U.S. GOVERNMENT PUBLISHING OFFICE

26–715 PDF WASHINGTON : 2019

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 

( 

Available via the World Wide Web: www.govinfo.gov 

or 

Committee address: http://edworkforce.house.gov 

EDL-011-D with DISTILLER

(II) 

COMMITTEE ON EDUCATION AND THE WORKFORCE 

VIRGINIA FOXX, North Carolina, Chairwoman 

Joe Wilson, South Carolina 

Duncan Hunter, California 

David P. Roe, Tennessee 

Glenn ‘‘GT’’ Thompson, Pennsylvania 

Tim Walberg, Michigan 

Brett Guthrie, Kentucky 

Todd Rokita, Indiana 

Lou Barletta, Pennsylvania 

Luke Messer, Indiana 

Bradley Byrne, Alabama 

David Brat, Virginia 

Glenn Grothman, Wisconsin 

Elise Stefanik, New York 

Rick W. Allen, Georgia 

Jason Lewis, Minnesota 

Francis Rooney, Florida 

Paul Mitchell, Michigan 

Tom Garrett, Jr., Virginia 

Lloyd K. Smucker, Pennsylvania 

A. Drew Ferguson, IV, Georgia 

Ron Estes, Kansas 

Karen Handel, Georgia 

Robert C. ‘‘Bobby’’ Scott, Virginia 

Ranking Member 

Susan A. Davis, California 

Rau ́l M. Grijalva, Arizona 

Joe Courtney, Connecticut 

Marcia L. Fudge, Ohio 

Jared Polis, Colorado 

Gregorio Kilili Camacho Sablan, 

Northern Mariana Islands 

Frederica S. Wilson, Florida 

Suzanne Bonamici, Oregon 

Mark Takano, California 

Alma S. Adams, North Carolina 

Mark DeSaulnier, California 

Donald Norcross, New Jersey 

Lisa Blunt Rochester, Delaware 

Raja Krishnamoorthi, Illinois 

Carol Shea-Porter, New Hampshire 

Adriano Espaillat, New York 

Brandon Renz, Staff Director 

Denise Forte, Minority Staff Director 

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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 

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(1) 

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 ingeEDL-011-D with DISTILLER

2 

nuity 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. 

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3 

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. 

EDL-011-D with DISTILLER

4 

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 examEDL-011-D with DISTILLER

5 

ple, 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 adEDL-011-D with DISTILLER

6 

dress 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 

EDL-011-D with DISTILLER

7 

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. 

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8 

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 ownerEDL-011-D with DISTILLER

9 

ship, 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. 

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10 

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 reskilling. 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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The Sharing Economy, Digital Innovation, and the Future of Work 

Arun Sundararajan 

Professor of Business; Robert L. & Dale Atkins Rosen Faculty Fellow 

NYU Stern School of Business 

Head, Social Cities Initiative, NYU Center for Urban Science and Progress 

Written testimony for the hearing titled, Tire Sharing Economy: Creating Opportunities for 

Innovation and Flexibility, convened by the Committee on Education and the Workforce, United 

States House of Representatives, September 6'", 2017. 

Chairwoman Poxx and Ranking Member Scott, I am 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. What we call the sharing economy today represents early examples of 

new and digitally-enabled ways of organizing economic activity. In the future, these new systems will 

span multiple industries, change what it means to have a job, reshape our regulatory landscape, challenge 

our social safety net, and restructure how we finance, produce, distribute and consume goods, services 

and infrastructure. Forward-looking policy about education and the workforce that anticipates these 

changes is essential for the continued competitiveness and stability of the country. 

Overview, definitions, and examples 

The term "sharing economy" means different things to different people, which often complicates 

discussions about policy for the sharing economy or regulating the sharing economy.' The label is also 

often challenged because it seems at odds with our everyday use of the verb "sharing." I am unaware of 

any consensus on a definition of the sharing economy.' In my 2016 book' (which I nevertheless decided 

1 See Kenneth Olmstead and Aaron Smith, I low Americans Define the Sharing Economv, Pew Research 

Center (May 20, 20 16), which highlights the diversity of perceptions that Americans associate with the 

term, ranging from charity and socialism to asset rental marketplaces. 

'I discuss a few alternative definitions from other authors in my 2017 report to the European Parliament's 

Committee on Internal Market and Consumer Protection. See Sundararajan, Arun, The Collaborative 

Ec0l1llmy: Socioeconomic. Rcgulatorv and Policy Issues (February 2017). 

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to title "The Sharing Economy,") I explain why I lind the term "crowd-based capitalism" more precisely 

descriptive of what most of us refer to as the sharing economy! 

Let me therefore start with a quick definitional summary to place my testimony in a clear context. Before 

I do that, let me clarify some terms. Platforms are the digital 'marketplaces' which facilitate the 

exchange of goods and services. Providers are the individuals or small businesses that supply goods and 

services in these marketplaces. Consumers are the individuals who generate the demand for (by buying, 

renting or otherwise consuming) what the providers provide. 

Over the last twenty years, digital technologies have been blurring the boundaries between institutions of 

differing scale that have historically facilitated the provision of trust and the use of intellectual capital in 

business. This changes how we organize economic activity. In the early days of modem American 

capitalism, commerce resembled a textbook peer-to-peer market economy-the one-person business was 

the primary form of production and distribution. Following the revolutions in transportation and 

communication induced by the railroad and the telegraph in the mid-19th century, mass distribution and 

mass production became more prevalent, leading to emergence of the modern corporation in the early 

20th century, and the subsequent dominance of mm1agerial capitalism, today's familiar hierarchical 

organization, and the work arrangement of full-time employment in the second half of the 20th century. 5 

3 Sundararajan, A run. The Sharing Economy: The End of Emplovment and the Rise of Crowd-Based 

Capitalism. (MIT Press, 2016) 

4 The sustained use of the term "sharing economy" may in pm1 be due to some of its intellectual 

precursors. See Sundararajan Q.illfl.l, Chapter 1, 30-35 for a more detailed discussion. For example, 

Y ochai Benkler' s notion of "commons-based peer production" discussed in 'Sharing Nicely': On 

Shareable Goods and the Emer"ence ofSharin~ as a Modalitv of Economic Production (Yale Law 

Journal, 2004), Michel Bauwens' conception of peer production discussed in The Political Economv of 

Peer Production (CTheory, 2005), and Lawrence Lessig's contrast between market economies and sharing 

economies in Remix: Makin~( Art and Commerce Thrive in the Hvbrid Economv (New York: Penguin, 

2009). Rachel Botsman and Roo Rogers, "\tb.u.t}_01iLL<:ls..i:illJI.:i~J:hc lli~~JlfC.ill.lahQJlllivc Cqj)sumption 

(Harper Business, 2010) prefer "collaborative consumption," and Lisa Gansky, I he Mesh: Whv the 

Future· oi Business i.s Sharing (Portfolio Trade, 2010) favors "the Mesh." 

5 An excellent history of the gradual transition from Adam Smith's famed "invisible hand" to the modern 

corporation of the late 20th century can be found in Alfred D. Chandler Jr., The Visible Hand: The 

MatH1£Crial Revolution in American Business (Harvard University Press, 1993). 

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Today, we are witnessing the emergence of another new way of organizing economic 

activity--crowd-based capitalism-that is the successor to 20th century managerial capitalism. What we 

often call the "sharing economy" (and what I prefer to call crowd-based capitalism) describe an economic 

system with the following five characteristics: 

(I) Market-based exchange facilitated by a platform. Such platforms almost always aggregate demand, 

match customers with providers, and provide some digitized form of trust. For example, the platform 

Airbnb facilitates the provision of short-term accommodation by its 3 million hosts (providers) to its 200 

million guests (consumers). Many platforms do significantly more. My analysis of over !00 sharing 

economy platforms in 2015 suggested considerable variation: some platforms resemble light-touch 

marketplaces that simply match buyers and sellers, while others provide support that may include 

production financing, provider mentoring, customer support, provider pricing tools, logistics support, 

payment processing and other operational assistance to providers.' 

(2) High-impact capital and asset-light consumption. The sharing economy creates opportunities for 

assets, skills and time to be used at levels closer to their full capacity. In parallel, it allows a greater 

fraction of consumption to occur through a variety of rental models, and without the need for individual 

asset ownership. For example, rather than owning a second car, many people may instead engage in 

market-based "sharing" using the platform Lyft or Uber. 

(3) Crowd-based "networks" replace centralized institutions or hierarchies. Much of the supply of 

capital and labor comes from decentralized and heterogeneous crowds of providers who vary in scale and 

objectives. For example, the platform Getaround facilitates peer-to-peer vehicle rental. A majority of its 

providers in San Francisco list just one car, a personal vehicle, on the platform. However, many other 

providers own small fleets of two to ten cars, and run a small car rental business through the platform. 

Additionally, City CarS hare, a Bay Area shared mobility company, rents out its fleet of over I 00 vehicles 

through the Getaround platform. 

(4) Blurring lines between the personal and the professional. The supply of services through sharing 

economy platforms often commercializes and scales peer-to-peer activities like giving someone a ride, 

having a house guest, preparing a meal for friends, helping someone move, or lending someone money, 

activities which used to be considered "personal." 

6 See Sundararajan (2016). Chapter 3, 77-79. 

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(5) Blurring lines between fully-employed compensated and casual labor, between independent and 

dependent employment, between work and leisure. Many traditionally full-time jobs are supplanted 

by a variety of non-employment work arrangements ranging from on-demand contract work to 

micro-business ownership, featuring a continuum of levels of time commitment, granularity, capital 

ownership, economic dependence, and entrepreneurship. I will return to this point later in my testimony. 

