    [House Hearing, 114 Congress]
    [From the U.S. Government Publishing Office]

     THE DISRUPTER SERIES: HOW THE SHARING ECONOMY CREATES JOBS, BENEFITS
                     CONSUMERS, AND RAISES POLICY QUESTIONS

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

                                    HEARING

                                   BEFORE THE

               SUBCOMMITTEE ON COMMERCE, MANUFACTURING, AND TRADE

                                     OF THE

                        COMMITTEE ON ENERGY AND COMMERCE
                            HOUSE OF REPRESENTATIVES

                        ONE HUNDRED FOURTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                               SEPTEMBER 29, 2015

                                   __________

                               Serial No. 114-80

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

          Printed for the use of the Committee on Energy and Commerce
                            energycommerce.house.gov
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                        COMMITTEE ON ENERGY AND COMMERCE

                              FRED UPTON, Michigan
                                     Chairman

    JOE BARTON, Texas                    FRANK PALLONE, Jr., New Jersey
      Chairman Emeritus                    Ranking Member
    ED WHITFIELD, Kentucky               BOBBY L. RUSH, Illinois
    JOHN SHIMKUS, Illinois               ANNA G. ESHOO, California
    JOSEPH R. PITTS, Pennsylvania        ELIOT L. ENGEL, New York
    GREG WALDEN, Oregon                  GENE GREEN, Texas
    TIM MURPHY, Pennsylvania             DIANA DeGETTE, Colorado
    MICHAEL C. BURGESS, Texas            LOIS CAPPS, California
    MARSHA BLACKBURN, Tennessee          MICHAEL F. DOYLE, Pennsylvania
      Vice Chairman                      JANICE D. SCHAKOWSKY, Illinois
    STEVE SCALISE, Louisiana             G.K. BUTTERFIELD, North Carolina
    ROBERT E. LATTA, Ohio                DORIS O. MATSUI, California
    CATHY McMORRIS RODGERS, Washington   KATHY CASTOR, Florida
    GREGG HARPER, Mississippi            JOHN P. SARBANES, Maryland
    LEONARD LANCE, New Jersey            JERRY McNERNEY, California
    BRETT GUTHRIE, Kentucky              PETER WELCH, Vermont
    PETE OLSON, Texas                    BEN RAY LUJAN, New Mexico
    DAVID B. McKINLEY, West Virginia     PAUL TONKO, New York
    MIKE POMPEO, Kansas                  JOHN A. YARMUTH, Kentucky
    ADAM KINZINGER, Illinois             YVETTE D. CLARKE, New York
    H. MORGAN GRIFFITH, Virginia         DAVID LOEBSACK, Iowa
    GUS M. BILIRAKIS, Florida            KURT SCHRADER, Oregon
    BILL JOHNSON, Ohio                   JOSEPH P. KENNEDY, III,
    BILLY LONG, Missouri                 Massachusetts
    RENEE L. ELLMERS, North Carolina     TONY CARDENAS, California
    LARRY BUCSHON, Indiana
    BILL FLORES, Texas
    SUSAN W. BROOKS, Indiana
    MARKWAYNE MULLIN, Oklahoma
    RICHARD HUDSON, North Carolina
    CHRIS COLLINS, New York
    KEVIN CRAMER, North Dakota

                                     _____

               Subcommittee on Commerce, Manufacturing, and Trade

                           MICHAEL C. BURGESS, Texas
                                     Chairman
                                         JANICE D. SCHAKOWSKY, Illinois
    LEONARD LANCE, New Jersey              Ranking Member
      Vice Chairman                      YVETTE D. CLARKE, New York
    MARSHA BLACKBURN, Tennessee          JOSEPH P. KENNEDY, III,
    GREGG HARPER, Mississippi                Massachusetts
    BRETT GUTHRIE, Kentucky              TONY CARDENAS, California
    PETE OLSON, Texas                    BOBBY L. RUSH, Illinois
    MIKE POMPEO, Kansas                  G.K. BUTTERFIELD, North Carolina
    ADAM KINZINGER, Illinois             PETER WELCH, Vermont
    GUS M. BILIRAKIS, Florida            FRANK PALLONE, Jr., New Jersey (ex
    SUSAN W. BROOKS, Indiana                 officio)
    MARKWAYNE MULLIN, Oklahoma
    FRED UPTON, Michigan (ex officio)

                                      (ii)

                                 C O N T E N T S

                                  ----------
                                                                       Page
    Hon. Michael C. Burgess, a Representative in Congress from the
      State of Texas, opening statement..............................     1
        Prepared statement...........................................     2
    Hon. Janice D. Schakowsky, a Representative in Congress from the
      State of Illinois, opening statement...........................     3
        Prepared statement...........................................     4
    Hon. Fred Upton, a Representative in Congress from the State of
      Michigan, opening statement....................................     5
        Prepared statement...........................................     6
    Hon. Frank Pallone, Jr., a Representative in Congress from the
      State of New Jersey, opening statement.........................    71
        Prepared statement...........................................    72

                                   Witnesses

    Luceele Smith, Driver/Partner, Uber Technologies, Inc............     7
        Prepared statement...........................................     9
    Michael Beckerman, President and Chief Executive Officer,
      Internet Association...........................................    10
        Prepared statement...........................................    12
    Robert Passmore, Assistant Vice President, Personal Lines,
      Property Casualty Insurers Association of America..............    24
        Prepared statement...........................................    26
    Dean Baker, Co-Director, Center for Economic and Policy Research.    29
        Prepared statement...........................................    31
    Alex Chriss, Vice President, QuickBooks Self-Employed Segment,
      Intuit, Inc....................................................    43
        Prepared statement...........................................    45
    Jonathan Lieber, Chief Ecoomist, Thumbtack, Inc..................    55
        Prepared statement...........................................    57

                               Submitted Material

    Statement of Vaughn Armour of Brooklyn, New York, undated,
      submitted by Ms. Schakowsky....................................    92
    Statement of New York Taxi Workers Alliance by Inder Parmar,
      September 29, 2015, submitted by Ms. Schakowsky................    93
    Statement of Taxicab, Limousine & Paratransit Association by Mike
      Fogarty, President, September 29, 2015, submitted by Ms.
      Schakowsky.....................................................    95
    Statement of Working Partnership USA of San Jose, California,
      undated, submitted by Ms. Schakowsky...........................   103
    Statement of American Hotel & Lodging Association, September 29,
      2015, submitted by Mr. Burgess.................................   105
    Letter of September 28, 2015, from Joseph E. Spinnato, President,
      and Vijay Dandapani, Chairman of the Board, Hotel Association
      of New York City, to Mr. Burgess and Ms. Schakowsky, submitted
      by Mr. Burgess.................................................   108
    Statement of Texas Hotel & Lodging Association, September 29,
      2015, submitted by Mr. Burgess.................................   122
    Statement of National Limousine Association by Gary Buffo,
      President, September 29, 2015, submitted by Mr. Burgess........   124

     THE DISRUPTER SERIES: HOW THE SHARING ECONOMY CREATES JOBS, BENEFITS
                     CONSUMERS, AND RAISES POLICY QUESTIONS

                                  ----------

                          TUESDAY, SEPTEMBER 29, 2015

                      House of Representatives,
    Subcommittee on Commerce, Manufacturing, and Trade,
                              Committee on Energy and Commerce,
                                                        Washington, DC.
        The subcommittee met, pursuant to call, at 10:18 a.m., in
    room 2322 of the Rayburn House Office Building, Hon. Michael C.
    Burgess (chairman of the subcommittee) presiding.
        Members present: Representatives Burgess, Lance, Blackburn,
    Harper, Guthrie, Olson, Pompeo, Kinzinger, Bilirakis, Brooks,
    Mullin, Upton (ex officio), Schakowsky, Clarke, Kennedy,
    Butterfield, Welch, and Pallone (ex officio).
        Staff present: James Decker, Policy Coordinator, Commerce,
    Manufacturing, and Trade; Andy Duberstein, Deputy Press
    Secretary; Graham Dufault, Counsel, Commerce, Manufacturing,
    and Trade; Melissa Froelich, Counsel, Commerce, Manufacturing,
    and Trade; Paul Nagle, Chief Counsel, Commerce, Manufacturing,
    and Trade; Olivia Trusty, Professional Staff Member, Commerce,
    Manufacturing, and Trade; Dylan Vorbach, Legislative Clerk;
    Michelle Ash, Democratic Chief Counsel, Commerce,
    Manufacturing, and Trade; Jeff Carroll, Democratic Staff
    Director; Lisa Goldman, Democratic Counsel; Meredith Jones,
    Democratic Director of Communications, Member Services, and
    Outreach; and Adam Lowenstein, Democratic Policy Analyst.
        Mr. Burgess. The Subcommittee on Commerce, Manufacturing,
    and Trade will now come to order. The Chair recognizes himself
    for 5 minutes for the purpose of an opening statement.

    OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A REPRESENTATIVE
                  IN CONGRESS FROM THE STATE OF TEXAS

        Good morning, and I want to welcome everyone to our hearing
    this morning on the sharing economy. We are lucky to be here
    this morning to be able to talk about a sector of our economy
    that is actually putting people to work.
        All of us here on the dais endure the typical Government
    skirmishes. We spend a lot of time quibbling over the proper
    size and the proper role of the Federal Government, so today it
    is refreshing to remind ourselves that the private sector is
    often working to solve problems even in spite of us some days.
    And we are doing that--and the private sector is doing so in a
    way that fosters jobs through innovation.
        The opportunities sharing platforms provide are often in
    addition to, not necessarily instead of, the streams of income
    available through traditional employment sources. The sharing
    economy has captured the entrepreneurial spirit of many
    Americans already. Those who engage in freelance jobs are
    expected to skyrocket to 40 percent of the workforce in the
    next 5 years, and almost 8 million will be participating in a
    sharing economy.
        The sharing economy is an excellent example of why the
    fight exists for smaller Government. I want to hear today about
    how technology has built in accountability and built in
    consumer protections into their platforms, because eventually
    we must confront the question of whether and how Congress
    responds to these types of firms.
        Many suggest no action is warranted, either by Congress or
    local regulators, and others are seeking direct and immediate
    intervention both at the Federal and the local level. There
    should be some limited Government oversight, particularly where
    safety is significant, and firms should be thinking about
    privacy, firms should be thinking about cybersecurity from the
    outset, lest they invite the very type of regulation that they
    sought to avoid.
        But generally speaking, the sharing economy companies do
    face regulations, like most other firms, under the typical
    patchwork of Federal and State laws, and I, for one, am more
    concerned about existing regulations hurting new jobs than I am
    about the need for new regulations. The CEI estimates that the
    Federal Government already has stifled progress through
    regulation to the tune of almost $2 trillion per year.
    Meanwhile, the sharing economy has generated $15 billion in
    global revenues in 2013, and is likely to generate $335 billion
    annually by the year 2020. We should be highly skeptical of
    interventions that take away new conveniences and measurable
    benefits for consumers.
        Sharing platforms are inherently good, providing reputation
    feedback loops. As we look at any disrupter, we should ask
    ourselves, is more regulation needed, or is someone just
    concerned about change, and worried about change of the status
    quo?
        I want to thank the witnesses for participating. I look
    forward to a lively and informative discussion. I will yield
    back my time, and recognize the ranking member of the
    subcommittee, Ms. Schakowsky, for 5 minutes for an opening
    statement.
        [The prepared statement of Mr. Burgess follows:]

                 Prepared statement of Hon. Michael C. Burgess

        Good morning and welcome to our hearing on the sharing
    economy. We are lucky to be here this morning to be able to
    talk about a sector of the economy actually putting people to
    work.
        All of us here on the dais endure the typical Government
    skirmishes--here in Washington we spend a lot of time quibbling
    over the proper size and role of Government.
        So it is uniquely refreshing for us to remind ourselves
    that the private sector is often working to solve the same
    problems we are and doing so in a way that fosters jobs through
    innovation.
        The opportunities sharing platforms provide are often in
    addition to--not necessarily instead of--the streams of income
    available through traditional sources.
        The sharing economy has captured the entrepreneurial spirit
    of many Americans already. Those who engage in freelance jobs
    are expected to skyrocket to 40 percent of the workforce in the
    next 5 years--about 7.8 million of which will be participating
    in the sharing economy.
        The sharing economy is an excellent example of why I fight
    for smaller Government. And I want to hear about how technology
    has built in accountability and consumer protections into the
    platform.
        Because eventually we must confront the question of whether
    and how Congress responds to these types of firms.
        Many suggest no action is warranted either by Congress or
    local regulators, and others are seeking direct and immediate
    intervention from Congress.
        There should be some limited Government oversight,
    particularly where safety is needed. And firms should be
    thinking about privacy and cybersecurity from the outset, lest
    they invite the very regulation they would rather avoid. But
    generally speaking, the sharing economy companies do face
    regulations, like most other firms, under the typical patchwork
    of Federal and State laws.
        And I for one am more concerned about existing regulations
    hurting new jobs than I am about the need for new regulations.
    CEI estimates that the Federal Government has already stifled
    progress enough through regulation--to the tune of $1.8
    trillion per year.
        Meanwhile, the sharing economy generated $15 billion in
    global revenues in 2013 and will generate $335 billion annually
    by 2020.
        We should be highly skeptical of interventions that snatch
    away new conveniences and measurable benefits for consumers.
    Sharing platforms are inherently good at providing reputation
    feedback loops.
        As we look at any disrupter, we really need to ask is
    regulation needed or is someone just scared of a change to the
    status quo?
        I thank the witnesses for participating and look forward to
    a lively and informed discussion.

