economy, and in my
industry, digital marketing is very important: platforms like
Thumbtack and having a direct connection to people interested,
having a website where I'm generating leads, even social media,
Facebook, Instagram, all important in attracting and acquiring
customers.
And I think about even today what I would be doing if I
wasn't receiving so many clients digitally. And I would be,
like, maybe knocking on doors at PTAs and, you know, wedding
venues and trying to make networking connections. And I really
feel like people are really interacting more digitally. And
that's -- it's just -- it's kind of a natural extension of what
people are already doing, that they're looking for service
providers digitally.
Chairwoman Foxx. Thank you very much.
Mr. Scott, you're recognized.
Mr. Scott. Thank you, Madam Chair.
Ms. Block, it's been noted that, when you're in the kind of
gig economy, your income has wide fluctuations. A lot of people
have trouble dealing with this because their monthly expenses
don't fluctuate. They have a mortgage or rent, car payments,
food, utilities.
What can be done to kind of smooth those out? If you can go
periods where you don't get a contract, so you have, really, no
income, in the employment situation, you get unemployment
compensation. What can be done to help people deal with the ups
and downs in the gig economy?
Ms. Block. Sir -- and thank you for the question. I mean, I
think you've hit on one of the things we can do, which is to
make sure that, to the extent the people do -- are in actual
employment relationships, that they're being treated as such
and then that they, therefore, do have access to unemployment
compensation if there are periods of time where there isn't
enough work.
I mean, I think there are also interesting conversations to
be had about adapting the unemployment compensation system to
deal with income fluctuations.
But the last thing I'd say is I also think it's a really
important question to look at why people are needing -- why
people have these income fluctuations, why people are needing
to fill in their income with short-term engagement in the
sharing economy. I mean, why don't people -- why don't -- why
aren't we creating enough good jobs that pay enough for people
to have a full-time job that can allow them to support their
families? Why do they need to drive Uber cars at night to
supplement income? I mean, I think that's actually the really
important question that we have in our economy today when we
look at how many people are coming in and out of the sharing
economy and what that does to their income.
Mr. Scott. In addition to that, I think some may need
access to some kind of insurance for loss of income due to
injury, family situations, as well as just fluctuality within
the contracts.
Can you say a word, in the last few seconds I have, on the
impact this has -- you served on the National Labor Relations
Board -- what the sharing economy has to do with the right to
organize?
Ms. Block. Again, to the extent that people who are
actually in an employment relationship who are employees are
being misclassified as independent contractors, that's taking
that really basic right to have sort of a voice in their
workplace and in their economy away from them. So I think it's,
again, another critical, important aspect of ensuring that
people who are properly classified as employees, you know, that
-- that right is enforced is, you know, exactly what you
mentioned, that they lose the right to [audio malfunction in
hearing room.] But even outside of that, to people who truly
are independent contractors, again, it's a big economy to be
operating on your own. And so finding ways that they can stand
together and have some voice in these platforms -- and I think
the idea about finding ways to encourage cooperative ownership
of these platforms is a really, really interesting one and one
that I think is worth more examination and conversation.
Mr. Scott. Thank you, Madam Chair.
Chairwoman Foxx. Mr. Scott, thank you.
I'll now recognize you for your closing comments.
Mr. Scott. Thank you, Madam Chairwoman.
I want to thank our witnesses. This has been a very
constructive discussion. I think there's a lot Congress has to
do to react to the innovation and technological advances in our
economy.
The sharing economy has spurred business growth, benefited
consumers, reduced inefficiencies, and improved lives. But
there are a lot of complications. The right to organize is just
one. Middle -- good middle class wages in the auto industry
didn't happen by accident. They happened because those wages
were negotiated. And without that negotiation, those wages
would not have been good middle class wages.
We need to make sure that people have a safe workplace and,
to the extent possible, some kind of consistent income. A lot
of people have trouble, if their income varies wildly from
month to month, making basic expenses.
We need to continue working on this because there are
challenges that we're going to have to address.
And, of course, Madam Chair, there are other issues that
we've mentioned that we hopefully will address in addition to
that.
So I thank you for the hearing and yield back.
Chairwoman Foxx. Thank you, Mr. Scott.
I want to say that I like to associate myself with the
first part of your comments today. Let me see. You said
Congress should support innovation, technological advances. The
sharing economy spurred business growth, benefited consumers,
reduced inefficiencies, and improved Americans' lives.
Mr. Scott. How about that right to organize?
Chairwoman Foxx. I like that.
We agree on those comments. I think any time we have an
opportunity to say that we agree.
But then I think our views differ.
Chairwoman Foxx. I often would say if I put a glass up
here, an 8-ounce glass with 4 ounces of water in it, I almost
always see it as half full, and my colleagues almost always see
it as half empty.
You know, we live in the greatest country in the world, the
absolute greatest country in the world. And that is because of
the freedom we have. I am so convinced of that. We have the
freedom to create all these wonderful businesses and industries
that have come about. I talk a lot about our phones. Thank God
the Federal Government did not get involved with regulating
cell phones. If it had, we'd be carrying bat phones around with
us now, and we wouldn't have the technical innovations that
have occurred. So I think any time you invite the Federal
Government to start regulating something, you stifle
innovation, I think.
People have the freedom to be involved in the sharing
economy or not. That is the way I look at it. And people can go
to work in a factory, and if they are looking for a certain
amount of security, if they're looking for a regular paycheck
and the things that come from different jobs, if they're
looking to utilize their talents, to work day and night, to
work whenever they want to, or I think, as Mr. Beckerman said,
where is it that you can just wake up in the morning and choose
not to go to work and not risk your livelihood? The sharing
economy gives ultimate freedom to people in this country. And I
think we attempt to regulate it at our peril.
And I just want to say it's not the government's role to
create a level playing field. You know, they've tried that in
Eastern Europe. They've tried it in Russia. Creating a level
playing field brings everybody down to the lowest common
denominator. It doesn't bring people up. It never has. And so I
want to say I'm grateful for the people who have been
innovative and creative and created the sharing economy. And I
hope that we will continue to have the culture that will allow
that to happen. I do think it would be useful for us to look at
what's happening in other countries and see how their economies
are being impacted compared to how ours is.
But I want to thank our witnesses again today and say to
everybody on the committee: Thank you for coming. This is a
fascinating subject, and I hope we will continue to look at it
and figure out ways, not for the government to regulate it or
to stifle it, but to encourage it.
There being no further business, the committee stands
adjourned.
[Questions submitted for the record and their responses
follow:]
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[Ms. Block response to questions submitted for the record
follow:]
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[Whereupon, at 12:09 p.m., the committee was adjourned.]

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