Short-term accommodation and transportation ("ride-sharing'') services have dominated the public dialog 

about the sharing economy over the last five years. By most measures, Airbnb is already the world's 

largest provider of short-term accommodation; it's 4 million listings (as of mid-2016) dwarf the 

1.1 million room inventory of Marriott-Starwood, the world's largest hotel chain. Around the world, 

mobile phone-hailed transpm1ation has been made possihle by platforms like Uber and Lyft in the US, 

Didi Chuxing in China, Grab and Go-Jek in South East Asia, and Ola in India, platforms that have 

collectively raised about $30 billion in venture financing. However, it is important to recognize that the 

changes induced by the transition to crowd-based capitalism span a broad range of industries, ranging 

from commercial real-estate (We Work) and long-term accommodation (Common) to groceries (La Ruche 

Qui Dit Oui) and healthcare (Care.com, Clineeds, UberDocs). 

Of particular interest are those platforms which aggregate the consumer demand for different services, 

connecting freelance workers and small businesses with this demand. Some, like Upwork and Thumbtack, 

span a broad range of professions, from accounting and copy editing to personal fitness and photography. 

Others, like Handy, concentrate on a cluster of related services like house cleaning, moving. and home 

maintenance. Still other platforms focus on one specific profession, like Catalan! for management 

consulting (over 40,000 providers), Gigster (whose providers arc highly curated software engineers), and 

Upcounscl tor legal services. 

The scale of such specialized platforms is growing. As an illustration: Upcounsellists over 20,000 active 

providers. These include professional solo law practitioners, stay-at-home parents who work part-time 

through the platform, and boutique law firms. 70% of Upcounsel's lawyers (who have an average of 15 

years of experience) have worked at top-200 law firms, and 50% of them have worked at Fortune-500 

firms. Essentially, Upcounsel is building the infrastructure of a law firm to support a highly skilled 

crowd-based provider population by aggregating demand, managing client relationships, and guaranteeing 

client payment for them. The pace of growth of such platform-based non-employment work accelerates 

with the emergence and popularity of new enterprise software from companies like WorkMarket and SAP 

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that manages corporate task-based workflows, allowing traditional corporations to integrate on-demand 

talent into more complex internal processes. 

Although the last few years has witnessed a striking expansion of this new way of organizing economic 

activity, there are many aspects of crowd-based capitalism that predate the modern sharing economy.' 

eBay, founded in 1995, was the pioneer of digitally-enabled peer-to-peer commerce, and currently has 

over 25 million sellers. YouTube, founded in 2005, aggregates content provided by a distributed and 

heterogeneous crowd of creators, and has more viewers than any television network in the world. The 

You Tube platfonn (owned by Google since 2006) centralizes the aggregation of demand, provides search 

and discovery capabilities, and performs some content filtering. (The demand aggregation and content 

distribution activities are thus still handled by a traditional hierarchical organization.) In contrast, content 

production is done by a distributed and varied "crowd" of providers. Some content comes from large 

studios: traditional entertainment hierarchies that also produce YouTube-ready music videos and 

Internet-customized programming. But there are also millions of independent and semi-professional 

producers who create media 'micro-businesses.' which generate revenue from the advertising shown to 

consumers who view their content. Some of these producers boast tens of millions of subscribers and earn 

millions of dollars in annual revenue.' Numerous others cater to a niche audience and generate more 

modest incomes. Still millions of other YouTube content creators simply post content for fun. 

While one might think of Amazon (founded in 1994) as a traditional online retailer, it is in fact one of the 

world's largest crowd-based capitalism platforms. About 50% of its estimated US merchandise sales of 

$125 billion' (and closer to 60% of its global sales) are from small businesses selling through the 

platform. Many of these small businesses use Amazon's inventory management and fulfillment services, 

7 In Sundararajan (20 I 6 l, Chapter 2, I discuss the confluence of technological and trust factors that have 

led to dramatic recent acceleration. 

'Some of the most prominent earners on YouTube include Lilly Singh (comedy sketches and music 

videos, $7.5 million in 2016), Tyler Oakley (variety entertainment, $6 million in 2016) and Rosanna 

Pansino (unconventional baking ideas, $6 million in 2016). 

9 Amazon docs not report the aggregate gross merchandise value (GMV) of merchandise sold through its 

platform, or break down the fraction of GMV that comes from marketplace sellers. These estimates are 

based on my own analysis of research done by investment banks and other third parties. 

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and the platform's "Fulfillment by Amazon" feature often masks the distinction between buying directly 

from Amazon and buying from one of these smaller sellers. 10 

The sharing economy is also contributing to a broader (but distinct) ongoing shift in the American 

workforce, away from full-time employment and towards non-employment work arrangements. Several 

studies over the last two years have documented a rise in this non-employment labor force: people who 

derive their primary or supplemental income from work arrangements other than employment. Estimates 

of the total number of such "independent" workers in the United States range from 40 million to 68 

million." This variation reflects different definitions and methods; nevertheless, both the high and low 

estimates demonstrate that independent workers represent a significant fraction of the country's civilian 

labor force of 160 million people. 

In the future, the aspiring law associate of today might instead become a tiny law firm that operates 

through a legal services platform. That would enable the young lawyer to gain access to corporate clients 

that the platform maintains relationships with, while perhaps leveraging artificial-intelligence-enabled 

legal research capabilities to scale. Similarly, micro-entrepreneurs might run transportation businesses 

using small fleets of autonomous cars or trucks through a logistics platform. A local mom-and-pop store 

may evolve into one that caters to a specific niche it reaches through a global retailing platform. A 

multinational consulting firm might evolve into a platform through which millions of individuals run 

micro-consulting practices (or even small partnerships). 

Economic impacts, regulatory challenges, and data-driven delegation 

These digital platforms that aggregate demand, provide search and discovery, and ensure sufficient trust 

for commercial exchange create significant opportunity for small business growth. Millions of small and 

10 This shift in how retail is organized will be reinforced as platforms like Postmates and DoorDash 

"index" one's physical neighborhood, create effective last-mile delivery systems, and make local 

purchases initiated through a digital interface more commonplace. 

11 See, for example, Manyika, J., Lund, S., Bughin, J., Robinson, K., Mischke, J. and Mahajan, D., 

Independent Work: Choice. NecessitY and the Gi\i l:ocononw. (McKinsey Global Institute, 2016), Katz, L., 

and Krueger, A. (2016). The Rise and Nature of Alternative Work Arran~cments in the United States, 

1995-2015 (National Bureau of Economic Research Working Paper 22667), and studies from the 

Freclanccrs Union'Upwork and from MBO Partners. 

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micro- businesses already operate through platforms ranging from Amazon and Airbnb to Upwork and 

Thumbtack. It is important that any assessment of economic impact not focus exclusively on the scale and 

market power of the large platforms, but actively measures the positive effects that the transition in 

business has on millions of smaller businesses that these platforms enable and support. 

My academic research about the projected economic impacts of crowd-based capitalism indicates that in 

the long run, the sharing economy will contribute positively to economic growth. Some of this growth 

may stem from total factor productivity (TFP) increases that accompany the more efficient use of assets. 

Additionally, the dramatic increase in variety that accompanies the emergence of crowd-based capitalism 

(contrast product variety on Airbnb with that of traditional hotel chains) will increase consumption, 

leading to further growth. Furthermore, shared assets are used more intensively, and as a result, might 

need to be replaced more actively. So even though there may be fewer owners, these o\\ners will buy 

more frequently because, in a sense, they are "spending" the capacity of their asset more rapidly. 12 

My research also suggests that the sharing economy may reduce economic inequality. There are a number 

of factors that explain this counterintuitive effect. 13 Lower-income consumers who were previously 

excluded from ownership are now able to enjoy the benefits of access-based consumption. For example, 

families who may not have been able to atTord vacations in the past can now enjoy them because of the 

ease of renting affordable or family-friendly short-term accommodation on Airbnb. Many lower-income 

consumers realize ownership cost savings, gains from greater usage efficiency and higher quality 

consumption. Still others benefit from being able to afford to purchase better assets because these 

personal assets can now be commercially monetized through sharing economy platforms. I highlight this 

finding because it speaks to what may eventually be the true promise of the sharing economy, as an 

economic force that democratizes access to a higher standard of living. 

As more and more of the economy transitions to crowd-based capitalism, the ensuing creation of millions 

of micro-businesses that reach global markets through digital platforms will require rebalancing 

regulatory responsibility between governmental and non-governmental bodies. Many of our current 

regulatory systems are premised on large corporations dominating the supply of goods and services, like 

they did in the second half of the 20th century. Because the sharing economy creates new ways of 

providing familiar services that are traditionally often highly regulated, regulatory conflict is to be 

12 I discuss these effects in greater detail in Sundararajan 12016), Chapter 5. 

ll Many of the details of this research are reported in Samuel Fraiberger and Arun Sundararajan, 

Peer-to-Peer Rental Markets in the Shari no Economv (March 2015, updated August 20 17). 

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expected, and indeed, around the world, governments have struggled with how to best regulate this new 

form of exchange. However, the sharing economy provides new solutions to existing trust challenges, and 

regulation, often interwoven with the provision of trust, doesn't always have to originate with 

governments. Regulation can take on myriad forms, governmental and otherwise. 

To summarize, responding to this ongoing shift requires a fundamental rethinking of how we regulate. It 

is important to imagine a regulatory system that works with, rather than against, the platforms of the 

sharing economy .

14 

Drawing new lines between governmental regulatory agencies and platforms is not simple. An approach I 

have often advocated considering is data-driven delegation--delegating enforcement of regulations, 

with appropriate oversight and application programming interfaces (A Pis) for audit purposes, to the entity 

that routinely gathers and holds, as a natural byproduct of the commerce in question, the data necessary 

for regulation-as an alternative to either government-only regulation or the ''open data" approach of 

transferring consumer information to government regulators. Some of the principles I have formulated to 

aid the difficult decisions about when data-driven delegation is appropriate are summarized below. 