           OPENING STATEMENT OF HON. JANICE D. SCHAKOWSKY, A
         REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS

        Ms. Schakowsky. Thank you, Mr. Chairman, for holding this
    hearing on the sharing, some call gig, economy. This is a topic
    absolutely deserving of our attention, discussion, scrutiny.
        Over the past few years Americans have begun to interact in
    ways we never imagined just a decade, or even less, ago. The
    sharing economy is one of the byproducts of technological
    change. Today people hail rides, book rooms, hire a contractor,
    purchase groceries, at the push of a button. This is the
    fastest growing sector in our economy, and while there is
    undoubtedly a convenience factor for those engaged with the gig
    economy, there are a number of adverse consequences as well.
        For many millennials the gig economy model of employment
    may be appealing for a time, providing scheduling flexibility
    that many young people desire. But for many older workers, who
    used to have full time employment, or younger workers, seeking
    steady full time work, this transformational change is not
    always positive. The model of this economy, where people--there
    are people seeking economic predictability and stability,
    also--often eliminates benefits, like health care and pensions,
    and it means more questions about whether they can make ends
    meet, much less save for their children's education, their
    parents' elder care, or their own retirement.
        The gig economy companies argue that the individuals who
    generate earnings through the use of their technology are
    independent contractors. They claim only to operate a neutral
    technology--technological platform, enabling individuals to
    connect. Making that claim may enable gig economy companies to
    avoid legal liability for much of what happens as a result of
    the use of their platforms, may enable them--enables them to
    avoid Social Security contributions, and requirements to
    provide overtime pay, Workers' Compensation, and Unemployment
    benefits. The workers are atomized, and unable to collectively
    bargain in their own interest. And this shift--many work
    related risks for employers go to workers. However, these
    entities are very often directly involved in almost every
    aspect of the transactions that occur by way of their
    technology. They maintain standards for users of their apps,
    and they have the ability to remove users from their platforms
    altogether, often without any mechanisms, by the way, to
    challenge their removal.
        In June the California Labor Commission found that Uber
    drivers are employees, rather than contractors. That
    determination, if upheld, would require Uber to provide
    reimbursable expenses, Social Security, Workers' Compensation,
    and Unemployment Insurance benefits. Many gig economy
    businesses do not ensure that their employees met licensing,
    tax, and zoning requirements that are in place for the
    industries against which those businesses seek to compete. I
    believe those companies, and their employees and contractors,
    need to meet all existing requirements if they intend to
    compete with other entities honoring those standards.
        It is also important that liability questions are addressed
    by the businesses operating in the gig economy space. Is
    additional insurance coverage needed to protect employees or
    customers of gig economy businesses? When additional protection
    is required, how do gig economy businesses ensure that their
    employees and customers are adequately covered?
        These gig economy businesses are largely data driven, and
    there are few restrictions on how that data is used or
    protected. Highly sensitive information, including background
    checks, home addresses, credit cards, and bank account
    information and travel patterns are often collected by these
    businesses. Uber recently changed its privacy policy to allow
    the company to ask for location details when users aren't
    actively engaging with the app. It also allows Uber access to a
    user's contact list. Most Uber users probably have no idea
    about these policy changes, which is why greater oversight,
    transparency, and communication are needed in this emerging
    sector of the economy. All of these issues must be addressed if
    we are to ensure that the sharing economy is as much about
    improving the lives of working Americans as it is about
    increasing the market caps of gig economy companies.
        So I thank the witnesses for being here today. This is a
    truly important, seminal discussion that we have right now. I
    look forward to their testimony, and I yield back the balance
    of my time.
        [The prepared statement of Ms. Schakowsky follows:]

                Prepared statement of Hon. Janice D. Schakowsky

        Thank you, Mr. Chairman, for holding today's hearing on the
    sharing--or gig--economy. This is a topic deserving of our
    attention and scrutiny.
        Over the past few years, Americans have begun to interact
    in ways never imagined just a decade ago. The sharing economy
    is one of the byproducts of technological change. Today, people
    hail rides, book rooms, hire a contractor, and purchase
    groceries at the push of a button. This is the fastest growing
    sector in our economy. While there is undoubtedly a convenience
    factor for those who engage with the gig economy, there are a
    number of adverse consequences as well.
        For millennials, the gig economy model may be appealing for
    a time, providing scheduling flexibility that many young people
    desire. However, for many older workers who used to have full-
    time employment or younger workers seeking steady full-time
    work, this transformational change is not a positive. The
    model--which eliminates benefits like health care and
    pensions--means more questions about whether they can make ends
    meet, much less save for their children's education, their
    parents' elder care, or their own retirement.
        Gig economy companies argue that the individuals who
    generate earnings through the use of their technology are
    independent contractors. They claim only to operate a neutral
    technological platform, enabling individuals to connect. Making
    that claim may enable gig economy companies to avoid legal
    liability for much of what happens as a result of the use of
    their platforms, and enables them to avoid Social Security
    contributions and requirements to provide overtime pay, and
    workers' compensation and unemployment benefits. This shifts
    many work-related risks from employers to workers.
        However, these entities are very often directly involved in
    almost every aspect of the transactions that occur by way of
    their technology. They maintain standards for users of their
    apps and they have the ability to remove users from their
    platforms altogether.
        In June, the California Labor Commission found that Uber
    drivers are employees rather than contractors. That
    determination--if upheld--would require Uber to provide
    reimbursable expenses, Social Security, workers' compensation
    and unemployment insurance benefits.
        Many gig economy businesses do not ensure that their
    employees meet licensing, tax, and zoning requirements that are
    in place for the industries against which those businesses seek
    to compete. I believe those companies and their employees and
    contractors must meet all existing requirements if they intend
    to compete with other entities honoring those standards.
        It is also important that liability questions are addressed
    by the businesses operating in the gig economy space. Is
    additional insurance coverage needed to protect employees or
    customers of gig economy businesses? When additional protection
    is required, how do gig economy businesses ensure that their
    employees and customers are adequately covered?
        These gig economy businesses are largely data-driven, and
    there are few restrictions on how that data is used or
    protected. Highly sensitive information--including background
    checks, home addresses, credit card and bank account
    information, and travel patterns--is collected by these
    businesses.
        Uber recently changed its privacy policy to allow the
    company to ask for location details when users aren't actively
    engaging with the app. It also allows Uber to access to a
    user's contact list. Most Uber users probably have no idea
    about these policy changes, which is why greater oversight,
    transparency, and communication are needed in this emerging
    sector of the economy.
        All of these issues must be addressed if we are to ensure
    that the sharing economy is as much about improving the lives
    of working Americans as it is about increasing the market caps
    of gig economy companies.
        I thank our witnesses for being here today, and I look
    forward to their testimony. I yield back the balance of my
    time.

        Mr. Burgess. The Chair thanks the gentlelady. The Chair
    recognizes the chair of the full committee, Mr. Upton, 5
    minutes for an opening statement.

       OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF MICHIGAN

        Mr. Upton. Well, thank you, Mr. Chairman. You know, today
    we are here to discuss one of the most promising aspects of our
    recovering economy, the sharing economy. Significant innovation
    and advances have enabled new platforms to connect self-
    employed individuals or small businesses with the consumers who
    demand those goods and services.
        The sharing economy is growing in leaps and bounds. Believe
    it or not, in a decade, it is expected to generate $335 billion
    annually. That sort of growth cannot be ignored. So this series
    of hearings about disrupters, and I would include the Internet
    of things, and the vehicle to vehicle communications under that
    umbrella as well, is so important as we work to better
    understand how these innovative companies impact consumers, job
    creation, and yes, our economy. I am always encouraged by the
    creativity and ingenuity that we see in America, and this
    hearing is a great forum to learn how real people are taking
    advantage of new opportunities to make a better life for
    themselves and their families. I know it is true in Michigan,
    as it is in the rest of the country, as families are glad to
    have new ways to make ends meet.
        One of the most intriguing aspects of this model is that it
    is not tied to any particular industry. The press regularly
    highlights the disruption in the lodging and transportation
    sectors, but there is innovation in every facet of the U.S.
    economy. And as with any developing marketplace, we must
    recognize the risk of stifling the innovation with reactionary
    regulatory measures. At a time when jobs are still hard to
    find, and balancing the budget is a challenge, we should not
    risk job creation with hasty calls to regulate. Where new
    technologies and competition are responding to consumer needs,
    and doing so safely, we should be asking ourselves if reducing
    the regulatory burden makes sense. This may be true for both
    the new entrepreneurs and incumbents. The sharing economy has
    also given folks across the country a chance to make decisions
    about how and when they work in a way that was not feasible
    even a few years ago.
        So we are familiar with high-profile leaders in the sharing
    economy, but there are many other platforms that are using
    technology to connect niche markets that have not been able to
    connect before, and I have seen that firsthand, and I am
    interested to hear more about those areas of the sharing
    economy. Our witnesses today represent a broad and diverse
    spectrum of the sharing economy. I would like to welcome in
    particular Michael Beckerman back to the committee, albeit on
    the other side of the dais this time around. I look forward to
    hearing all your stories and experiences with the sharing
    economy, and how we can foster an environment for community job
    growth and community development, and I yield back.
        [The prepared statement of Mr. Upton follows:]

                     Prepared statement of Hon. Fred Upton

        Today we are here to discuss one of the most promising
    aspects of our recovering economy: the sharing economy.
    Significant innovation and advances have enabled new platforms
    to connect self-employed individuals or small businesses with
    the consumers who demand their goods and services.
        The sharing economy is growing in leaps and bounds. In a
    decade, it is expected to generate $335 billion annually. That
    sort of growth cannot be ignored.
        This series of hearings about disrupters--and I would
    include the Internet of Things and vehicle-to-vehicle
    communications under that umbrella as well--is important as we
    work to better understand how these innovative companies impact
    consumers, job creation, and our economy.
        I am always encouraged by the creativity and ingenuity we
    see in America and this hearing is a great forum to learn how
    real people are taking advantage of new opportunities to make a
    better life for themselves and their families. I know that this
    is as true in Michigan as it is in the rest of the country, as
    families are glad to have new ways to make ends meet.
        One of the most intriguing aspects of this model is that it
    is not tied to any particular industry. The press regularly
    highlights the disruption in the lodging and transportation
    sectors but there is innovation in every facet of the U.S.
    economy.
        As with any developing marketplace, we must recognize the
    risk of stifling innovation with reactionary regulatory
    measures. At a time when jobs are still hard to find, and
    balancing the budget is a challenge, we should not risk job
    creation with hasty calls to regulate. Where new technologies
    and competition are responding to consumer needs, and doing so
    safely, we should be asking ourselves if reducing the
    regulatory burden makes sense. This may be true for both the
    new entrepreneurs and incumbents.
        The sharing economy has also given folks across the country
    a chance to make decisions about how and when they work in a
    way that was not feasible even a few years ago.
        We are familiar with high-profile leaders in the sharing
    economy, but there are many other platforms that are using
    technology to connect niche markets that have not been able to
    connect before. I am interested to hear more about those areas
    of the sharing economy. Our witnesses today represent a broad
    and diverse spectrum of the sharing economy--and I'd like to
    welcome Michael Beckerman back to the committee, albeit on the
    other side of the dais this time around. I look forward to
    hearing all your stories and experiences with the sharing
    economy and how we can foster an environment for continued job
    growth and community development.