• Are there new technological solutions to infonnation asymmetry? Platforms represent a new 

generation of third-party institutions. Often, the existence of a governmental regulatory body was due 

to market failure caused by some form of infonnation asymmetry. Does the platfonn naturally 

provides a technological fix to what required intervention in the past?" 

• Do economic externalities have to be internalized? If government intervention has historically been 

because of economic externalities, delegation to platforms may be less effective. The commercial 

choices made by a buyer or provider may impose costs on (or result in benefits to) others, and these 

externalities often may not be naturally taken into account (or internalized) when trading peers make 

choices. When these externalities are negative, continued involvement by either the government or a 

non-platform third-party may be necessary. 

14 I discuss this issue in greater detail in Sundararajan 120 16), Chapter 6. 

15 For example, in the past, a passenger might not have known the shortest route in a new city, or the right 

prices for taxicab services. Thus, it was necessary for a government body to set standards and install 

meters in taxicabs. But in today's era ofGPS and smartphones, the need to install government-issued 

meters seems lower; besides, the existence of nationwide or even global platforms indicates that this role 

can be delegated to them in a manner than benefits society. 

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• Are social and profit interests aligned? If a desired social outcome is at odds with a platform's profit 

motive, delegation must be considered with care. 

• Does regulatory effectiveness increase with data? Does the effectiveness of regulation increases as the 

scope and volume of available data for regulation increases? If it does, data-driven delegation may be 

in society's best interest. These advantages may be greater when there is significant variety in or a 

rapidly changing provider population. 

• How sensitive is the data required for regulatory purposes? Do the potential privacy costs to society 

from mandating data transparency outweigh the potential costs to society from auditing platforms for 

compliance? If the data required to regulate effectively is of the kind whose sharing imposes a 

potentially high cost on the platform's users, or that may raise citizen concerns about government 

surveillance, this favors data-driven delegation. 

• How much technological sophistication is required? The technological sophistication of the potential 

non-governmental partner, and the complexity of the data analysis required for effective detection and 

correction are also important considerations. If the platform in question has technological talent 

resources that are likely to be superior to those a government agency can attract or afford, and the task 

at hand requires some technological sophistication, this favors data-driven delegation. 

• How timely does the enforcement need to be? In deciding on the right situations for data-driven 

delegation, it is also helpful to consider the social costs and benefits of a timely regulatory response." 

• Are there societal cost advantages to delegation? In deciding on the right situations for data-driven 

delegation, it is also useful to consider the relative costs of the governmental and non-governmental 

options." 

16 For example, the availability of certain kinds of inappropriate content on YouTube has immediate social 

costs given the speed with which access to such content may spread. Thus, delegating the role of 

regulating such content to YouTube can benefit society, since YouTube has a far superior ability to 

detect, as well as to act on enforcement (block or remove the offending content) much more rapidly. 

17 For example, it costs Airbnb a lot less to simply deduct taxes for each transaction, aggregate these 

receipts, and transfer them to a city government periodically, than it does for a government to set up a 

reporting system for hosts, for hosts to have to report their earnings, compute tax and file paperwork 

associated with the tax remittal, and for the government to then have to audit these receipts. 

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Workforce and education policy issues 

With these opportunities, however, come new challenges. When coupled with a rise in the cognitive 

capabilities of artificial intelligence and robotics technologies, sharing economy platforms will 

dramatically reshape tomorrow's workplace, threatening the viability oftoday's dominant model of work: 

being a salaried provider of labor and talent." Three important areas of policy intervention that are 

necessary to effectively manage this transition are related to capital ownership, to labor law and the social 

contract, and to education policy. 

Capital ownership. A particularly attractive feature of crowd-based capitalism is its promise to 

redistribute and make less unequal the ownership of capital. But this promise is just a possibility, and not 

a certainty. As the workforce moves away from the 20th century model of earning money by providing 

labor and talent to a large organization which owns the capital associated with the economic activity, a 

critical policy direction will be to guide the shift towards an economy in which a greater fraction of the 

workforce are capital owners, running tiny businesses that use a mix of labor and talent inputs from the 

individual themselves and from others (perhaps even via an on-demand platform). These guidelines 

contrast with other proposed policy responses to digitally enabled work changes which focus on the 

redistribution of income through progressive taxation, a capital tax," or a universal basic income. 20 

18 At a specific level of technological progress, different tasks that comprise a job have always been 

automatable to different degrees. However, work arrangements that involve long-term labor relationships 

allow greater slack in the design of work systems. In contrast, if the work associated with full-time jobs is 

"unbundled," this must necessarily be accompanied by a far more structured production process, one that 

is designed to make tasks more separable and modular. This will naturally increase the pace and precision 

at which such tasks can be automated when the technology is ready, which in turn will accelerate the pace 

of displacement of human labor. The labor displacement effects of technological progress are also 

affected by the differential speed with which it lowers the cost of doing different tasks that comprise a 

job. Of the many tasks that comprise a production process, if only a few are automated, the variable cost 

of production associated with these tasks is lowered. As a consequence, production may increase, thereby 

increasing the demand for the human labor associated with the other tasks. This mitigating effect may be 

higher when the tasks arc done as a "bundle" of work, and less so when separated. 

19 For a discussion of capital taxation ideas following a robotic technology induced productivity shock, 

see Jeffrey D. Sachs and Laurence J. Kotlikoff, Smart Machines and Lono-Tcrm Miserv (National Bureau 

of Economic Research Working Paper 18629, 2012) 

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Put differently, sensible policy will shift the workforce away from those platform models under which the 

workforce is simply on-demand labor, and favor those platform models under which the providers have 

genuine ownership of some fraction of the organizational and intellectual property capital associated with 

the service. For example, a seller on Amazon or a host on Airbnb is not simply providing labor: they run a 

small business by setting prices, managing inventory, positioning their product, making merchandizing 

choices, engaging in customer service, and building a brand through the platform's reputation system. If 

an economy attains decentralized capital ownership, as an increasing fraction of labor inputs shift away 

from human labor and towards AI and robotics technologies, the workforce can more easily retain their 

ability to earn a living through their ownership of part of the associated capital. 

In addition to favoring the platform models that are creating genuine individual-owned businesses, there 

are other policy actions that may aid this decentralization. For example, as some of the larger platforms 

become publicly traded corporations, government incentives that encourage the creation of "provider" 

stock ownership programs-under which providers are allocated shares in a platform-would be helpfuL 

Additionally, since providers build "brand capital" through the profiles that exist on platform reputation 

systems, allowing these providers ownership over the associated reputation data (perhaps through an 

extension of current intellectual property law) will enable them to credibly port not just summary 

information but the details of their commercial histories from one platform to another, thereby increasing 

the value of the associated intangible capital. 

Labor law and the social contract. It is critical that we rethink how benefits, workplace insurance, paid 

vacations and other facets of the social safety net are funded, since there will not be a well-defined 

employer responsible for a majority of tomorrow's workforce. Most saliently, the 20th century social 

contract for a worker was often defined in a way that presupposed or depended on the work arrangement 

being full-time employment. Employers frequently provided the funding for all or parts of a worker's 

benefits, paid vacations, income stability and workplace insurance. Salaried employment also provides a 

natural career trajectory and source of community for workers. None of these assumptions will hold for 

the majority of the workforce of 21st century. 

The challenge of funding a new safety net will be greatest in countries like the United States and the 

United Kingdom, where large institutional employers have a bigger hand in providing worker benefits. 

20 See, for example, Andy Stern and Lee Kravitz, Raising the Floor: How a Universal Basic Income Can 

Renew Our Economy and Rebuild the American Dream (2016). 

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The creation of new government-individual-institution partnerships may be one solution." For example, 

as corporate pension plans have dwindled in the US over the last few decades, the 401 (k) and associated 

programs have evolved to facilitate retirement planning that complements Social Security benefits. These 

represent a partnership between different stakeholders - individuals put aside a portion of their income 

each month, corporations supplement their contribution, and the government provides tax incentives. 22 

It is also important to remove any barriers to the platforms themselves embracing some of the 

responsibility. Protecting the providers who generate their profits can be both "doing the right thing" and 

smart capitalism. For a platform to offer a branded service experience of consistently high quality requires 

a reliable and steady source of high quality supply from providers. Since platfonns lack the typical 

directive authority or culture-building capabilities that traditional firms use to manage their employees, 

provider benefits may eventually be naturally viewed as good business practice. It is essential, however, 

to remove labor classification barriers to the emergence of these market responses, recognizing that the 

binary classification of"employee" versus "contractor" does not describes the market reality today. 

It is also necessary to rethink labor laws predicated on an assumption of full-time employment. For 

example, minimum wage laws do not easily port to a platform-based world. Someone who drives for 

Ubcr or Lyft can connect and disconnect from the platform at will, can take time off whenever they want, 

and can drive for multiple platforms. Any economic objectives of a minimum wage cannot therefore be 

reasonably accomplished by requiring one platform to guarantee its providers a minimum hourly income. 

Rethinking transition education. In tomorrow's world of work, a larger fraction of the workforce will 

not enjoy the natural career trajectory that comes with institutional employment. Perhaps the role of 

today's post-secondary university will evolve to include this kind of lifelong career planning. But in 

parallel, a growing fraction of the workforce will have to transition to new professions multiple times 

during their career. We therefore need new university-like institutions that provide individuals 

experiencing mid-career transitions with structured and pedagogically sound education. This education 

cannot stop simply at offering retraining or the opportunity to acquire new skills. Rather, it must be 

accompanied with the creation of a new professional network and access to new opportunities, facilitating 

21 See Sundararajan, Arun. Sharing ResponsibilitY in the Sharing Economy. (Policy Network, November 

2014) 

22 I don't mean to suggest that 40 l (k) plans have solved the retirement savings problem for everyone, but 

merely that they represent a partnership model that has worked for some over the last decade in providing 

an alternative to employer-funded retirement benefits. 