        Mr. Burgess. The Chair thanks the gentleman. The gentleman
    yields back. We are expecting the ranking member of the full
    committee, Mr. Pallone, to be here at any moment. But pending
    that, let me just go ahead and introduce our witnesses, and
    then, when Mr. Pallone arrives, we will yield back to him for
    his opening statement. So we do want to thank all of our
    witnesses for being here today, thank our witnesses for taking
    time to testify before the subcommittee.
        Our witness panel for today's hearing will include Ms.
    Luceele Smith, a driver-partner with Uber Technologies,
    Incorporated, Mr. Michael Beckerman, President and CEO of the
    Internet Association--and, you know, Michael, after you left
    the committee, so many people asked, ``What happened to
    Michael?'' And people said, ``He went to a better place,'' so I
    guess the Internet Association is defined as a better place.
    Mr. Bob Passmore, Assistant Vice President for Personal Lines
    Policy with the Property and Casualty Insurance Association of
    America, Mr. Dean Baker, Co-Director of the Center for Economic
    and Policy Research, Mr. Alex Chriss, Vice President and
    General Manager at Intuit, and Jon Lieber, Chief Economist at
    Thumbtack. We do appreciate all of you being here today.
        We will go ahead and proceed with the witness testimony,
    and we may allow Mr. Pallone to give his opening statement when
    he arrives. So we appreciate all of you being here. We will
    begin with you, Ms. Smith. You are recognized. Each of you will
    have 5 minutes to provide a summary of your testimony and given
    an opening statement. Ms. Smith, you are recognized.

    STATEMENTS OF LUCEELE SMITH, DRIVER/PARTNER, UBER TECHNOLOGIES,
    INC.; MICHAEL BECKERMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER,
         INTERNET ASSOCIATION; ROBERT PASSMORE, ASSISTANT VICE
         PRESIDENT, PERSONAL LINES, PROPERTY CASUALTY INSURERS
      ASSOCIATION OF AMERICA; DEAN BAKER, CO-DIRECTOR, CENTER FOR
      ECONOMIC AND POLICY RESEARCH; ALEX CHRISS, VICE PRESIDENT,
     QUICKBOOKS SELF-EMPLOYED SEGMENT, INTUIT, INC.; AND JONATHAN
                LIEBER, CHIEF ECONOMIST, THUMBTACK, INC.

                       STATEMENT OF LUCEELE SMITH

        Ms. Smith. Good morning, Chairman Burgess, Ranking Member
    Schakowsky, and committee members. My name is Luceele Smith,
    and I appreciate this opportunity to address you today and
    speak about my experience working with Uber. I began driving
    with Uber in June 2014, and prior to that I worked in the legal
    field, and served 8 years in the Air Force. My son is also in
    the Air Force, and will soon be deployed to the United Arab
    Emirates.
        Uber has been a great opportunity for me and many others.
    What I like most about Uber is the flexibility. It allows
    drivers to make money on their own time. I don't have a boss to
    report to. I don't have to be on call. I work when I want to,
    for as long as I want to, or as little as I want to. I use Uber
    as supplementary income to finance my travel. I am from the
    British Virgin Islands, and I use my extra income to visit my
    family. And when I want to travel, I don't need to ask
    permission. I just go.
        Driving with Uber has also helped me to discover the city
    in new ways, which has been very rewarding. In fact, I have
    encouraged friends, and even riders, to become drivers because
    I think it is a great opportunity not only to see new parts of
    the city, but to connect with people in the community. And
    these are people that I would never otherwise have met.
        Every rider that I have met is grateful for the choice, and
    the convenience, that Uber has brought to their lives. I
    particularly enjoy the people component of being an Uber
    driver. Having traveled all over the world, I can strike up
    conversation with anyone, and point out new restaurants or new
    shows in town. And when it comes to my riders, I have had so
    many good experiences. I remember I picked up a couple once
    from the airport and took them to a Redskins game, and when we
    arrived, it started to rain, and the young lady was very
    concerned about her hair, so I gave her my umbrella. I
    understood what it would be like to sit in the rain and ruin
    your hair. So it was just a great opportunity to help people in
    large and small ways.
        I have worked in traditional jobs before, but there is
    nothing else out there where you can set your own schedule and
    your own goals. Sometimes drivers ask me, how much money do you
    make in a week? And the answer is, you can make as much as you
    want to. If I want to make $500 to fly to St. Thomas for
    Christmas, I can do that. With other jobs, the only way to earn
    more money is to take another job, or to get a promotion, and
    that can take years. So that freedom--it removes a lot of
    stress from your life, and that freedom is priceless, knowing
    you can log in anytime and make money. That is incredible. It
    is unmatched. So it is an opportunity that I enjoy, and I know
    many people feel the same way. Thank you so much.
        [The prepared statement of Ms. Smith follows:]

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        Mr. Burgess. The Chair thanks the gentlelady. The Chair
    recognizes Mr. Beckerman. Five minutes for an opening
    statement, please.

                     STATEMENT OF MICHAEL BECKERMAN

        Mr. Beckerman. Thank you. Chairman Burgess, Ranking Member
    Schakowsky, Chairman Upton, and Ranking Member Pallone, and
    members of the committee, thank you for inviting me to testify.
    My name is Michael Beckerman. I am the President and CEO of the
    Internet Association, which represents the world's most
    innovative Internet companies. The 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, to foster
    innovation and growth, and to empower the global community of
    Internet users.
        Included in our membership are more than 35 of the world's
    most innovative companies, including the sharing economy
    platforms, such as Airbnb, FlipKey, Lyft, Sidecar, and Uber.
    And as an advocate for these companies on the local, State,
    Federal, and international level, the Internet Association has
    witnessed firsthand the often heavy handed and misguided
    regulatory approach in markets throughout the country for these
    platforms. These companies have an extraordinary story to tell,
    a story about job creation, about economic growth, opportunity,
    and life changing flexibility.
        Ride sharing and home sharing do get most of the attention,
    but these business models are really just the tip of the
    iceberg. Companies like Instacart, Washio, TaskRabbit,
    GetAround, Handy, and Thumbtack, who is here with us today, are
    changing the way we shop, do our laundry, rent cars, improve
    our homes, and so much more. The incredible consumer benefits
    of these platforms pales in comparison to the benefits of
    flexible earning opportunities for those that opt-in to meet
    consumer demand.
        What we are seeing across the country is a tale of two
    cities. In some communities, regulators embrace new technology
    and competition. In these communities, consumers in the local
    economy have seen job creation and growth. Unfortunately, there
    are other communities where policymakers and regulators have
    put up roadblocks that block consumer choice and competition.
    In these areas, the community is worse off when arbitrary
    barriers are placed on new entrants to the market. Competition
    is stamped out, growth is stifled, and opportunities are lost.
        In my testimony this morning, I would like to outline a few
    important principles the Internet Association thinks is helpful
    in this policy debate. But first I would like to help put the
    on demand, or sharing, economy into the proper macroeconomic
    context. Sidecar, or Uber, or Lyft, they are neither taxi
    companies nor transportation companies. They are technology
    platforms that connect supply and demand. Likewise, Airbnb is
    not a hotel or lodging company. It is a technology platform
    that connects supply and demand.
        To just give one example, back in 1980, let us say, if you
    wanted a ride to the airport, you might pick up the Yellow
    Pages and look up a number for a car service. Then you would
    pick up the phone, dial the number, talk to the dispatcher, and
    arrange for a ride. In that pre-Internet age, the Yellow Pages
    served a similar function to what Uber or Lyft does today. It
    connects supply, the driver, with demand, the rider. But today,
    thanks to the Internet, and advances in mobile payments and
    other technology, this connection of supply and demand happens
    in real time, and in a seamless way for consumers, and the same
    is true for the other sharing platforms.
        Based on our advocacy for the Internet industry, and for
    the sharing economy specifically, the Internet Association
    suggests the following principles guide the committee as you
    wade into this debate. First, evidence demonstrating the clear
    benefits to consumers must be taken into account. These
    benefits include lower prices, higher quality of services, and
    overall increase in consumer choice. Second, in weighing these
    benefits against perceived harms, lawmakers should consider
    whether sharing economy services may, in fact, be safer than
    incumbent counterparts. Third, in listening to complaints
    against sharing economy companies in local markets, assess
    whether these complaints capture a genuine consumer protection
    concern, and are not merely complaints against increased
    competition that will benefit consumers. And finally, recognize
    the sharing economy platforms already self-regulate through
    various mechanisms that are hardwired into the technology, such
    as consumer ratings, payment systems, and GPS tracking, not to
    mention the intense competition between all of these platforms.
    And I do elaborate on each of these points in my written
    testimony, which I ask to be submitted for the record.
        In closing, the sharing economy is an exciting innovation
    that collapses the distance between those offering services and
    those consuming services. The end result of this arrangement is
    increasing quality, and lower costs. The sharing economy
    provides clear benefits to both consumers and those who wish to
    earn extra money, and evidence of this fact must be considered
    before taking legislative or regulatory action. Thank you for
    allowing me to testify, and I look forward to any questions the
    committee may have.
        [The prepared statement of Mr. Beckerman follows:]

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        Mr. Burgess. The Chair thanks the gentleman. The Chair
    recognizes Mr. Passmore. Five minutes to summarize your
    testimony, sir.

                      STATEMENT OF ROBERT PASSMORE

        Mr. Passmore. Let us turn on the button first. Good
    morning, Chairman Burgess, Ranking Member Schakowsky, and
    members of the committee. My name is Bob Passmore, Assistant
    Vice President for Personal Lines Policy at the Property
    Casualty Insurance Association of America, better known as PCI.
    On behalf of our nearly 1,000 member companies, I thank you for
    your invitation at--to speak today--at today's hearing.
        PCI members are at the heart of the sharing economy. While
    innovators in the sharing economy have designed new ways of
    using technology to improve business models, insurers have been
    innovating new ways of providing protection for centuries, and
    similarly will be the grease that will enable the sharing
    economy to reach its potential. The sharing economy is
    typically not new commercial activity, but rather is a new
    business model that allows individuals to use their personal
    time and resources to engage in commercial activity, with the
    potential to provide for more efficient use of resources for
    society, while essentially creating millions of single-person
    businesses.
        Where the sharing economy poses the biggest challenge, and
    the most controversy, is when they enter into a commercial
    activity that is highly regulated when conducted by a
    traditional business, such as a taxi company or a hotel.
    Essentially the same activity, but on a much smaller scale, but
    connected to a large sharing economy company. The policy
    question becomes what is the appropriate level of regulation,
    and does applying the same level of regulation render the
    sharing business model impractical or impossible? Insurers are
    certainly interested in the--understanding the answers to those
    larger policy questions, but of primary concern for insurers
    are critical insurance issues that are raised, as these
    business models blur the line between what has traditionally
    been thought of as a commercial or personal exposure.
        A prominent example of this dynamic has been evident in the
    emergence of ride sharing, or transportation network companies,
    or TNCs. TNCs had initially relied on their--the driver's
    personal auto insurance policies for coverage, with the
    companies themselves providing some coverage that applied if
    the driver's coverage was exhausted. However, most personal
    auto policies specifically exclude coverage when the vehicle is
    being driven for hire, leaving TNC drivers facing some
    significant gaps in coverage. And since almost every State has
    a motor vehicle financial responsibility law that requires
    vehicle owners to have--maintain some kind of auto insurance
    coverage, disputes in coverage litigation were inevitable. If
    these coverage disputes would result in court decisions
    imposing coverage for driving for a TNC on a personal policy
    that was neither intended for--neither intended or priced for,
    this potentially shifts the cost of this--of the risk
    associated with driving for hire onto the personal auto
    insurance system, requiring that all bear--drivers bear the
    cost of the activities of a relatively small number of TNC
    drivers.
        The good news is that TNCs and insurers have been able to
    reach a consensus on a model law that supports the sharing
    economy business model, while providing appropriate
    protection--insurance protection, as well as disclosures that
    protect drivers, consumers, and insurers. The consensus model
    also allows for the development of different private sector
    business solutions for personal and commercial insurance
    coverages that can evolve over time, and has already been
    adopted in over half of the States.
        Over the last year it has become clear that, while there
    are significant insurance challenges presented by the sharing
    economy business models, solutions can be found by following a
    few principles. First, market-based approaches are preferred
    for both sharing business models and insurance, but in some
    cases State laws may need to be clarified to protect consumers
    in policy language certainty. Awareness of issues is essential.
    Many may not be aware if they have the right insurance when
    they enter into these activities. There needs to be proactive
    disclosures by the sharing business of what the insurance
    issues are, what coverage the sharing business is providing,
    and what additional coverage one may need to get prior to
    participation.
        Finally, State laws and regulations need to be flexible to
    allow for different insurance solutions. The sharing economy
    business model creates opportunities for both personal lines
    and commercial lines insurance products, and the excess and
    surplus lines insurance market is where many new businesses,
    such as the sharing economy business models, find their
    coverage, and those avenues need to be open to the sharing
    economy business models as well.
        PCI's mission is to promote and protect a competitive
    insurance market for the benefit of consumers and insurers. Our
    members are committed to developing and providing new insurance
    products to support commercial and consumer innovation for the
    sharing economy. We appreciate that Congress has taken an
    interest in these issues, and look forward to continuing to
    work on sharing economy issues in the future. Once again, on
    behalf of our members, I thank you for inviting us to share our
    views, and I would be happy to answer any questions that you
    might have.
        [The prepared statement of Mr. Passmore follows:]

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        Mr. Burgess. The Chair thanks the gentleman. The gentleman
    yields back. Mr. Baker, recognized for 5 minutes for
    summarizing your opening statement, please.