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relocation to pursue a new career more naturally, imbuing workers in flux with a new identity and sense 

of purpose, and rebuilding self-worth to allow transition with dignity. Seeking this sort of mid-career 

intervention should be as natural as choosing to go to college after high school, a new rite of passage. 

Templates for these institutions are likely to emerge from large corporations managing workforce 

transitions in the coming decade. However, for this new education ecosystem to truly flourish, the right 

government interventions may be necessary. While the mix of post-high school education delivered by 

today's universities may naturally evolve over time in response to market forces, perhaps away from 

STEM subjects and towards design and entrepreneurship, it is not realistic to expect enough new 

continuing education institutions to emerge entirely driven by market forces. The managerial revolution 

of the twentieth century in the United States was made possible in part by the Morrill Land-Grant Act of 

1862, which spawned over I 00 land-grant institutions that still exist today (and that include some of the 

country's top educational institutions like Cornell, MIT, Ohio State University and the University of 

Minnesota). Although these institutions perhaps did not immediately fulfill their stated goal of teaching 

"agriculture and the mechanic arts," the Act laid the foundations for a nationwide and broadly accessible 

post-secondary university system. 

To summarize, the "sharing economy" represents the early stages of a very significant digitally-enabled 

transition that will dramatically reshape the American world of work in the coming decades. Timely and 

forward-looking workforce and education policy is central to the future competitiveness and stability of 

the country. 

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24 

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 fulltime 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. 

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25 

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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Summary 

Testimony of Jonathan M. Johnson 

Owner of SnapSeat 

Great news- your wife shares the news that you are expecting your first baby! And one week 

later you walk into work and are laid off because your position has been eliminated. I am writing 

today to share how I went ti·om laid off to living out a dream of owning a small business over the 

course of the last four years. 

Seize an Opportunity, Limit Risk 

My name is Jonathan Johnson and I am here to speak on behalf of individuals who have been 

able to start their own business and find success in the new economy. 

My story started in October 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 in a career I hoped to be lifelong to pass. But what I couldn't shake was a 

photo booth I had seen at an event just one month before. 

I have 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 industry and realized there was an entirely 

new market of people and events looking for photo booths. An idea I had for mobile portrait 

stations a few years earlier was now becoming mainstream. So I decided to take the risk and start 

my own photo booth business called SnapSeat. 

I started SnapSeat with a partner and every spare dollar we could find- and no debt. 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. We were able to come up with about $10,000 and that 

covered our basic equipment, software, website, graphic design. 

One thing !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 to have a minimum viable 

product and the determination to go out and find our first customers, learn along the way, and 

reinvest as we made money. 

Finding Customers 

We made the investment, we took the risk, and we built a photo booth that (mostly) worked. We 

attended our first wedding expo in January 2014 and we had only two brides interested. This was 

clearly not enough to start a business. So how did we find customers? It took me three months to 

discover what would lead us to our first real customers, and be responsible for eighty percent of 

our business in our first year. On a friend's advice, I checked out and registered for a profile on 

Thumbtack.com as a service provider. 
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Thumbtack is an incredible mechanism for both local customers and local service providers to 

create a market. For a customer, they can go on the website, create a request for a large array of 

services- plumber, website designer, photographer, landscaper, graphic designer, electrician, 

digital marketer, and more- and be contacted by local professionals with quotes for those 

services. For professionals like me, we receive real leads from real customers looking for our 

services in our area. 

After registering and completing a profile, I started receiving leads the same day. Shortly after, I 

figured out a pricing and a communication style that landed me my first paying customer for a 

small birthday party about 40 minutes away that paid me $300. It sounds cliche and funny, 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 the next client. In that first year, I completed 47 events, invested 

back into my business, and grew a solid base of business. And most importantly, my wife gave 

birth to a healthy baby boy, Jeremiah, on May 16'h, 2014. 

Keep Growing 

We had a plan when we started SnapSeat of growing into a large outfit with multiple photo 

booths, operating in surrounding cities, and being capable of handling hundreds of clients a year. 

In just three years, we now have a total of five photo booths and five employees. We've served 

over 600 clients in the last 40 months in three states. 

One of the best parts of establishing a business is being able to create jobs. SnapSeat is a great 

part time job for someone looking for a night or weekend job to supplement an income, to pursue 

their entrepreneurial endeavors, or go to college and finish school. My business offers flexible 

hours, allows office roles to be performed virtually, and we utilize a co-working space in 

Hartford as our main office. 

Starting a gig-based business has given me the flexibility to grow my business based on my 

schedule and be home for my family. I truly believe that the only limit on the amount of success 

of my business is how hard I'm willing to work. 

Another great part of finding success in an entrepreneurial pursuit is being able to help others 

pursue their business dreams. I've been able to coach three other startup owners and share my 

experience to help them improve. I'm now passionate about seeing small businesses succeed and 

I see the impact they can have on an economy. 

How the Government Can Support Entrepreneurs 

Going from a traditional job to owning a business has shown me another side of the economy. I 

have also experienced starting a business from very humble beginnings. I would like to share a 

few areas where legislation and policy change would, in my opinion, help foster small business 

and create an environment that would increase opportunities for startups to succeed. 

Registration & Formation Assistance: I would love to say that the Small Business 

Administration made a difference in my business, but my real world experience with the SBA 
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left me feeling like assistance to seek financing, e.g. loan readiness, was the only help being 

offered. Registering a business on the local, state, and federal level is extremely difficult. There 

are numerous tax, employer, and business formation filings and registrations to complete. The 

government can and should work to make these basic registration processes easier to navigate 

and understand if they truly want to support small businesses. A small startup or entrepreneur in 

the "gig economy" will most likely have less legal or financial resources to devote out of pocket 

to these areas, and a streamlined approach to helping these businesses succeed in this area will 

lead to a lower failure rate. 

Taxes: In the case of the startup, I would submit that there is an opportunity to get more tax 

revenue from a business by asking for less up front. Taxes and tax law compliance is a huge 

undertaking, extremely hard to navigate, and even harder to afford for most new businesses. 

would offer from my experience that ifthe government gave small businesses a two-year tax 

amnesty period on income, it would give startup entrepreneurs more money in their pocket, 

allow more of them to complete the registration process for their businesses to be a part of their 

income tax filings, and allow them to become more proficient and hopefully more lucrative 

taxpayers at later stages in their business cycle. 

Health Insurance: Giving everyone, and in my case entrepreneurs, an opportunity to pay for and 

choose a right-sized health insurance policy for themselves and their family is a big safety net. 

The freedom of knowing that medical issues would be covered by our insurance has enabled us 

to continue this venture with one less thing to worry about. It's also a viable option for my part 

time employees who are at different stages of life and needing insurance as they make ends meet 

I know that giving small businesses more options for insurance allows more people to take risks 

to try to make their ideas work. 

Conclusion 

As an entrepreneur, I took a risk to make an idea work that would ultimately provide for my 

family's needs. I'm living the American dream to work hard, to pursue my God given potential, 

and to be rewarded by serving others in the marketplace with a profit. Every great business 

started with an idea and someone willing to take a risk. 

In today' s rapidly changing world, and in a new American economy and job market, it seems 

that more people are looking to make ends meet in this "gig economy." I believe our public 

policy needs to reflect this with laws that help every person with an idea who is willing to risk 

their time, talent, and resources to succeed. The next great American corporation could be that 

startup in the basement, garage, spare bedroom, or co-working space. 

Thank you for your time and allowing me to speak today. I am truly honored to be a part of this 

discussion and to be able to share my story. 

Sincerely, 

Jonathan M. Johnson 
29 

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. 

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30 

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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Testimony of 

Sharon I. Block 

Labor and Worklife Program, Harvard Law School 

Hearing Before the 

United States Congress 

House Education and the Workforce Committee: 

The Sharing Economy: Creating Opportunities for Innovation and Flexibility 

September 6, 2017 

Sharon I. Block, Executive Director 

Labor & Worklife Program, Harvard Law School 

8 Mount Auburn Street 

Cambridge, Massachusetts 02138 

(617) 495-9265 

sblockra>law.harvard.cdu 

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Testimony of 

Sharon I. Block 

Labor and Worklife Program, Harvard Law School 

Hearing Before the 

United States Congress 

House Education and the Workforce Committee: 

The Sharing Economy: Creating Opportunities for Innovation and Flexibility 

Chair 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 impacts on 

people who earn income from it, the workforce, and the broader economy. 

My name is Sharon Block, and I am the Executive Director of the Labor & Worklife Program at 

Harvard Law School, which is Harvard University's center for research, teaching and creative 

problem solving related to the world of work and its implications for society, as well as home of 

the Harvard Trade Union Program, the oldest executive leadership program at Harvard. The 

views expressed in my testimony are my own and do not represent the views of Harvard Law 

School. 

Before T start, I would like to make a note about vocabulary, which I find challenging in the 

context of talking about what the Committee has labeled "the sharing economy." In addition to 

"sharing economy," it is often referred to as the "gig economy," the "on-demand economy" or 

the "online platform economy". I prefer the "online platform economy" because I find it the 

most descriptive and value neutral. It also can be difficult to arrive at agreed terms for labeling 

people who derive income from the online platform economy without betraying an opinion as to 

the answer to one of the questions that we are here today to discuss: whether or not those 

individuals are employees or independent contractors. To foster a spirit of open dialogue on the 

question, I prefer to use a term that does not convey a bias as to the answer to that question and 

so have adopted the convention of labeling those individuals "workers"- even in the absence of 

agreement on whether they are employees or independent contractors, surely we agree that they 

work for a living and differ only on whether they work for another company or for themselves. 

I would imagine that everyone in this hearing room has used the services of an online platform at 

some point and most probably use them 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 a touch of a 

tlnger. As with many technologic innovations, the digital platform creates new opportunities for 

its consumers. The ability to order food, call for car service or sell our unwanted stuff without 

interacting with a person allows us to forget sometimes that there are real people behind these 

platforms-- often they're our neighbors or even family members, and indeed, the terms under 

which they're working makes a difference in the standards of living of many American families. 

I appreciate the Committee's interest in exploring the standard ofliving for those workers and 

how our labor and employment laws do and should apply to work in this sector. 

The key question that this hearing is designed to address is whether the innovation and flexibility 

that marks the online platform economy is consistent with our historical structure of labor and 

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employment laws that we enacted to ensure a basic level of economic security for American 

workers. Judge Vince Chhabria 1

, in a case brought by Lyft drivers asserting that they were 

employees misclassified as independent contractors, described the dilemma this way: "The jury . 

. . will be handed a square peg and asked to choose between two round holes." In an address this 

spring to the Consumer Technology Association's New American Jobs Summit, Chair Foxx 

similarly adopted the square peg/round hole analogy and concluded that, "self-employed 

individuals who rely on the sharing economy for work don't fit neatly into obsolete job 

categories defined in another era."2 

I believe that the square peg/round hole analogy sells short the framers of our basic labor and 

employment laws. They handed down to us 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 technologic and 

business innovation, I see nothing inconsistent between that principle and the dynamism that has 

always marked the American economy. Employers have found ways to innovate their way 

through many phases of the American economy from the recovery from the Great Depression 

through to the information age within the confines of this principle. 

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. My testimony will focus on demonstrating that there is nothing inherent in 

their drive for innovation or flexibility that precludes them from making the right choice the 

choice to create good jobs. 

Current Law Can Be Applied to Online Platform Business Models 

The first step in assessing whether or not current law is an impediment to innovation and 

flexibility is to assess how that law applies to the business models adopted by the dominant 

online platJorm companies. Although the experience of hailing a ride by watching pictures of 

cars on your smartphone was new with the advent of Uber, the experience of paying a company 

to procure transportation from point A to point Bon our nation's city streets is not new. In fact, 

even the argument that a company using new technology to connect people who need rides with 

people who want rides is a technology company and not a transportation company is not new. 

Consider this opening paragraph from a recent article3 on ridesharing platforms: 

In 1933, Elizabeth Rhone called Try Me Cab Company's advertised phone number to 

order a cab The company dispatched a vehicle bearing its logo. Unfortunately, the 

driver negligently operated the cab and injured Ms. Rhone. She sued the company for her 

injuries, but the company responded by saying it is not 'engaged in carrying passengers 

for hire.' Rather, the company characterized itself as "a nonprofit-sharing corporation, 

1 Cotter v. Lyft, Inc., Case No. 13-cv-04065-VC, Order Denying Cross-Motions for Summary Judgment (N.D. CA) 

(3/11/15); http://www.rstreet.org/wp-content/uploads/2015/03/Lyft-summary-judgment.pdf 2 https:/ /www.bna.com/gig-workers-need-n57982087532/ 3 https:/ /papers.ssrn.com/sol3/papers.cfm ?abstract_id=2995176# 

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incorporated under the laws ofthe District of Columbia for the purpose of furnishing its 

members a telephone service and the advantages offered by use of the corporate name, 

while the company did not own this or any other cab." Although Try Me Cab Company 

held the license to operate the cabs, it maintained that drivers were the passengers' 

independent contractors and claimed that it was not liable for Ms. Rhone's harm. 

Much of the debate over the online platform economy, however, is dominated by words like 

"disruptive," "innovative," and "new."4 If, in fact, online platform companies are service 

providers and not just intermediaries between individuals providing services and individuals 

needing services, however, the business model in terms of worker classification looks rather 

conventional. My former colleagues David Wei! and Tanya Goldman have differentiated 

between platforms that create virtual markets and those that provide branded services. Much of 

the litigation over employee status has been against the online platforms that provide branded 

services, such as Uber and Handy.5 In those examples, the platform company endeavors to 

deliver a consistent experience for customers- looking at Uber's website it is clear that they 

want the public to associate Uber with a ride that is always fast, reliable,safe, and ubiquitous.6 

While the outcomes of employee status cases are dependent on the particular facts and 

circumstances, 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 status7

• For example, in order to appeal to a particular segment of the market that the 

platform company bas decided is most profitable to serve, branded service platforms typically set 

the price at which workers offer the service to the customer. Similarly, in order to ensure 

consistent quality of service, branded service platforms typically dictate many aspects of the way 

in which workers provide the service. Moreover, thus far, most of the branded service platforms 

provide services that do not require a degree of worker skill or specialization, such as driving, 

cleaning or delivering groceries. 

Moreover, under the FLSA 8 and the NLRA,9 the opportunity for entrepreneurial gain or loss is a 

key indicator of employee or independent contractor status. Looking at Uber as emblematic of 

the branded service platform model, the entrepreneurial opportunity appears very constrained. 

Although Uber tends to be rather secretive about how its platform works, recent reports have 

revealed the following rules 10 that apply to drivers' behavior: 

• Drivers must accept at least 80% of assigned rides or they may be deactivated. 

4 http://www.newyorker.com/magazine/2017/05/15/is-the-gig-economy-working; 

https:/ /www. nyti mes.com/2017/06/19/books/ review /wild-ride-ad am-lash insky-uber-airbn b. html 

'Weiland Goldman, "Labor Standards, the Fissured Workplace, and the On-Demand Economy," Perspectives on 

Work (2016); http://www. fissuredworkplace.net/assets/Weil_ Goldman.pdf 6 https:/ /www.uber.com/ride/ 7 https://www.dol.gov/whd/regs/cosnoliangi.whdfs13.htm (FLSA economic realities test); NLRB v. United 

Insurance Co. of America, 390 U.S. 254 (1968) (NLRA common law agency test). 8 Solis v. Cascom, Inc., 2011 WL 10501391, at *4 (S.D. Ohio Sept. 21, 2011). 9 Fed Ex Home Delivery v. N.L.R.B., 563 F.3d 492 (D.C. Cir. 2009). 10 Rosenblat and Stark, Algorithmic Labor and Information Asymmetries: A Case Study of Uber's Drivers, 

International Journal of Communications 10(2016); 

https :/I papers. ssrn .com/ sol3/ papers .cfm? abst ract_id=2686227 

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• Drivers have only about 15 seconds to decide whether to accept an assigned ride. 

• Drivers may be required to explain any deviations from GPS suggested routes. 

• Drivers do not know their passengers' destination when they decide whether or not to 

accept a ride. 

• Uber sets the price charged to the customer for the ride and may change it at any time 

without prior notice to drivers. 

When you put all of these rules together, it is hard to see how Uber drivers have the opportunity 

to exercise entrepreneurial initiative. These rules preclude them from using their business 

acumen to decide whether a ride provides an optimal opportunity for profit, as they have to make 

an almost instant decision whether to accept it or not and do not know how much they will be 

paid for the ride, how long it will take or where it will lead them when they make the decision. 

Moreover, they cannot use their own business goodwill to make their "businesses" more 

profitable as they lack the authority to set their own prices. Setting prices is a fundamental 

feature of business decisionmaking. Instead, they have the ability to make more money by 

working more hours, not through the exercise of entrepreneurial or management skill. But that is 

no different than employees in many settings who have the option to add additional hours to their 

work week. Having the option to add hours does not transform an employee into an 

entrepreneur. 

Debunking the Myth that Current Law Stifles Innovation and Impedes Flexibility 

This hearing is premised on the uncontroversial premise that innovation and flexibility are 

positive attributes for participants in our economy and that the law should at best encourage them 

and at the least not create obstacles to companies achieving them. This premise necessarily then 

raises the question of whether the application of current law stifles innovation and impedes 

flexibility. 

Innovation: 

Many in the online platform sector have created a narrative that bending their business models to 

fit our Depression-era worker protection statutes will stifle the innovation that is crucial to the 

success of their companies. In a 2015 Atlantic article, David Mack, then Lyft Director of Public 

Affairs, suggested that a new definition of employment was needed to avoid burdening 

innovation in the ridesharing sector. 11 In introducing legislation to clarify the tax laws in order 

to facilitate online platform companies' classification of workers as independent contractors, 

Senator John Thune explained that he introduced the bill because he "think[s] it's important for 

Congress to do its part to keep up and ensure our laws don't prevent or stifle future growth" of 

the gig economy. 12 Senator Thune's legislation was endorsed by 10 of the biggest online 

platform companies, including Uber, Instacart and Handy, who in a letter to Thune asserted that 

11 "In the Sharing Economy, No One's an Employee," Gillian B. White, The Atlantic (June 8, 2015); 

htt ps:j /www. th eatlantic. com/business/arch ive/2015/06/i n -the·sh ari ng·economy-no·ones·a n-employee/395027 1 12 https :/ /www. thune.senate .gov /pu blic/index.cfm/2017 /8/ten-i n novative-technology-compa n ies-support -thun es-new-gig-act 

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his legislation would enable continued innovation in their sector. 13 Harris and Krueger also 

echoed this theme of the possible conflict between our current legal regime for classifying 

workers and promoting innovation. They asserted that the existing legal dichotomy "creates 

much legal uncertainty for workers and intermediaries" and that such uncertainty "may stifle 

innovation." 14 

While assertions of a connection between the ability to treat workers as independent contractors 

and the fostering of innovation are easy to find, it is harder to find explanations of the causal 

mechanism. Harris and Krueger rely primarily on what they perceive is an ill fit between the 