                        STATEMENT OF DEAN BAKER

        Mr. Baker. Thank you, Chairman Burgess, and Ranking Member
    Schakowsky. I appreciate the opportunity to address the
    committee. My name is Dean Baker. I am the Co-Director of the
    Center for Economic and Policy Research. I want to raise some
    general issues about the sharing economy. Certainly I would
    agree with comments that have been made that it offers great
    opportunities, basically, to take advantage of idle resources,
    as Ms. Smith had indicated her labor, her free time. Of course,
    with apartments, other sorts of idle resources to put them to
    greater use, that is the great opportunity, the great benefit
    of the sharing economy. The great risk is that it is--it--risk
    undermining a set of regulations at national, State, and local
    level that have often been put in place for very good purposes.
    And that is my real concern that I want to address here. And in
    doing so, I want to say I strongly disagree with Mr.
    Beckerman's comment that this is simply the Internet version of
    the Yellow Pages. We have that. It is called craigslist. We
    aren't talking about that. These are companies that have an
    active role in the operations that we are talking about here.
        So very quickly, I want to outline four areas that I talk
    about in my testimony, where regulations are being called into
    question. First, labor regulations. Secondly, consumer, both
    safety and quality regulations. Third, a question on property
    rights that has come up in a lot of different contexts. Fourth,
    anti-discrimination laws and regulations. And fifth, an
    important issue that the committee should be concerned about,
    issues of tax collection at all levels of Government.
        Starting with the issue of labor regulation, as Ranking
    Member Schakowsky raised in her opening testimony, we don't
    know that sharing economy companies will provide the same sorts
    of protections that we expect--that Congress and State and
    local governments have given to traditional employees. So that
    means wage and hour laws, do minimum wage laws apply, Workers'
    Comp laws. These are issues that should concern us. We don't
    want to see sharing economy companies benefit simply because
    they are capable to undermine those laws. I should also point
    out that in many cases, perhaps most cases, this is not an
    insoluble task. For example, Uber could very easily use the
    information that is available to ensure that all its drivers
    are getting minimum wage laws, and they are paid in accordance
    with wage and hour standards.
        The second area, consumer safety regulation, we have
    extensive sets of regulations to ensure that, when you get into
    a cab, that the driver is a safe driver. I abuse my mother in
    this context. She is an 84-year-old woman who is a very decent
    person, and she has a Washington State Driver's License. I
    really do not think she should be driving an Uber. This is the
    sort of issue that we should be concerned about. We ensure that
    people who drive cabs, drive commercially, have commercial
    driver's licenses. We want to make sure that you have good
    drivers for Uber, or any other car driving service. Cars should
    be safe. Again, insurance issues. Insofar as those are being
    settled, that is a big step forward, but I should point out
    that was not the original intention of Uber. They would--that
    was done under public pressure. In the case of--if we look at
    Airbnb, again, are they renting rooms that are safe? You know,
    do we know that they are--that they meet fire codes? This
    should be an important concern. Certainly we make sure that
    hotels--or at least we try to make sure that hotels are not
    fire traps. We would want to make sure the same is true of
    rooms rented through Airbnb.
        The third issue has to do with property rights. Many
    leases, many apartment leases, prohibit subletting. Many--in
    many cases, someone could sublet through Airbnb in violation of
    that lease. Again, does Airbnb bear responsibility? I would say
    we would want a situation where they do bear responsibility.
    Condo associations also often prohibit subleasing. Again, are
    people renting out rooms through Airbnb, or whole units, in
    violation of condo laws? And then, of course, it goes beyond
    that. Very often you have rent stabilization rules, you have
    zoning rules. These have all been called into question by
    Airbnb. I am not saying Airbnb is necessarily wrong in these
    circumstances, but we need clear regulation.
        The fourth issue, discrimination. Again, we have well
    developed sets of rules prohibiting discrimination based on
    race, gender. We don't want discrimination against the
    handicapped--handicapped individuals. We want to make sure--
    case of--with Uber, we want to make sure we have handicapped
    accessible vehicles. Again, this is something that is a matter
    of legitimate public concern threatened by the sharing economy
    companies.
        The last point, we know in the case of traditional
    employers they are obligated to take out money for taxes for
    people, for their workers, and also, I should say, if you have
    someone renting out a unit, that can be done through Airbnb.
    This is a real concern. It is not a concern just for purposes
    of tax collection. We don't want someone to come to April 15
    and suddenly find they owe the IRS $5,000 because nothing has
    been taken out of their paycheck.
        So these are very real concerns. So just to sum up, the
    whole point, to me, of the sharing economy is that it offers
    greater opportunities. We want to take advantage of the new
    technology. This should not be a way where firms are able to
    prosper simply by finding a more effective way to evade the
    law. Thank you.
        [The prepared statement of Mr. Baker follows:]

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        Mr. Burgess. The gentleman yields back. The Chair thanks
    the gentleman. Mr. Chriss, you are recognized for 5 minutes for
    summarizing your opening statement, please.

                        STATEMENT OF ALEX CHRISS

        Mr. Chriss. Good morning, and thank you Chairman Burgess,
    Ranking Member Schakowsky, and members of the committee, for
    providing Intuit the opportunity to be here. My name is Alex
    Chriss from Intuit, and I am the Vice President for QuickBooks
    Self-Employed Business. I appreciate the opportunity to speak
    with you today about the sharing economy, and I am pleased to
    provide some insights we have gathered from close collaboration
    with our customers. I will also outline three recommendations
    Government could take to ease the burdens of sharing economy
    workers.
        As context, Intuit was founded over 30 years ago with one
    core mission that remains today, to improve people's financial
    lives so profoundly they cannot imagine going back to the old
    way of doing things. We currently serve more than 45 million
    consumers and small businesses with our QuickBooks, TurboTax,
    and Mint offerings.
        In the past few years we have noticed an acceleration of a
    trend that began decades ago. We believe this trend to be a
    massive shift in employment towards a more independent, or
    self-employed workforce. Intuit recently conducted a study
    forecasting that self-employed will grow to represent 43
    percent of the workforce by 2020. A very fast growing segment
    of this new workforce is the sharing economy. According to our
    data, 3.2 million Americans are earning income from the sharing
    economy. Within 5 years, our survey suggests the total
    population of sharing economy workers will more than double, to
    7.6 million.
        What is not--what is often not fully appreciated is that
    the people who are self-employed and in the sharing economy are
    ultimately a small business of one in the eyes of the U.S. tax
    structure. They have a unique set of financial management
    needs. They often co-mingle business and personal expenses in a
    single bank account, making expense management and deduction
    tracking burdensome. They get paid a gross amount, often on a
    weekly basis, making visibility into their real income, or what
    is safe to spend, nearly impossible. And they are often unclear
    about their quarterly tax obligations, as this is most often a
    new and unfamiliar requirement. It is with these unique needs
    in mind that we created our QuickBooks Self-Employed offering.
    We strived to make the business aspect of being self-employed
    simple and pain free, while improving our users' cash flow.
        I would like to outline three opportunities policymakers
    could being to take action on to improve the lives of this fast
    growing segment of the economy. The first is to clarify what
    constitutes a record for Schedule C tax compliance. Sharing
    economy workers find customers and income at the touch of a
    button on a mobile device. If they are required to keep paper
    records to verify their Schedule C deductions, this requirement
    raises questions about the regulatory definition of what a
    record entails. Flexibility with respect to the term record
    would benefit the growth of this worker segment. The less time
    people spend managing paperwork, the more time they have to
    earn a living.
        The second is to enable sharing platforms to give guidance
    without triggering worker classification issues. Sharing
    economy platforms can play a role in helping this segment of
    the workforce meet and understand their obligations. Many
    sharing platforms limit the advice they provide to workers for
    fear of triggering employment regulations that would
    characterize this workforce as employees. Providing this
    information would be beneficial to the sharing platforms, the
    workers, and the IRS. This creates an opportunity for
    Government agencies that oversee classification guidelines.
    Clarity around the type of communication companies can share
    with self-employed workers will enable them to access helpful
    information regarding financial literacy, tax obligations, and
    savings.
        Finally, the third recommendation is to update Government
    programs to support the self-employed. A great example is the
    Department of Treasury. They initially released its MyRA
    retirement savings product to employees to access exclusively
    through employers. They are now planning to allow individuals
    to open accounts, but they were not initially being considered,
    and had to wait for benefits to be opened up to them. Creating
    a shift in mindset where self-employed are considered part of
    the workforce is something Government agencies should
    prioritize.
        We encourage the committee to explore ways to adapt our
    current structure to meet the needs of the sharing economy
    workers so that the grown and success of this segment
    continues. Once again, Chairman Burgess, Ranking Member
    Schakowsky, and members of the committee, thank you for giving
    Intuit the opportunity to share insights from our sharing
    economy customers, and I look forward to answering any
    questions you may have.
        [The prepared statement of Mr. Chriss follows:]

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        Mr. Burgess. The gentleman yields back. The Chair thanks
    the gentleman. Mr. Lieber, you are recognized for 5 minutes for
    an opening statement, please.

                      STATEMENT OF JONATHAN LIEBER

        Mr. Lieber. Good morning, and thank you for the opportunity
    to testify today. My name is Jon Lieber, and I am testifying on
    behalf of Thumbtack. We are a San Francisco based technology
    company that matches consumer with--consumers with service
    professionals to help them accomplish projects that are central
    to their lives. We are honored to be part of this discussion
    here today on behalf of our growing technology companies and
    the small businesses we serve.
        Thumbtack's network of more than 150,000 active
    professionals help customers get started with more than 5
    million projects each year. We are proud to say that we will be
    putting more than a billion dollars into the pockets of these
    professionals this year, and multiples of that in years to
    come. Our professionals are active across all 50 States, and
    here in the District of Columbia, and they offer services
    across more than 1,000 categories, from dog walking to bathroom
    remodeling. About half the service professionals on Thumbtack
    have been in business for themselves for 5 or more years, and
    similar numbers report that they have one or more employees.
    Two-thirds say that the businesses they run on Thumbtack is
    their primary form of income.
        Our most active categories are events, such as DJs,
    photography, and catering, home improvement, including lawn
    care, house cleaning, plumbing, and electricians, and we also
    offer wellness services, like personal training, and a variety
    of lessons, from Spanish to horseback riding. And though we are
    headquartered in San Francisco, it is only our 11th biggest
    market. We operate only in the United States for now.
        Although the hearing today is officially about the sharing
    economy, this name is frequently misapplied to a variety of new
    business technologies that are connecting people together.
    Thumbtack does not consider ourselves to be part of the sharing
    economy. We like to say we are part of the real economy.
    Technology is enabling the businesses who use Thumbtack to
    work--find work faster and cheaper than they ever could before.
    And not to pile on the Yellow Pages here, but while a previous
    generation was limited to placing an ad in the Yellow Pages and
    waiting for the phone to ring, Thumbtack directly connects
    these small businesses to customers who are looking for their
    services.
        The ease of introducing small service businesses to new
    clients is solving one of the biggest problems that these
    businesses have. And along with back office support tools, like
    those offered by Intuit, is lowering the cost of starting and
    growing a successful small business. We believe that we are
    empowering these professionals to realize their dreams of
    working for themselves, and the stories that we hear from our
    pros about what Thumbtack has enabled them to do are inspiring
    and powerful.
        In my written testimony I discuss some of the effects that
    technological disintermediation is having on both consumers and
    the professionals who serve them, and I would like to mention
    two of them now. First is that although disruptive technology
    companies are bringing attention to issues of worker
    classification and workplace benefits, for small businesses,
    like the ones that use Thumbtack, to grown, these issues aren't
    new.
        Because Congress has passed responsibility for certain
    elements of the social safety net onto employers through a
    combination of mandates, tax incentives, and payroll taxes, we
    have created a two-tier benefit system in this country, one for
    individuals who generally work full time at larger companies,
    and one for everyone else. The decision to go work for one's
    self has long meant giving up the comforts of traditional
    employment, including paid time off, and a variety of tax-
    preferred health and retirement benefits. And although Congress
    has attempted to extend some of these benefits outside the
    workplace through the Affordable Care Act and tax-free savings
    vehicles, like IRAs, there is more that could be done. To the
    extent possible, benefits should be tied to the worker, and not
    their place of work, or their form of compensation.
        Small businesses are also intimately familiar with issues
    surrounding worker classification. Although many of the
    businesses we speak with would love to bring on full time
    workers to help them expand, the cost, not just in wages, but
    in compliance and benefits, are often prohibitively high. The
    decision to bring on a full time worker can frequently mean
    with--dealing with unexpected and expensive mandates, such as
    California's recent decision to require that all employers,
    regardless of size, provide paid sick leave. Often it is far
    easier to rely on independent contractors, who generally don't
    qualify for these benefits.
        The second issue I would like to emphasize for the
    committee is the need for better measurement tools. Although
    all signs point to the rapid adoption of technology that will
    connect people together, and allow an increasing number of
    people to work outside of the traditional employment system
    over the coming decades, we don't have a great count of how
    many people are actually engaged in this kind of work. The
    Bureau of Labor Statistics hasn't had dedicated funds to study
    this segment of the workforce, which they call contingent
    workers, since 2005. Private researchers and corporations are
    attempting to fill the gaps, but the Government should be doing
    more to keep up with the pace of change in the labor market by
    more accurately tallying and releasing data on the number of
    self-employed and independent contractors on a more regular
    basis.
        Thank you again for the opportunity to testify, and I look
    forward to taking your questions.
        [The prepared statement of Mr. Lieber follows:]

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        Mr. Burgess. The Chair thanks the gentleman. The gentleman
    yields back. The Chair would ask unanimous consent that Mr.
    Pallone be allowed to give his opening statement out of order
    before we proceed to questions. Mr. Pallone, you are recognized
    for 5 minutes.

    OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE
                IN CONGRESS FROM THE STATE OF NEW JERSEY

        Mr. Pallone. Thank you, Mr. Chairman. Today this
    subcommittee has the opportunity to discuss one of the fastest
    growing sectors of the U.S. economy, and that is the sharing
    economy, which is just not millennials hailing rides and
    renting spare rooms from their phones. In communities across
    the country, Americans are using their computers and
    smartphones to order a meal, find a gardener, sell homemade
    crafts, and even request a dog sitter.
        Just like Google and Facebook before them, businesses like
    Uber, Lyft, and Airbnb are rapidly evolving from names into
    verbs. One recent study predicts that the five biggest sectors
    of the sharing economy generated $15 billion in revenues last
    year, and could exceed $330 billion in a decade. In my home
    State of New Jersey, Uber has already signed up 9,000 drivers.
    These businesses can offer benefits for both buyers and
    sellers. Some platforms provide temporary access to goods and
    services that buyers might not be able to otherwise afford.
    Consumers enjoy the convenience of being able to summon a ride,
    request a dry cleaning pickup, or order groceries from a device
    in their pocket. And sellers can benefit from a new source of
    income, sometimes just by renting items sitting unused in their
    basements or garages.
        But the growth of the sharing economy has also raised a
    number of difficult issues. Many services track their users'
    location, potentially putting privacy and safety at risk. To
    verify users' identity some apps store credit card information,
    home and work addresses, and other personal information.
    Consumers often have no way of knowing if their information is
    protected from a data breach, or if it will be sold to or
    shared with an unknown third party. In addition, may apps allow
    both buyers and sellers to view ratings and reviews of past
    transactions. These reviews can push bad actors out of the
    market by making sure users are trustworthy and legitimate, but
    it can also be difficult to tell if these reviews are accurate,
    and it is unclear whether reviews and rankings alone can
    protect users' safety.
        As more Americans seek to provide services in the sharing
    economy, the question of whether they are employees or
    independent contractors remains unresolved. Other than that
    logo on the door, there is little obvious difference between
    Uber drivers and cab drivers, but for the workers a lot is
    riding on the distinctions. Unemployment benefits and overtime
    pay are just a couple of the workplace protections at stake.
    State and local governments across the country are also
    grappling with the regulatory challenges posed by the growth of
    the sharing economy, including whether companies are
    responsible for paying local taxes, providing insurance, or
    conducting background checks.
        The sharing economy is about transforming innovative ideas
    into services we depend on, but that innovation must be coupled
    with basic protections for all participants, including worker
    protections, privacy, data security, and safety, and I am
    confident that we can find a balance that protects consumers
    while preserving innovation, and ensuring a level playing field
    for businesses. And I think the--I, again, thank the chairman
    for holding this hearing, and giving me the opportunity to make
    my statement. Thank you.
        [The prepared statement of Mr. Pallone follows:]

                 Prepared statement of Hon. Frank Pallone, Jr.

        Today this subcommittee has the opportunity to discuss one
    of the fastest-growing sectors of the U.S. economy. The
    ``sharing economy'' is not just millennials hailing rides and
    renting spare rooms from their phones. In communities across
    the country, Americans are using their computers and
    smartphones to order a meal, find a gardener, sell homemade
    crafts, and even request a dog-sitter.
        Just like Google and Facebook before them, businesses like
    Uber, Lyft, and Airbnb are rapidly evolving from names into
    verbs. One recent study predicts that the five biggest sectors
    of the sharing economy generated $15 billion in revenues last
    year and could exceed $330 billion in a decade. In my home
    State of New Jersey, Uber has already signed up 9,000 drivers.
        These businesses can offer benefits for both buyers and
    sellers. Some platforms provide temporary access to goods and
    services that buyers might not be able to otherwise afford.
    Consumers enjoy the convenience of being able to summon a ride,
    request a dry-cleaning pickup, or order groceries from a device
    in their pocket. Sellers can benefit from a new source of
    income, sometimes just by renting items sitting unused in their
    basements or garages.
        But the growth of the sharing economy has also raised a
    number of difficult issues. Many services track their users'
    location, potentially putting privacy and safety at risk. To
    verify users' identities, some apps store credit card
    information, home and work addresses, and other personal
    information. Consumers often have no way of knowing if their
    information is protected from a data breach or if it will be
    sold to, or shared with, an unknown third party.
        In addition, many apps allow both buyers and sellers to
    view ratings and reviews of past transactions. These reviews
    can push bad actors out of the market by making sure users are
    trustworthy and legitimate. But it can be difficult to tell if
    these reviews are accurate, and it is unclear whether reviews
    and rankings alone can protect user safety.
        As more Americans seek to provide services in the sharing
    economy, the question of whether they are employees or
    independent contractors remains unresolved. Other than the logo
    on the door, there is little obvious difference between Uber
    drivers and cab drivers. But for the workers, a lot is riding
    on the distinctions. Unemployment benefits and overtime pay are
    just a couple of the workplace protections at stake.
        State and local governments across the country are also
    grappling with the regulatory challenges posed by the growth of
    the sharing economy, including whether companies are
    responsible for paying local taxes, providing insurance, or
    conducting background checks.
        The sharing economy is about transforming innovative ideas
    into services we depend on. But that innovation must be coupled
    with basic protections for all participants, including worker
    protections, privacy, data security, and safety. I am confident
    that we can find a balance that protects consumers while
    preserving innovation and ensuring a level playing field for
    businesses. I thank the chairman for holding this hearing and
    look forward to hearing from our witnesses.