FLSA's requirements that employers track employees' time and the looser and more fluid nature 

of work hours for those engaged in online platform work. Larry Mishel and Ross Eisenbrey of 

the Economic Policy Institute provide a strong refutation of that asscrtion. 15 As they point out, 

the rules set by platforms- Uber in particular- provide very powerful incentive for drivers to 

devote concentrated time on the app, dispelling the idea that Ubcr drivers frequently mix 

personal time with their driving time or that they constantly switch back and forth between 

different apps, such as Uber and Lyft. As Noam Scheiber documented in the New York Times, 

Uber has even adopted behaviorial tools based on psychological research to push drivers to stay 

on the app longer. 16 

Further undermining the assertion that gig workers' hours are immeasurable and therefore any 

tracking requirement would necessitate an innovation-stifling reconception of how the platforms 

operate is the fact that the companies are among the most tech savvy in history that have found 

ways to track workers and customers to a degree that many find alarming. Uber now touts its 

minimum income guarantee for drivers who meet stringent standards for frequent usage of the 

app. 17 Implicit in Uber's ability to provide a minimum income guarantee is its ability to track the 

number of hours that drivers are working exactly the kind of tracking that Uber would have to 

do if their drivers were classified as employees. It is hard to imagine that a company that until 

recently had a practice of tracking the whereabouts of its customers after they finished their rides 

and without their knowledge cannot track the amount of time its drivers spend working for the 

company. 18 

The best evidence that employee status is not an obstacle to innovation are the examples of 

online platform companies that have made the choice not to fight application of the current 

13 https :/ /www. th u ne.senate .gov I public/_ cache/files/188c3824-417 e-48b5-9 239-

6af4b5dff1c6/78A9306A1CA70CFC597175E47D8189EF.thune-new-gig.pdf 

14 Harris and Krueger, "A Proposal for Modernizing Labor Laws for Twenty-First Century Work: The 'Independent 

Worker"', The Hamilton Project, Policy Brief 2015-10 (December 2015); https://www.brookings.edu/wpconten t/ u ploads/2016/07 I modern izing_l a bor _laws _for_ twenty_ first_ century_ work _pol icy_ brief. pdf 15 Mlshel and Eisenbrey, "Uber business model does not justify a new 'independent worker' category/' Economic 

Poilcy Institute Report (March 17, 2016); http:/ /www.epi.org/publication/uber-business-model-does-not-justify-anew-independent-worker-category/ 

""How Uber Uses Psychological Tricks to Push Its Drivers' Buttons," Noam Scheiber, New York Times (April 2, 

2017); https :/ /www. n ytimes .com/interactive/2017 /04/02/technology I uber -drivers-psychological-tricks .html? _r=O 17 h tt ps ://www. u ber. com I drive I at Ian ta/resources/ driver -partner -guaranteed-hourly-lares/; 

https:/ /www.uber.com/drivejpittsburgh/resources/guarantee-faq/ 

" http://www. n pr .org/sections/thetwo-way /2017/08/29/54 7113818/ u ber -ends-its-controversia !-post -ridetracking-of-users-location 

6 
37 

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definition of employee status and, instead, have embraced providing their workers with the 

security and stability that comes with employee status. I have had the privilege to spend time 

with several CEOs of online platform companies that have made this choice and have enjoyed 

watching their business flourish. 19 For example, Dan Teran, CEO of Managed by Q, an online 

platform company that provides office cleaning services on-demand, has classified all of his 

workers as employees and provides a wide array of benefits, including profit sharing, in addition 

to paying minimum wage and overtime, making workers compensation contributions on their 

behalf and meeting Social Security and Medicare contribution requirements. Dan is frequently 

recognized as a highly successful entrepreneur in the online platform economy. 20 

Flexibility: 

As the title of this hearing suggests, there is a perception that: (!)workers in the online platform 

economy value flexibility in their work arrangements over all other attributes of work; (2) that 

online platform business model provides the desired flexibility; and (3) that employee status 

impedes achieving the desired level of flexibility. I think that there are flaws in all three of these 

assumptions. 

There is a little doubt that a segment of online platform workers- perhaps a large segmentvalue the flexibility that platform work offers. In an article in the Harvard Business Review, 

Alex Rosen blat, a sociologist conducting an in depth ethnography ofUber drivers, found that for 

part-time ride hail drivers, who use their online platform work to supplement their primary 

source of income, the flexibility to work when and as much as they want is important. 21 In 

addition, a study done by Uber's Head of Economic Research Jonathan Hall and Princeton 

economist Alan Krueger found that 85 percent of survey respondents agreed that flexibility was a 

major motivator for driving for Ube~2 Thus, many online platform companies justify their use 

of the independent contractor status as a means of facilitating workers' desired flexibility. 

There also should be little doubt that flexibility- even radical flexibility-- is not inconsistent 

with employee status. For example, to decide which days to work is not an uncommon attribute 

of workers who engaged by temp agencies and who are undisputedly employees. As my 

colleague Professor Ben Sachs noted: 

The bottom line is that workers can choose when and how much to work, and can even 

work without immediate supervision, and still be employees within the meaning of the 

19 "These Startups Are Ditching the Uber Model and Hiring Full Time Workers," Miranda Katz, Wired. com (April 7, 

2017); https :/ /www. wired.com/2017 /04/th ese-sta rtups-are-ditchi ng-th e-uber-model-an d-hiring-full-timeworkers/ 

20 ~www.forbes.com/pictures/ml145klmm/dan-teran·26/#1066c7d63d7b; 

b.t.\ID://hub.jhu.edu/2017/01/17 /dan-teran-forbes-30-under-30-all-star/; 

https:/ /www. bi zjourn a Is. com/ n ewyork/ news/2016/08/2 4/ dan ·teran-upstart -100-reinventor -man aged-by-q. htm I 21 https:/ /hbr.org/2016/11/what-motivates-gig-economy-workers 22 Hall and Krueger, An Analysis of the labor Market for Uber's Driver-Partners in the United States, Working 

Papers (Princeton University Industrial Relations Section) (2015); 

http:/ I arks.pri nceton. edu/ ark :/88435/ dspO 1 Oz708z6 7 d 

7 
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law. Despite the trope, a legal determination that workers are employees does not require 

the loss ofthis kind oftlexibility. 23 

In their excellent report on this topic, the National Employment Law Project noted cases 

involving a wide array of workers who both enjoyed the flexibility to accept or decline work and 

set their schedules, but who were nonetheless determined by courts to be employees, including 

cake decorators, home researchers, nurses, couriers and restaurant workers.24 

What is in doubt is how real the promise of flexibility is for online platform workers. They 

clearly have the flexibility to work when they want to work. Generally, the online platform 

companies do not impose or assign work schedules on their workers. The platforms do, 

however, create strong incentives to influence when, where and for how long workers provide 

services. For example, Uber offers minimum guaranteed income only to drivers who stay on the 

app for fifty minutes out of every hour and engages in surge pricing to lure more drivers onto the 

app during peak hours and in high demand areas.25 In an interview with NPR's Aarthi Shahani, 

Uber driver David McKee told Shahani, "No, you don't feel like your own boss at all. The only 

thing you control is the time when you sign on and sign off. Other than that, Uber controls 

everything." As discussed above, this kind of narrow flexibility can certainly be accommodated 

within the definition of employee status. 

What also is in doubt, however, is how workers balance a desire for flexibility with the burden of 

low pay and lack of protections and benefits that accompany independent contractor status. Of 

course, in a world where all else is equal, people like flexibility. There is recent data suggesting 

that many online platform workers don't want the kind of flexibility that the online platform 

world offers when they can only get it by giving up basic employment protections. The high 

turnover rates among online platform workers suggests that many workers are not satisfied 

working for these platform companies. Research by the JP Morgan Chase Institute found that 

"one in six online platform workers is new in any given month and more than half of participants 

quit within a ycar."26 Moreover, these researchers found that as the national unemployment rate 

has declined, indicating an increase in opportunities in other parts of the economy, participation 

in the online platform sector has decreased. Finally, an earlier JP Morgan Chase Institute study 

showed that turnover was lower among participants who have the highest levels of income 

volatility- the young and the poorY Taken together, these data paint a picture of many workers 

willing to abandon the flexibility of online platform work if they can find other employment. 

What Are the Risks of Amending the Law to Accommodate the Online Platform Sector 

To fully assess the question posed by this hearing, it is important to examine what the risks 

would be of acquiescing to calls to amend our bedrock labor and employment laws to make it 

" https ://on labor.org/ uber -employee-status-and-flexibility I 24 NELP, Flexibility and the On-Demand Economy, Policy Brief (June 2016); 

http://www.nelp.org/content/uploads/Policy-Brief-Fiexibility-On-Demand-Economy.pdf 

25 NELP, Flexibility and the On-Demand Economy, Policy Brief (June 2016); 

http:/ /www.nelp.org/content/uploads/Policy-Brief-Fiexibility·On·Demand·Economy.pdf 26 https://www.jpmorganchase.com/corporate/institute/document/jpmc-institute-online·platform·econ-brief.pdf 27 https://www.jpmorganchase.com/corporate/institute/document/jpmc-institute-volatility-2-report.pdf 

8 
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easier for online platform companies to opt to treat their workers as independent contractors. 

believe that the risks arc significant: 

Continued risk shift: One way of thinking about what happens when a worker is classified as an 

independent contractor instead of an employee is that much of the risk attendant to acting in the 

economy shifts from the employer or the government to the individual. The Yale political 

scientist Jacob Hacker described this phenomenon in his book, "The Great Risk Shift: The New 

Economic Insecurity and the Decline of the American Dream."28 When workers become 

independent contractors, they become responsible for negotiating on their own for family 

sustaining wages, providing a safe workplace, saving for a secure retirement, and sustaining 

themselves through periods of unemployment. Our basic labor and employment laws were 

premised in part on the idea that individuals were not best suited to carry so much risk. Any 

change in the law that further facilitates that risk shift without an assessment of whether those to 

whom it is being shifted can bear it, risks great damage not just to the individuals involved but to 

the economy as a whole. 

Slippery slope of declining labor standards: While drafters of legislation to address the 

perceived needs of the online platform economy may intend to enact a narrow fix, the risk of in 

fact creating a giant loophole is great. Although our current definition of employee and 

independent contractor might lack laser-like precision, they are the product of decades of 

interpretation and clarification. The likelihood that Congress could draft new definitions that 

would be precise enough to preclude companies outside of what we now consider the online 

platform economy from increasing the classification of workers as independent contractors 

seems remote. Moreover, a new category risks incentivizing employers who currently treat 

workers as employees and provide all the attendant protections to moving their workers to a 

category that diminishes those protections. Thus, rewriting the definitions risks lowering labor 

standards for a much broader segment of the workforce than intended- not to mention decades 

of additional litigation to tease out any new standards in terms of how they are applied. This risk 

is especially unwarranted when viewed in light of the small size of the online platform economy 

- less than one percent of the workforce?9 

Need to Raise Labor Standards: In my opinion, the most urgent challenge facing our economy is 

how to raise labor standards. In last week's release of the August jobs report, we once again saw 

sluggish wage growth.30 The recent lackluster increase in Americans' income is a part of a 

decades-long pattern of wage stagnation31 and increasing income inequality.32 In the absence of 

any evidence that addressing the concerns of the online platform economy will raise wages or 

reduce income inequality, our national attention is better spent on policies that will: raising the 

minimum wage, increasing the overtime threshold and encouraging full employment. 

28 https :/I global.oup.com/ a cad em ic/ product/the-great -risk-shift -9780195 33534 7?cc=us&lang=en& 29 Katz and Krueger, "The Rise and Nature of Alternative Work Arrangements in the United States, 1995-2015," 

(December 2016); http: If arks. princeton. edu/ ark :/88435/ dspO lzs25xb9 33 30 https://www.reuters.com/article/us-usa-economy/u-s-job-growth-slows-in-august-wage-growth-retreatsidUSKCN1BC3Q4 

31 http://www.epi.org/nominal-wage-tracker/ 

32 htt ps ://www. washington post.com/ news/posteverythi ng/wp/2017/08/14/th e-whys-of-in creasing-inequality-agraphical-portrait/?utm_term=.9047d8d90336 

9 
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Conclusion: 

The online platform sector is an exciting and vibrant part of our economy. It provides income 

and convenience for millions of American workers and consumers. It is an admirable goal of the 

Committee to seek ways to foster its positive attributes- flexibility, innovative spirit, efficiency 

and convenience. I believe that the choice between those positive attributes and maintaining 

decent labor standards is a false choice. We should all share the goal of growing the American 

economy in ways that create a better future tor everyone involved in this sector platform 

owners, consumers, and workers. The innovation that Americans should be most proud of is our 

nation's long history of adapting to change- including technological change- in ways that have 

produced the most enduring and prosperous middle class in history. 

10 
41 

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 sharEDL-011-D with DISTILLER

42 

ing 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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43 

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TESTIMONY OF MICHAEL BECKERMAN 

President & CEO, Internet Association 

September 6, 2017 

Chairwoman Foxx, Ranking Member Scott and members of the Committee, thank you 

for inviting me to testify. My name is Michael Beckerman and I am the President & 

CEO oflnternet Association, which represents the world's leading Internet platforms. 

Internet Association is the unified voice of the Internet economy and its global 

community of users. We are dedicated to advancing public policy solutions to strengthen 

and protect Internet freedom, foster innovation and economic growth, and empower 

users. 

Included in Internet Association's membership are more than 40 of the world's most 

innovative companies, including sharing economy platforms suc1

h as Airbnb, Doordash, 

Handy, HomeAway, Lyft, Thumbtack, Turo, Uber and Upwork. As an advocate for 

these companies at the local, state, and federal level, Internet Association has witnessed 

first hand how the tremendous economic opportunity of the sharing economy has been 

embraced by individuals and communities across the country. We have have also seen 

how regulations implemented at a state and local level has the potential to stifle the rapid 

growth of jobs in these same communities. 

In some communities, policymakers and regulators have embraced new technology, the 

modern workforce and flexible income, and recognized the consumer benefit from 

increased competition. In these communities, which span across all 50 states, local 

economies have seen massive increases in income opportunities directly as a result of 

sharing economy platforms. IA research using member company data and economic 

modeling shows that these positions correlate with overall job creation and growth. Local 

economies are stronger where the sharing economy is also strong.2 

Unfortunately in some other communities, policymakers and regulators have put up 

roadblocks to consumer choice and competition. In these areas, the community is worse 

off when arbitrary harriers are placed on new entrants. Opportunities are lost, 

competition is stamped out, and growth is stifled. 

The diversity of platforms today make it nearly impossible to concisely define the sharing 

economy, sometimes also referred to as the gig, on-demand or flexible economy. At its 

1 Members oflnternet Association include Airbnb, Amazon, Coinbasc, Doordash, Dropbox, eBay, Etsy, 

Expedia, Facebook, Google, Groupon, Handy, HomeAway, lAC, Intuit, Linkedln, Lyft, Match Group, 

Microsoft, Monster, Netflix, Pandora, Pay Pal, Pinterest, Rackspace, reddit, Salesforce, Snap Inc., Spotify, 

SurveyMonkey, Ten-X, Thumbtack, TransferWise, TripAdvisor, Turo, Twitter, Uber, Upwork, Yelp, 

Zenefits, Zillow and Zynga. 

2 Research forthcoming 
44 

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foundation, the sharing economy is about removing barriers and allowing individuals to 

more efficiently utilize their time, earn income from their passions and hobbies, and 

better utilize assets or liabilities as a source of income. At their most basic, sharing 

economy companies are platforms that connect supply and demand. In 1980, for 

example, if you wanted a ride to the airport, you might have picked up the yellow pages 

to look up a phone number for a car service to call and arrange a pickup. In that 

pre-internet age scenario, the yellow pages served a similar function that Lyft and Uber 

do today- connecting supply- the driver- with demand -the rider. Today, thanks to the 

Internet and advances in mobile technology, this connection of supply and demand 

happens in real time and in a seamless way for consumers. 

Based on our advocacy for the internet industry generally and for the sharing economy 

specifically, Internet Association suggests the following principles to guide the 

Committee as you consider issues related to the sharing economy: 

• First, it's critically important to recognize that the sharing economy is diverse, 

rapidly growing, and creating new economic opportunities at the local, state, 

and national level. 

• Second, data demonstrates clear benefits to workers and other individuals. 

These benefits include flexible income, more opportunities, and an overall 

increase in marketplace access. 

• Third, in listening to grievances against sharing economy platforms and 

considering proposed legislative and regulatory actions, it is critically important 

to dispassionately assess whether these complaints capture genuine concerns 

about worker protection and safety, rather than simply being complaints from 

incumbent industries against increased competition. There is a growing body of 

evidence from groups like IA, UCLA, Brookings Institute, and others showing 

those concerns do not play out in data. 

I will elaborate on each of these points now and would be pleased to answer any 

questions you have about them. 

The Sharing Economy is Increasingly Diverse and Bolstering Economic 

Opportunity 

The sharing economy- also called the gig, on-demand, or flexible economy- is difficult to 

define and is rapidly developing to encompass new and innovative approaches to 

connecting workers and consumers. In fact, given improved data that is now available we 

know that there has previously been dramatic underestimating of individuals participating 

in the sharing economy. For example, for the years between 2012 and 2016, research 

from groups like JPMorgan and academics like Alan Krueger, estimated the sharing 

economy to number between approximately one to three million positions or 
45 

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opportunities. Today in 2017, new data collected and analyzed by IA shows that number 

to be approximately 24 million.3 · 

The benefits to U.S. workers, consumers and the economy from the sharing economy are 

real and growing. That same IA research estimates that the sharing economy adds tens of 

billions of dollars of real income to hardworking individuals, even when we use the most 

conservative of figures. Other research from Brookings Institute and IA 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 

demand that didn't previously exist.4 

Workers Benefit from the Flexible Economy 

Evidence is mounting that participation in the sharing economy is a net positive for the 

'microenterpreneurs' who participate in it. 5 

Any small business, free lancer, contractor, cleaning service or handyman who has been 

able expand their market, find new clients, build their businesses, or just use their skills to 

earn some extra money through platforms like Upwork, Thumbtack, or Handy can speak 

to the economic opportunities for them that didn't exist just a few short years ago. 

Anyone who has helped pay their mortgage by hosting on Airbnb or listing on 

HomeAway, or helped make their car payments by listing their car on Turo can speak to 

the life-changing flexibility and opportunity enabled by sharing economy platforms. 

Anyone who has used their smartphone to summon a ride or driven their car for a few 

hours of their choosing each week to help pay their bills can speak to the user first 

experience ofridesharing with platforms like Lyft and Uber. Anyone who has been able 

to share their creativity with a global marketplace from the comfort of their own home 

through platforms Etsy, Amazon or eBay, or has made a little extra money during their 

free time delivering restaurant quality food through a platform like Doordash can speak 

to the transformational nature of this new economy. 

These benefits are particularly important in today's economy- a time when we see 

decreasing dynamism among 'traditional' businesses and increasing prevalence of 

economic distress in communities across the country as shown by numerous studies from 

groups such as Economic Innovation Group.6 The sharing economy is more 

geographically dispersed and serving as a vital tool for millions of Americans. We 

cannot forget that. 