        Mr. Burgess. The Chair thanks the gentleman, and the Chair
    would like to remind members that, pursuant to committee rules,
    all members' opening statements will be made part of the
    record. We conclude, then, our witness testimony, and we thank
    you for your presence and your testimony today. We will move to
    the questions part of the hearing. And I will recognize myself
    for 5 minutes for the purposes of questions.
        Mr. Chriss, let me ask you, because the study that we both
    reference, that estimated that almost 8 million people will be
    participating in a sharing economy very soon, begs the
    question, why are so many people showing up to participate in
    the sharing economy?
        Mr. Chriss. Thank you. I think one of the things that we
    have seen, as people are coming in, and--we actually refer to
    this as the on demand economy. On demand refers to not only the
    ability to push a button, as a consumer, and get a ride, or
    have someone deliver food to you, but also the idea that
    workers are able to come in, and push a button, and get a job.
    I think that is where we are seeing more and more people coming
    in, when they have the ability to--before, just--literally at
    the push of a button, find income.
        This is changing behavior--just as we see from consumers,
    this is changing behavior of workers. Right now we are seeing
    79 percent--in our research, 79 percent of the workers in on
    demand are working part time. Many of them are coming from
    traditional jobs, and adding this to create incremental income
    as well. And as they test their way in, I think we will see
    that they continue to evolve. Many of these workers right now,
    again, with our research, are less than 1 year working in on
    demand. So while this is wonderful we are having this
    conversation, it is so early in the game right now. It will be
    interesting to see how it evolves.
        Mr. Burgess. Ms. Smith, let me ask you kind of the same
    question. I mean, how did you arrive at the decision that this
    was something that you wanted to do?
        Ms. Smith. It--it is a great opportunity to make money by
    one's choice. So--I have worked in traditional jobs before.
    This opportunity to log in and earn money on any schedule that
    I chose, for any goal that I had, is just incredible. So that
    was very attractive to me.
        Mr. Burgess. Mr. Lieber, we will probably disagree about
    the amount of money available to the Bureau of Labor
    Statistics, but one of the things they do is provide to
    Congress, the first Friday of every month, to the Joint
    Economic Committee--I am no longer on that committee, but I
    was, so--during the harshest part of the recession it was part
    of my job to hear their report on the first Friday of every
    month.
        And we all talk about the unemployment rate, and the U-6
    numbers, and what the employment rate really is, but it seemed
    to me, studying for this hearing and understanding better the
    sharing economy that--I mean, this is a way for some of those
    people who have been chronically unemployed now, may have left,
    may even have dropped out of the labor workforce participation.
    But, again, you can punch an app and earn some money, that is a
    pretty powerful notion, isn't it?
        Mr. Lieber. Absolutely. And what we find of users of--
    business users of Thumbtack is many of them are leaving a
    corporate job, and they are kind of putting their finger in the
    wind to test out if they can actually cut it as a full time
    caterer, or a photographer. And by lowering the cost of getting
    these people into their own business, and by delivering
    consumers to them, we think that we are creating this
    opportunity that didn't exist in years past, and making it
    easier than ever for them to start and go work for themselves.
        Mr. Burgess. And it is certainly not part of this hearing,
    but having spent time on the Joint Economic Committee, and
    hearing those figures from the Bureau of Labor Statistics, and
    the people who were discouraged from ever finding or looking
    for traditional employment again, I mean, this seems to be a
    way back into the workforce that, really, probably wasn't even
    available, or only available on a limited basis, as the years
    of the Great Recession began to unfold. Would you agree that
    this is a fifth pathway, if you would, back into employment?
        Mr. Lieber. Absolutely. I think this represents a
    tremendous opportunity for people. And what is--what is
    exciting to me is that, for people who have a skill--say you
    are a locksmith, and you are good at locks, but you, you know,
    haven't had a chance to build out your customer base yet, this
    is the opportunity for you to go online, find customers, and
    get your business started quickly, easily, and start getting
    customers pushed to you.
        And we have heard a lot of stories like that, of people who
    have been down on their luck, people who just left the
    military, people who lost their jobs, or people who are looking
    for what next to do in their lives. And they are able to come
    to these platforms, come online, and start finding new work.
        Mr. Burgess. Well, I kind of believe we are just beginning
    to scratch the surface. Mr. Beckerman, let me just ask you,
    because I remember my predecessor in this office, who at the
    time was Majority Leader, in the late 1990s described to the
    Dallas Chamber a situation with--this thing was new, it was e-
    commerce. He said Congress doesn't understand it, they are very
    likely to try to regulate it and tax it, and when they do that,
    they will kill it. Do you think he was correct in that
    assessment?
        Mr. Beckerman. I think this is a new area providing
    incredible opportunity, and Congress need to be a little
    careful not to put too heavy of a hand on this and regulate it
    too much. Because, as we are hearing from a number of the
    witnesses, it is providing opportunities for them that didn't
    exist before, and it is a great opportunity for our economy,
    for people to get back to work, and earn extra money for their
    families.
        Mr. Burgess. Very good. Thank you, and my time has expired.
    I will recognize the ranking member of the subcommittee, Ms.
    Schakowsky. Five minutes for questions, please.
        Ms. Schakowsky. Thank you. Mr. Baker, I want to ask some
    questions, but first I want to read a piece of testimony that I
    would like to put in the record for--from Indir Pamar, who says
    he has a been a professional driver in New York City for 15
    years. He says, I began working for Uber because I thought I
    could earn more money than I had working for other black car
    companies. Uber's rates sounded like a good deal. When I first
    started working with Uber X, the minimum fare would be $12.
    Uber would take 10 percent of each fare, and the rest would be
    mine to keep.
        Within just months, though, Uber changed its payment rates,
    and while the price of gas and my car payment stayed the same,
    the 10 percent commission I paid to Uber became 20 percent, and
    the $12 minimum fare dropped to $8. And then he also says,
    the--Uber's business model is flood the streets with cars,
    regardless of how much work is available for them. In New York
    City, Uber added 20,000 new cars to have us compete with 13,600
    taxis, and another 40,000 black cars, and car service liveries
    that were already on the streets. It says that Uber doesn't
    care--if there are 100,000 trips a day, those trips could be
    split between 10,000 drivers or 30,000 drivers.
        And he--finally he says, Uber says they are not my
    employer--to the point that you made--even though they direct
    my every move, and control my income, and can punish me. With
    Uber we have no voice. I don't get to set the rates. Uber takes
    away my fare income if a passenger has a dispute with them over
    the fare they set. And if a passenger complains that I took a
    long route, Uber takes the money back without giving me a
    chance to explain myself. Friends of mine have been suspended
    because their passenger rating was too low, even though they
    had been accused of doing nothing wrong. What was too low? Less
    than 4.5 out of 5 stars, a B+.
        So I just wanted to talk to--here is somebody who though he
    was going to make more money, have more control, and finds
    that, really, Uber, that says they are just a Web site, or just
    a technological platform, is controlling their life.
        Mr. Baker. Yes, well, I think this is very problematic, and
    exactly the sort of situation that I think we have to be
    concerned about. So just to be clear, you know, being able to
    order a cab over the Internet, wonderful thing. You could be on
    a smartphone, that is a great thing. But, on the other hand,
    these people, for practical purposes, are employees while they
    are on the job.
        And, again, we aren't asking a lot if we are to tell Uber
    that, you know, you have to make sure that your drivers make at
    least the minimum wage. They have the technology to do that. If
    they are competent enough, then they should be replaced by a
    company that is. I mean, that is a very, very simple thing. So
    extending employee-type relationships, employee-type rights,
    for example, collective bargaining--again, people may not like
    it, but that is the law. It doesn't make sense that you have
    collective bargaining over here, but we are going to call
    ourselves Uber, and now you don't have collective bargaining.
    So these are issues that I think are very much a proper concern
    of Congress, and of State and local governments as well.
        Ms. Schakowsky. Let me just ask you this. So many sharing
    economy firms have said that they are just an app. They
    describe themselves not as employers, but rather as technology
    platforms. So how would you compare the type of work being done
    by workers who have traditionally been deemed independent
    contractors, such as electricians, Realtors, or consultants,
    with those in the sharing economy?
        Mr. Baker. Well, traditional contractors, they control
    their time, they control their wage rate, they control what
    they do. I sometimes write a paper, sometimes I will be paid on
    commission. Well, if someone contacts me, they say, ``We need
    this in two weeks,'' I am going to decide what it looks like, I
    will decide the content. That is really not the case with Uber.
    They specify the rules.
        In a lot of ways, that is a good thing. We want to make
    sure that, when you drive an Uber, the car's safe, other
    conditions are met, but that is not the situation of an
    independent contractor.
        Mr. Burgess. Let me--Mr. Lieber, in your testimony you seem
    to suggest that most sharing companies fall into one of two
    buckets, that those that have a mostly hands-off approach,
    perhaps such as Etsy, and eBay, and others that impose certain
    requirements on the independent contractor, such as Uber. Can
    you further explain those two types?
        Mr. Lieber. Yes. The distinction there is--we think of
    there of being--as kind of a marketplace company, which is kind
    of matching buyers and sellers in a marketplace, giving them
    information to make informed decisions on their own, and a
    dispatch company, which is directly pushing a service provider
    to you. You know, you ask for your groceries delivered, and the
    groceries then come to you. And I think these are kind of two
    separate types of technologies that are out there today.
        Ms. Schakowsky. OK. And so, Dr. Baker, do you agree that
    there are two types of sharing companies, and would the need
    for more or less regulation depend on which of those buckets a
    company falls into?
        Mr. Baker. I think that is exactly right. Inevitably there
    will be some gray areas, but I think Uber's a very clear side
    of the gray area. This is an employee-type relationship.
        Ms. Schakowsky. Thank you. I yield back.
        Mr. Burgess. The gentlelady yields back. The Chair thanks
    the gentlelady. The Chair recognizes the gentleman from Texas,
    Mr. Olson. Five minutes for your questions, please.
        Mr. Olson. I thank the Chair, and welcome to our witnesses.
    I am excited about the sharing economy, all this new
    technology, new innovation. But with regards to these changes,
    I asked myself, how does this impact the market? Is it good, is
    it bad, and most importantly, is it safe?
        My first question is for Mrs. Smith, Mr. Passmore, and Mr.
    Beckerman. Unfortunately, we don't hear a lot about the good
    actors. We hear about the bad actors, stories from back home.
    For example, people who use the sharing economy to do harm.
    Back home in Houston, Texas, a driver in the shared economy
    assaulted an intoxicated woman. The background check missed him
    because he had been in jail for most of that time. My question
    is, who should be liable for protecting our consumers from bad
    actors in the shared economy? Mrs. Smith, your thoughts, ma'am?
        Ms. Smith. I believe that is an Uber policy question that I
    am not comfortable answering.
        Mr. Olson. Thank you, ma'am. Mr. Beckerman?
        Mr. Beckerman. Thank you. I would add, I think there are a
    number of safety precautions that are hardwired into the
    technology that provides accountability that didn't exist
    prior, and that does not exist on taxi cabs. And no industry is
    100 percent safe, or 100 percent perfect.
        Mr. Olson. You bet.
        Mr. Beckerman. Certainly hotels are not, and taxi cabs are
    not. But the two-way rating system, having GPS tracking, and
    the background checks that all the sharing economy platforms do
    on the ride sharing side are very comprehensive, and they seek
    to have transparency, accountability, and trust for their
    users. And I think that goes a long way.
        Mr. Olson. Mr. Passmore, your thoughts, sir?
        Mr. Passmore. PCI represents auto home and business
    insurers, so I think the question gets a little bit beyond the
    scope of what I am prepared to answer for. But, you know, what
    we have tried to do is clarify the auto insurance issues to
    make sure that, if you get involved in an accident, there is a
    clear line of where the injured parties can go to collect for
    their damaged vehicles, and injuries, and things like that.
        Mr. Olson. And my final question is for the entire panel.
    Start with you, Mr. Lieber. Sadly, my home of Houston, Texas,
    is ground zero for human trafficking in America. Interstate 10,
    according to our FBI, right through Houston, Texas, is the
    number one highway for human trafficking to come through.
    Girls, mostly, being sold into slavery right through my
    hometown.
        I have held several roundtables back home with law
    enforcement officials, local mayors, all these people involved
    in this. It is a real big problem. But I am concerned that the
    bad guys can use the shared economy to promote human
    trafficking. So my questions is, what can this shared economy
    do to stop human trafficking? Mr. Lieber, your thoughts?
        Mr. Lieber. Just speaking from Thumbtack's perspective,
    there is--I mean, we don't offer any kind of services that
    would be appropriate to be abused in that fashion. Trust and
    safety is the number one important factor for Thumbtack,
    getting you a trusted professional to do a great job for you,
    and marketplace integrity is something we take very seriously.
        Mr. Olson. Mr. Chriss, your thoughts, sir?
        Mr. Chriss. Providing financial management software through
    Intuit, I think this would be beyond my expertise to answer.
        Mr. Olson. OK. Mr. Baker?
        Mr. Baker. I don't know of things sharing economy companies
    can specifically do, but the one thing I would say is that,
    insofar as Congress puts--or State Governments, for that
    matter, put in regulations in place to try to crack down on
    human traffic, again, the point is it has got to apply to
    sharing economy companies as well. So if you have regulations
    that make it more difficult for, say, a traditional cab company
    to be involved in this in some way, certainly you want that to
    be applied to your ride sharing services also.
        Mr. Olson. Thank you. Mr. Passmore? Any thoughts about
    human trafficking, how--I mean, I know you are not quite
    directly involved, but any thoughts how----
        Mr. Passmore. Right.
        Mr. Olson [continuing]. You can influence this, make sure
    we separate the bad guys from the people who are getting abused
    by these----
        Mr. Passmore. Again, it is a little outside of our realm of
    expertise, but I would say that, you know, if you are
    applying--no, I think--I don't really think I am qualified to
    answer that question.
        Mr. Olson. Mr. Beckerman?
        Mr. Beckerman. Safety and security is first and foremost
    for all of our member companies, and, you know, those kinds of
    activities I think are outside of the scope of the services
    that our companies offer. But I think technology certainly can
    help, and when you look at all of these platforms, the
    community that they create, and the trust they create, I think
    could be helpful in stopping some of this.
        Mr. Olson. And, finally, Ms. Smith?
        Ms. Smith. As a driver, I have never encountered anything
    remotely connected to human trafficking, and so I don't feel
    informed enough to give a detailed response on that.
        Mr. Olson. Well, thank you. Thank you for your service, and
    we can agree, go Air Force, go Navy, beat Army. I yield back.
        Mr. Burgess. The Chair thanks the gentleman. The Chair
    recognizes the gentleman from New Jersey, Mr. Pallone, the
    ranking member of the full committee. Five minutes for your
    questions, please.
        Mr. Pallone. Thank you, Mr. Chairman. In May of this year,
    Uber updated its privacy policy to allow the company to track
    users' location whenever its application is open, even if
    consumers are not actively using the application. In other
    words, if I take a ride on a Monday, Uber still can be tracking
    my location the following Thursday. And, of course, Uber is not
    the only sharing economy firm to track its users. The constant
    collection of that data does raise privacy concerns. So I
    wanted to initially ask Mr. Baker, it is my understanding that
    most consumers do not understand the extent to which mobile
    applications, such as those created by sharing economy firms,
    can access and store data about consumers' locations. Do you
    agree with that statement?
        Mr. Baker. I would be inclined to agree, but I have to say,
    that is really not based on any data. It is just simply
    anecdotal. I mean, I do know people, obviously, who will use
    Uber. I will confess I have never used it myself, but, you
    know, I do know many people, and they have no idea of what data
    they collect and what they do with it. And I think it is
    certainly a proper concern of Congress that there be, at the
    very least, clear disclosure, if not actual regulation, on what
    they can do with it, but certainly disclosure of what their
    practices are.
        Mr. Pallone. Well, from a--I mean, expressing the privacy
    concerns that I share, but do you see any--well, I mean, what
    about this idea of storing location data permanently, rather
    than discarding it after the transaction is completed? Is there
    some way--I mean, obviously, from a privacy concern, you would
    rather see it discarded after the transaction is completed.
    What would be your view on that?
        Mr. Baker. Well, I think it would be totally appropriate to
    say that, you know, to prohibit those companies from keeping
    that data, because it is--well, on the face of it, you are
    contracting with them for a ride, and that seems to me that
    should be the end of the relationship, unless people
    consciously decide they want a further relationship with the
    company. But, again, I think most people are understanding,
    when they are taking an Uber, they are contracting for a ride,
    not to give away details of their lift to third parties.
        Mr. Pallone. OK. Now, should sharing economy firms be more
    up front about when, how, and why they are tracking user
    locations, in your opinion?
        Mr. Baker. I think absolutely. Again, I think, two separate
    issues here. One, do you restrict what they can do? Open
    question, you know, I couldn't give you a well-reasoned----
        Mr. Pallone. OK.
        Mr. Baker [continuing]. Answer on that, but that is one
    issue. Second one, disclosure of what they are doing, and, to
    my mind, that has to be a clear responsibility, that there have
    to be clear roles so that everyone at least can know. I mean,
    some people may not care, and that is fine, but a lot of people
    may want to know that if they are taking an Uber, this
    information is being kept and quite possibly shared with a
    third party.
        Mr. Pallone. All right. Now, some apps, including Uber,
    give companies access to other personal information, including
    users' contacts and address book. It is my understanding that
    most consumers do not understand the extent to which mobile
    applications, such as those created by sharing economy firms,
    can access and store data from consumers' contacts and address
    books. Do you agree, and you want to talk about the privacy
    concerns with that?
        Mr. Baker. Well, that is, to my view, you know, I have
    heard accounts of that. I assume that they are true. But, to my
    view, that is absolutely amazing. I mean, again, you are
    contracting with Uber to get from point A to point B. You
    aren't--at least I think almost no one is knowingly contracting
    with them to give them access to their address book. So it is
    very hard to see why they would have a legitimate reason to get
    access to that sort of information.
        Mr. Pallone. Well, let me go to Ms. Smith. In order to use
    Uber, a person must download the Uber app, giving permission
    for Uber to collect that person's address book. Can you explain
    how that information is used by Uber?
        Ms. Smith. I am not sure how it is used by Uber, but when
    an individual does download the app, they are given an
    opportunity to agree to what Uber may do. And, as far as the
    location, I believe that the information may always be
    collected only when the app is being used, or never. And so an
    individual does have an opportunity to decline, if they are not
    comfortable. And whenever you do download the app, there is an
    agreement that you must agree to in order to use the app. So
    everyone who uses the app agrees to the conditions that are in
    the agreement.
        Mr. Pallone. Well, let me ask Mr. Beckerman to comment on
    that, and also, since there are only a few minutes--seconds
    left. We all know the critique, Mr. Beckerman, that privacy
    policies are too long and full of legalese, especially on a
    mobile device. But how are your members taking steps to make
    sure consumers are aware of the extent to which their
    information is collected, and sometimes is shared or sold? Or
    if you want to also comment on what Ms. Smith said?
        Mr. Beckerman. Yes. Thank you for the question. First, on
    the tracking, if you look at the settings in your phone, it
    does indicate that the tracking only happens when the app is
    open, and you are using it. And the ability to look at the map
    and see where you are going is part of, actually, the safety
    and security features of the phone. You know, my wife left her
    purse in an Uber once, and we were able to retrieve it
    immediately because of some of these features. And had she left
    it in a cab, we probably never would have seen it again.
        When it comes to data security and privacy, there are laws
    on the books from Congress and the FTC that apply to all
    companies, sharing economy companies, Internet companies, brick
    and mortar companies, and I don't believe there are any gaps in
    the coverage of protections that we have.
        Mr. Pallone. All right, thank you. Thank you, Mr. Chairman.
        Mr. Burgess. The gentleman yields back. The Chair thanks
    the gentleman. The Chair recognizes the gentleman from
    Illinois, Mr. Kinzinger. Five minutes for questions, please.
        Mr. Kinzinger. Well, thank you, Mr. Chairman, and thank you
    all for being here. It is helpful to us, appreciate it.
    Chairman, thank you for holding the hearing of--that is the
    first of what I expect will be a great series of hearings. I
    think there is a lot to be excited about in the sharing
    economy, and I appreciate the committee's consideration of the
    economic benefits, new choices for consumers, and the
    underlying policy impacts that have come to light.
        Last week Business Insider ran an article on the sharing
    economy that started with ``The rise of the sharing economy has
    fundamentally changed the business landscape, and some
    companies are going to have to adapt to survive.'' And I think
    that sentence captures some essential characteristics about the
    sharing economy. It is new, it is changing, and it is adapting
    to meet market demands. In such a dynamic economic space, I
    think the committee's approach towards this regulation is
    pragmatic, and, frankly, the correct course. Sharing platforms
    have provided two apparent benefits in particular. They have
    given workers another source of income in addition to
    traditional work options, and they have also given consumers
    additional choices.
        Ms. Smith--by the way--I am an Air Force pilot, so thank
    you for your service. And I am still in the Air Guard. I love
    it, so--but I want to say thank you for your service, and for--
    I guess your son's as well, so that is fantastic. I appreciate
    your testimony, and for highlighting that many Uber driver use
    this service for supplemental income. Do you think this is
    something you are going to utilize long term?
        Ms. Smith. Yes, absolutely. Yes.
        Mr. Kinzinger. And what is it you enjoy about it? What is
    it that makes you think that this is going to be a long-term
    process for you?
        Ms. Smith. Just about everyone that I have driven has
    expressed the joy, really, at having the alternative.
        Mr. Kinzinger. Um-hum.
        Ms. Smith. Whether they didn't have a car at all, or they
    constantly relied on others to take them from place to place,
    or a bus was not available where they lived, or a taxi was more
    expensive. Whatever their reason was, they just were so
    grateful to have the opportunity to have a means of
    transportation that is affordable and safe.
        Mr. Kinzinger. And as a user of it, I can agree. And I will
    tell you what is neat too is the whole idea of the surge
    pricing. If you don't have enough drivers, it helps drivers
    come online, to say that there is a surge. Consumer makes a
    decision, the supply makes the decision, and it kind of works
    out for everybody.
        Mr. Beckerman, as sharing platforms proliferate, is there a
    way to maintain light touch regulations in a way that promotes
    competition on a level playing field, and can local governments
    peel back some unnecessary regulations on incumbents to some
    equilibrium that encompasses sharing platforms to the extent
    that they directly compete?
        Mr. Beckerman. Thanks for the question. Yes, I think so. I
    mean, we have seen two different kinds of regulations in local
    communities. Some that were maybe written in the '70s and '80s
    that just couldn't anticipate any kind of Internet platform at
    all, and those are being peeled back. But we are seeing in some
    areas new regulations that are put in with the sole purpose of
    blocking, or discriminating, against these platforms, and those
    are the ones we are the most concerned about.
        Mr. Kinzinger. OK. And, Mr. Passmore, some commenters
    suggest that the insurance problems are too hard to solve when
    a sharing platform is involved. How has the insurance company
    worked to solve the coverage issues in the transportation
    network company context? Is the insurance industry hopeful that
    insurance questions raised by other types of sharing platforms
    can be resolved?
        Mr. Passmore. Yes. As I mentioned in my testimony, we
    have--we worked very hard with the sharing economy companies,
    the TNCs, to develop a solution that would work, and is being
    implemented in over half the States right now.
        As for other sharing economy businesses, I think a lot of
    them have sort of observed what has happened with the
    transportation network companies, and sort of been more
    proactive about making sure that their participants, whoever,
    whether it is Airbnb hosts, or Thumbtack vendors, or what have
    you, they are being more proactive and making sure that they
    are aware of the insurance issues, making it clear what kind of
    insurance they provide, and what they might have to get on
    their own. Those kind of developments are very encouraging.
        Mr. Kinzinger. And I think every major invention or leap in
    humanity, or leap in technology, or leap in any way we do
    business sometimes is met by resistance, and that is natural.
    People feel uncomfortable, they don't know what the future
    holds. But the great thing, I think, about a free market,
    capitalistic economy like ours is we have the ability to adapt.
    And adapting is what makes us great, and, frankly, why we
    continue to lead the world.
        So, with that, Mr. Chairman, again, thank you for doing
    this. This is very beneficial, and thank you to the witnesses,
    and I yield back.
        Mr. Burgess. The gentleman yields back. The Chair thanks
    the gentleman. The Chair recognizes the gentleman from North
    Caroline, Mr. Butterfield. Five minutes for questions, please.
        Mr. Butterfield. Thank you very much, Chairman Burgess, and
    Ms. Schakowsky, and members. Thank you very much for holding
    this hearing today, Mr. Chairman. I was just looking at the
    memorandum, and I think it is a very appropriate topic. It is
    sharing the--``How the sharing economy creates jobs, benefits
    consumers, and raises policy questions''. A very appropriate
    topic, and I thank you so very much for it.
        As you know, Mr. Chairman, I am now the chair of the
    Congressional Black Caucus. For several months now we have been
    examining diversity among the Fortune 500 companies in America,
    and we realize that taking on 500 companies at one time is a
    daunting task, and so we have started to target the technology
    companies in particular. And we have found that African
    Americans have been largely excluded from all levels of
    technology. African Americans are a missing link in the tech
    economy, and until we see full participation in the tech
    economy, America will never truly unlock its full potential,
    and that is why I like the topic of this hearing. That is why,
    as part of my role as the chair of the CBC, I have focused on
    our efforts of increasing diversity within the technology
    sector.
        In May the CBC launched the CBC Tech 2020, which is an
    initiative to bring together the best minds in the technology,
    non-profit, education, and public sectors to chart a path
    forward to increase minority inclusion at all levels of the
    technology industry. The goal of CBC Tech 2020 is to achieve
    full representation of African Americans at every level of the
    industry in 5 years. Over the past few months I have taken this
    message across the country, and even to the heart of Silicon
    Valley. And now I would like to ask just a few questions on a
    few of these subjects.
        Let me start with Mr. Beckerman. Thank you for
    participating, and thank all six of you for participating
    today. Mr. Beckerman, as I said, I am interested in the
    inclusion of African Americans and other minorities in the
    technology industry, both as owners and employees, as well as
    vendors. How many companies, if you know, are members of--well,
    I am sure you know--are members of your association?
        Mr. Beckerman. Thirty-six.
        Mr. Butterfield. Thirty-six. Let me write that down, 36.
        Mr. Beckerman. I am glad I got that one.
        Mr. Butterfield. All right. I have got four here, so I
    don't know how we are going to do on the other ones. Out of
    your companies, how many have African American CEOs, if you
    know?
        Mr. Beckerman. I would be happy to get back to you on that.
        Mr. Butterfield. All right. Question mark. Please get back.
    How many have an African American on their Board?
        Mr. Beckerman. I would be happy to get back to you with
    those numbers.
        Mr. Butterfield. All right. The reason I ask the Board
    question is because we found, of the top 20 technology
    companies, collectively they have 189 directors. And of those
    189, three are African Americans, so we are particularly
    interested in that as well. And do you know if any of those
    companies have released their diversity data? I know they do
    the EEO-1s, but have any of these made their diversity data
    reports public?
        And now we are seeing the trend in Silicon Valley that
    companies are now opening up their EEO reports for the world to
    see, and they are making a commitment to us that they are going
    to work with us in trying to improve it.
        Mr. Beckerman. Yes. I just want to say I appreciate what
    you are doing, and our companies realize there is a lot of work
    to be done, and they are making strides to improve, but I do
    think that these platforms do create a lot of opportunities
    both for direct employment, and what--the opportunities that we
    see on the sharing platforms that we are talking about today.
    But thank you for your work on this, and it is something that I
    know our companies are striving to do better.
        Mr. Butterfield. I really want you to pay attention to it,
    and I won't call up the CEO's name that I met with in Silicon,
    but all of you would recognize the name. He told us that there
    is a correlation between the bottom line and diversity, that
    you--that the profits are really related to diversity and
    inclusion, and if you can get those two in sync, you can really
    grow the economy, grow the consumer base, and the company can
    do very well. So I look forward to working with you. And thank
    you, Mr. Chairman. I yield back.
        Mr. Burgess. The Chair thanks the gentleman. The gentleman
    yields back. The Chair recognizes the gentleman from Kentucky,
    Mr. Guthrie. Five minutes for questions, please.
        Mr. Guthrie. Thank you, Mr. Chairman, I appreciate it. I am
    also a member of the Education and Workforce Committee, and we
    were having a meeting downstairs. Sorry I didn't hear all this
    on a joint employer, and the definition of joint employer. So I
    say that because I am from the business world as well, and