3 America's Online Jobs: Measurements and Influencing Factors (forthcoming) 4 See: Brookings Institute. 2016. "Tracking the gig economy new numbers" and Garza and Hooton 

(2017). "A Comprehensive Look at Short-Term Rentals in Seattle." 5 Debbie Wosskow, "Unlocking the Sharing Economy: An Independent Review," 

https:i /www.gov. uk/~overnment/uploads/system/uploads/attachment data/file/378291/bis-14-1227-unlocki 

ng-the-sharing-economv-an-independent-review.pdf at 14 (20 14). 6 Various. See: http://cig.org/rescarch 
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The sharing economy offers workers a high level of autonomy and flexibility to choose 

when, how and where people can earn income. Only 11 percent of workers stated that 7 inability to find employment caused them to seek work through on-demand platforms. 

This mirrors lA research, which shows that it is cost factors and a desire to earn 

supplemental income rather than necessity driving sharing economy participation. 

Research from Paul Oyer at Stanford University, commissioned by Upwork and the 

Freelancers Union, shows that individuals are craving a different type of work 

arrangement, one in which they work fewer hours with more time for their families, 

friends, and life. Sharing economy participants are motivated to seek opportunity 

through on-demand platforms to build greater financial stability, supplement other 

income, and build their businesses. Previous studies have roughly estimated average 

annual income of between about $3,000 to $20,000 per individual. On an hourly basis, 

sharing economy workers averaged approximately $34 per hour of work, compared to 

$26 for payroll workers.8 

These are not simply abstract figures. Just a few weeks ago during the PGA 

Championship in North Carolina, Airbnb hosts in the Charlotte area earned 

approximately $550 each over just a handful of days.9 That is several months groceries. 

That is a weekend family road trip. That is money helping families and individuals. 

But more than simply an income source, the other side of the sharing economy is 

opportunity. Short-term rentals offer more affordable options for guests, are creating new 

demand for tourism and travel, and are bringing tens of millions of dollars to local 

communities rather than to corporations. 10 Ridesharing offers a more affordable and 

more efficient way for an individuals to get across town for their job interview and have 

opened up mobility options to the disabled and elderly. 11 Online platforms are helping to 

eliminate prejudices and biases in work fields. 

The diversity of platforms offering opportunities is matched by the ability of anyone to 

engage in independent work. A recent study found that the workforce for the sharing 

economy is approximately 3 5 percent millennials, 41 percent Gen Xers, and 24 percent 

Baby Boomers. The same study showed that 59 percent are male and 41 percent are 

female, approximately half are married, 31 percent had a bachelor's degree and 28 

7 "Dispatches from the New Economy: The On-Demand Workforce," Intuit and Emergent Research, 

available at 

http://intu ittaxand linancialcenter.comi\\ p-contcntluploads ~o 17 /06/Dispatches-from-the-New-Economv-I .o 

ng-Form-Report.pdf p. 3 (20 17). 

'Dispatches from the New Economy: The On-Demand Workforce p. 6. 9 "Charlotte readies to cash in on PGA Championship tourism dollars," Charlotte Observer, available at 

http://www.charlotteobserver.com/sports/other-sports/pga-charnpionship/article J 654931 02.html 10 See: http://blog.atairbnb.com/economic-impact-airbnb/ 

Garza and Hooton (20 17). "A Comprehensive Look at Short-Term Rentals in Seattle." 11 See e.g. "Lyft and MBT A Expand Partnership for Passengers with Disabilities," Lyft Blog available at 

https://blog.ly ft.com/posts/20 17/3/22/maj or-expans ion-of-lyft-partnership-for-passengers-with-disabilities 

(2017). 
47 

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percent had a graduate or professional degree. 12 Anyone seeking opportunity has the 

ability to access a wide variety of consumer markets to earn income. 

I'd like to address the question of some participants in the sharing economy being 

"independent contractors" vs. "employees." One of the great things about the sharing 

economy and what makes it so valuable and life changing for those earning extra money 

on its platforms, is flexibility. The flexibility these platforms provide is unprecedented 

and it is this flexibility that allows so many Americans to earn extra money -when they 

want, where they want and how they want. Not only can you simultaneously engage with 

multiple and competing platforms, you can choose your schedule and location of workwithout prior approval. 

You're working for yourself, not the technology platform that's connecting you to your 

customers. Workers are not required to put in a set number of hours or show up at a 

predetermined location. Platforms do not tell their partners when they have to work, 

where they have to work, or if they have to work at all. Instead, workers choose their 

level of engagement and maximize the choice they have in earning income. 

Additionally, numerous studies show that some common perceptions about the sharing 

economy have not materialized. 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 haven't been hurt and these "gig economy" jobs arc not serving as 

unemployment. The previously mentioned Brookings research showed no evidence of 

harm to taxi and hotel workers as a result of ride-sharing and short-term rentals. 

Evidence from Thumbtack, shows that sharing economy platfonns are opening up 

opportunities to women and minorities, allowing them to break into male-dominated 

fields. 13 The previously cited evidence from IA shows that negative externalities in 

things like homcowncrship and vacancy were pure speculation. The list goes on and is 

growing by the day as more research finds reaches the same conclusions. 

Regulation and Legislation Should Only Capture Genuine Concerns 

In listening to complaints about the sharing economy from incumbent players and 

entrenched interests, Internet Association encourages the Committee to think about 

whether those arguments truly reflect a genuine concern for worker protection and safety, 

or whether they are, in fact, complaints against increased competition as a result of a the 

growing sharing economy. It is very important to distinguish between genuine and 

pretextual complaints in this context because the Committee should avoid protecting 

competitors from enhanced opportunities that actually benefit workers. 

12 Dispatches from the New Economy: The On-Demand Workforce p.8. 13 "Women Entrepreneurs on Thumbtack are Breaking Stereotypes and Making Hundreds of Millions of 

Dollars," Thumbtack, available at 

https://www. thum btack.com/blog/female-entreprenuers-making-millions/ ( 20 I 7). 
48 

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Although creative destruction can and does benefit consumers in the form oflower prices 

and increased quality, it also creates anxiety on the part of market incumbents. The 

Internet has, since its inception, lowered entry barriers for new entrants, search and 

transaction costs for consumers, and generall~ corrected information asymmetries in 

many markets, from contact lenses 14 

to wine. 5 As with the early Internet, today's sharing 

economy platforms are spurring increased competition and worker/consumer choice in 

our economy. 

Technology is redefining our traditional understanding of the workforce. It is no longer 

likely that an individual will obtain and remain at a single place of employment for their 

entire careers. Workers want and seek varied opportunities that maximize both flexibility 

and choice in earning income and bolstering entrepreneurial activity. 

******************************* 

In summation, the sharing economy is an exciting innovation that collapses distance 

between those offering services and those consuming services. The end results ofthis 

unique arrangement are increased quality and lowered costs. The sharing economy 

provides clear benefits to workers and consumers, and evidence of this fact must be taken 

into account before taking legislative or regulatory action. These benefits include more 

flexible employment opportunities for workers, increased competition, lower prices, 

higher quality services, and an overall increase in consumer choice. 

Thank you for allowing to me to testifY here today, I look forward to answering your 

questions. 

14 See, e.g., Report !rom the Staff of the Federal Trade Commission, "Possible Anticompetitive Barriers to 

E-Commerce: Contact Lenses", at p. I (March 2004). ("While eye care providers still control the 

prescription process, consumers now not only purchase more lenses with greater frequency but they also 

have a greater choice of lens suppliers and modes of delivery. These changes have caused tension among 

eye care practitioners, bricks-and-mortar lens sellers, contact lens manufacturers, Internet lens sellers, and 

state officials over issues such as licensing contact lens sellers, contact lens prescription release 

requirements, and methods of verifYing prescriptions.") 

15 Report from the Staff of the Federal Trade Commission, "Possible Anticompetitive Barriers to 

E-Commerce: Wine" (July 2003). 
49 

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? 

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50 

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 

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51 

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. 

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52 

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. 

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53 

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 

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54 

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 

EDL-011-D with DISTILLER

55 

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. 

EDL-011-D with DISTILLER

56 

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. 

EDL-011-D with DISTILLER

57 

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 

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58 

ployment -- 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 

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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. 

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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 

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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. 

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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 

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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 

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ment 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, 

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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 

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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 

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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 AllStars 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 

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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 

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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 

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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. 

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71 

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. 

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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. 

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73 

try 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. 

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74 

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. 

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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. 

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76 

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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Mny3,2018 

Sharon Block 

Executive Director 

COMMITTEE ON EDUCATION 

AND THE WORKFORCE U.S. HOUSE OF REPRESENTATIVES 

2176 RAYBURN HOUSE OFFICE BUILDING 

WASHINGTON, DC 20515-6100 

Labor and Work life Program, Harvard Law School 

8 Mount Auburn Street 

Cambridge, MA 02138 

Dear Ms. Block: 

ROOgRrc.•OOOilY"SCOH,VlRGINIA, 

R<m~iJlj;Meml!or 

Thank you again for testifying at the September 6, 2017, Committee on Education and the 

Workforce hearing on "The Sharing Economy: Creating Opportunities for Innovation and 

Flexibility." 

Please lind enclosed an additional question submitted by a Committee member following the 

hearing. Please provide a written response no later than May 25, 2018, for inclusion in the official 

hearing record. Your response should be sent to Olivia Voslow of the Committee staff. She can be 

contacted at (202) 225-7101. 

We appreciate yom continued contribution to the work of the Committee. 

Sincerely, 

Enclosure 
78 

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Question for the Record 

Hearing: "The Sharing Economy: Creating Oppm·tunitics fot· Innovation and Flexibility" 

September 6, 2017 

Rep. Sablan (D-MP) 

I. Do you have any thoughts or is there any data regarding job loss or displacement as a 

result of the "sharing" or "online platform" economy? Are there less taxi drivers because 

ofUber and Lyft? Are there less service jobs in the hospitality industry because travelers 

arc using Airbnb or other platforms, etc.? 
79 

[Ms. Block response to questions submitted for the record follow:] 

[Whereupon, at 12:09 p.m., the committee was adjourned.] 

Æ 

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