    labor issues are something I have worked on and understand,
    that labor classification issues are at the forefront of this
    debate.
        But in your--so this is to Mr. Beckerman. So in your
    testimony you urged Congress to consider the real benefits of
    the sharing economy before moving too quickly into regulations.
    And what are some of the most critical benefits offered by
    these platforms that would be affected if service providers on
    these platforms are classified as something other than
    independent contractors?
        Mr. Beckerman. Thank you for the question. I think first
    and foremost there is incredible flexibility, and we have heard
    a lot of that today from Ms. Smith and others. On all these
    platforms it is opt-in, and a majority of the people
    participating on these services are doing so part time. They
    are doing it to have new income, not necessarily replacing a
    full time job that they had before, and the ability to be your
    own boss. That is compelling to a lot of people, to be able to
    set your own schedule, and really work for yourself as a small
    business person, and I think that is probably top of the list.
        Mr. Guthrie. OK. Again, Mr. Beckerman, when we consider the
    extent of consumer protection regulations that should exist for
    sharing platforms, we have heard today that reputation
    mechanisms, like rating systems, lessen the need for certain
    consumer protection regulation. What kinds of consumer
    protection regulation should apply to apps, such as Uber?
        Mr. Beckerman. There are a few things. When it comes to
    data security and privacy, I just want to note that there are
    laws in the books, and regulations, the FTC and other places,
    that apply to all platforms, online and offline, and I don't
    think there are gaps in that kind of coverage. But when it
    comes to rating systems, there is incredible transparency and
    accountability that really never existed before, being able to
    rate the driver, and have the driver rate you, and on Airbnb,
    and other platforms, being able to see peoples' past
    experiences. And I think this is a new innovation, and it is
    important.
        Mr. Guthrie. And what about apps for TaskRabbit? Same----
        Mr. Beckerman. Same.
        Mr. Guthrie [continuing]. Situation? Well, thanks. I know
    on Uber you can see the picture of the driver, and understand
    there have been a couple instances in Chicago where somebody
    has pulled up, say, you looking for an Uber driver? And they--
    and it is not an Uber driver. So those protections seem to be
    in there, if somebody checks their----
        Mr. Beckerman. I think those protections are working, and
    what you see with all these platforms you mentioned, TaskRabbit
    and others, trust is first, but also a community has been
    created where you want to have a higher level of service for
    your customers because you know you are being rated on an
    instant basis, and you are being rated many times throughout
    the day. And I think that helps what you are asking for.
        Mr. Guthrie. Yes. I think in the incidents in Chicago
    people were getting in the car--somebody just pulled up and
    looked like they were looking for an Uber driver, but if
    somebody followed what Uber provided, either the picture, or
    the car, the make, the model, that wouldn't have happened.
        Mr. Beckerman. If they don't know your name, you know,
    don't get in the car.
        Mr. Guthrie. So, Mr. Lieber, I am going to--how much time
    did a person usually spend trying to track down local
    professional services before Thumbtack?
        Mr. Lieber. That is a great question, and we don't have a
    scientific answer for you, but I am sure, from your own
    experience, you have tried to hire a--somebody for your house,
    a plumber--and my parents have lived in the same house for 40
    years, they still don't know who to go to to find a plumber. So
    they found Thumbtack is a really useful tool for them to bring
    somebody to their house who is trusted, and is going to do a
    great job.
        Mr. Guthrie. Does Thumbtack reduce the cost of looking
    for--I guess it is self-evident in your answer here--reduce the
    cost for looking for the right professional?
        Mr. Lieber. On both sides of the marketplace, we believe
    Thumbtack dramatically reduces the cost, both search time for
    the consumers--it is time you could be spent hanging out with
    your kids, as opposed to calling people and trying to find
    somebody who is right for you. And on the pro side, finding new
    business is a really hard thing to do. Finding a new client,
    you put an ad out in the paper, maybe, you know, the name of
    our business is Thumbtack because it is named after the pins
    people used to put on bulletin boards, where they would just
    put this up on the bulletin board, and hope that somebody
    called them. And that system is really outdated today, and we
    think that we are lowering the cost of that, finding them new
    customers.
        Mr. Guthrie. Thank you very much. And it is good for our
    businesses to have that opportunity. I always say--difference
    in our system in the world and everywhere else is that
    everybody that becomes a plumber, or skilled trades, eventually
    usually becomes their own boss, especially in the plumbing
    business and HVAC business. You see a lot of people with vans
    with their name on the side, my name, Inc., and they are
    driving around. And helping them market is a great opportunity
    for those who provide it, as well as those who receive it.
        Mr. Lieber. Absolutely. And a lot of these are skilled
    professionals who are really great plumbers, maybe don't know
    how to run their own business. And that is where companies like
    Intuit and Thumbtack come in, to help them market themselves a
    lot more--in a lot more sophisticated manner.
        Mr. Guthrie. Because they are very much in demand. Mr.
    Chriss, you had a comment on that?
        Mr. Chriss. Just to pile onto that, one of the--having
    served small businesses for a number of years, one of the top
    challenges that our small businesses face is finding customers,
    and many of these new platforms are now allowing them to,
    again, with the push of a button, find that customer, to allow
    the individual to spend more time actually making money.
        Mr. Guthrie. It only works because you have customers
    looking for them. So it is a win-win.
        Mr. Chriss. It is.
        Mr. Guthrie. Thank you very much, I appreciate that, and I
    will yield back.
        Mr. Burgess. The gentleman yields back. The Chair thanks
    the gentleman. The Chair now recognizes the gentlelady from
    Indiana, Mrs. Brooks. Five minutes for questions, please.
        Mrs. Brooks. Thank you, Mr. Chairman, for holding this
    fascinating hearing. I co-chair what is called the Women in
    High Tech Caucus here. It is a bipartisan group that is about
    promoting women and leadership in the tech companies as well,
    and--so I talk with a lot of tech companies, particularly in
    Central Indiana, where I am from, and I can't tell you how
    excited the sharing economy is to so many people, and whether--
    particularly when we have hack-a-thons, whether it is for
    businesses, or whether or not it is for State Governments, or
    Federal Government, there is so much energy and excitement
    about the sharing economy, and the platforms that are coming
    forward. And I--we also have what is called 1150 Academy in my
    district, which is teaching people how to code, which is so
    critical to all of this, and all of these new platforms.
        But I have to tell you, there are--there is a lot of
    concern, and--particularly generational, probably more than
    anything, when it comes to this sharing economy, and the
    questions about the sharing economy, so I think this type of
    hearing--and I hope, Mr. Chairman, there are going to be more
    hearings on this, because I don't think it is really cut and
    dry on a lot of these issues. There are a lot of questions.
        But I do have to ask, Mr. Beckerman, it--and I am a former
    deputy mayor in Indianapolis, and I know that State and local
    regulations can really get in the way, and I know that a lot of
    these platforms, and a lot of these innovations have struggled
    with State and local regulations. And I know that it often can
    be used in many ways to block competition, and to block
    innovation. Can you share a bit more about what we, in looking
    at what the Federal Government should be doing, what lessons
    can we be learning about what is happening maybe at State and
    local issues around the country?
        Mr. Beckerman. Sure, thank you. Competition obviously is
    important for consumers in all communities, and our companies
    have made great strides in working with local mayors and local
    city governments to make sure their services are allowed to
    operate in those communities. But I think the leadership of
    this committee, and of Congress, talking to your local mayors,
    and even your Governors, and, you know, taxi commissions, as
    appropriate, that they should allow these services to operate
    because it is benefitting consumers. It is providing more
    choice, it is lowering costs, and that is what this is really
    all about.
        Mrs. Brooks. And so this is an education process you are
    undertaking at mayor--with individual mayors, or at association
    meetings, or how are you doing it?
        Mr. Beckerman. Both. You know, the companies are actually
    working city by city, town by town, State by State in a lot of
    places. And you asked for some examples, you know, we have seen
    areas where they are putting new regulations in place, such as
    saying for--on the ride sharing side, you have to wait 40
    minutes before a car picks you up, which obviously does not
    have any consumer benefits at all. It is just meant to block
    competition. Or regulations that say the minimum fare must be
    $50, which is 10 times the fare of a taxi, which, again, has no
    consumer benefits whatsoever. And so those are the things we
    are trying to get rid of.
        Mrs. Brooks. Thank you. Mr. Chriss, there were
    conversations and discussions about protecting consumers'
    financial data, and obviously, in today's day and age, when we
    rely so heavily on technology for all--so many financial
    transactions, how is this different, if it even is different?
    How is the sharing economy any different than the other ways in
    which we transact business, or is it essentially the same?
        Mr. Chriss. I think in many ways it is still the same.
    The--all of our partners, including ourselves, need to think of
    data privacy as chief, and we need to maintain the stewardship
    that we have of our customers' data. When it comes to consumer
    protections, again, I think there isn't much difference that we
    have seen in the number of companies.
        I do want to mention, we have talked a lot about Uber as an
    example here today. It should be said that we have seen over
    200 other platforms, sharing economy platforms, coming in that
    are impacting all sorts of different businesses. And so...
        Mrs. Brooks. Can you give us some examples?
        Mr. Chriss. Absolutely, and these would be ones that might
    surprise you. So we have talked some about food delivery, and
    caring for your dog, but there are some that are disrupting
    industries like the legal industry. So one of our partners, Up
    Council, has provided an opportunity for lawyers to come in,
    and, again, find clients that are perfectly matched to them. Or
    a company called Hourly Nerd, which allows MBAs to be partnered
    with the right Fortune 500 company as well. So this is very
    broad, and, again, we are very early in this journey, but with
    over 200 now, it will be amazing to see how that grows over the
    next few years as well.
        Mrs. Brooks. I would be curious, Mr. Lieber, with respect--
    because I think one of the things that we are--we are often
    concerned about, whether it is with Airbnb, whether it is with
    Uber, whether it is with the providers that you are--or the
    people who are going into the homes, providing services, the
    safety issues that are discussed, can you talk about that a
    little bit with respect to Thumbtack, and how you educate your
    customers, as well as the people who are providing the
    services? What kind of safety issues are addressed, with
    respect to--whether it is criminal history background checks,
    whether it is just educating your customers about what kind of
    background checks have been done or not been done, and
    informing them?
        Mr. Lieber. Yes. So we do background checks on every
    professional who is active on Thumbtack to make sure that we
    are delivering somebody that we can be proud of to your house.
    Marketplace integrity is incredibly important to us. We have a
    large team dedicated to that. We kick off any bad actors who we
    think have violated our principles of marketplace integrity,
    and we do everything we can to ensure that we are delivering a
    trusted professional to your house. Reviews are a part of that.
    We try to do everything we can to collect and aggregate reviews
    so you have the most information to make an informed decision,
    and we police this very, very carefully.
        Mrs. Brooks. Thank you. My time is up. I yield back.
        Mr. Burgess. The gentlelady's time has expired. The Chair
    thanks the gentlelady. The Chair recognizes the vice chair of
    the full committee, Mr. Lance of New Jersey. Five minutes for
    questions.
        Mr. Lance. Thank you, Mr. Chairman. I apologize to the
    panel for being late. I was in continuing legal education over
    at the Library of Congress, in the hopes perhaps someday there
    will be a lawyer app that will employ me.
        Mr. Baker, I certainly understand your point. Would it be
    fair to say that the distinction between independent contracts
    and employees is an ongoing discussion in our society, and has
    been for quite some time?
        Mr. Baker. Sure. I mean, the issues certainly pre-date the
    rise of the sharing economy companies.
        Mr. Lance. For example, I sold real estate. I was not the
    broker. I was merely an agent, and I was treated as an
    independent contractor, and I think that is traditional in the
    real estate industry. Is that your understanding of it, as it--
    how it works in real life?
        Mr. Baker. To be honest, I couldn't tell you whether most
    realtors are treated as independent contractors or employees.
    I----
        Mr. Lance. I believe most salespersons are treated as
    independent contractors, although there certainly is
    significant guidance. I was trained as to how to answer the
    telephone. I was trained how to try to sell real estate, but
    definitely I was an independent contractor.
        You state in your testimony, regarding Uber and Lyft, that
    there have been several cases brought before the NLRB, and in
    Federal Court, arguing that those working in these companies
    are employees. Has either the NLRB or the Federal Courts
    adjudicated any of those questions yet?
        Mr. Baker. No, there has been no final adjudication on
    that. Those cases are still pending.
        Mr. Lance. I see. And do you expect that there will be a
    decision at some point in the near future?
        Mr. Baker. It depends on your definition of near. I suspect
    we are talking about a couple years before we get anything
    resembling a final decision.
        Mr. Lance. I see. And anything that is adjudicated by the
    NLRB then potentially could be appealed, probably to the United
    States Court of Appeals for the District of Columbia. Is that
    accurate?
        Mr. Baker. Exactly, yes.
        Mr. Lance. Yes. Thank you. Mr. Beckerman, I also was
    greatly interested in your testimony, and you point out that
    this is a growing phenomenon in this country, and that there
    are internal checks regarding all of this. Could you elaborate
    a little greater on your point of view in that regard?
        Mr. Beckerman. Absolutely. There are certain transparency,
    and accountability, and trust features that are built into the
    platforms. Again, on the rating system, it is something that
    doesn't exist in--for many of the incumbents. Being able to
    track your location, in many cases, does make you safer. Or, if
    you end up leaving your purse or your bag in the car, that
    helps you retrieve that. And so there are a lot of things built
    into technology, and that has worked out very well.
        Mr. Lance. Thank you. I point out particularly of--four
    points that you articulated. You stated, second, in weighing
    these clear benefits against perceived harms, lawmakers should
    consider whether sharing economy services may, in fact, be
    safer for consumers when compared to their incumbent
    counterparts. And number four, recognizing that sharing economy
    platforms already self-regulate through various mechanisms that
    are hardwired into the technology, such as consumer ratings,
    payment systems, intense competition, and GPS tracking. I tend
    to agree with that. This is obviously a growing phenomenon in
    this country.
        And, Mr. Beckerman, you state that in a pre-Internet age
    the Yellow Pages served as a similar function that Lyft and
    Uber serve today. Would you explain your point of view
    regarding that?
        Mr. Beckerman. Sure. At the basic level, these are
    technology platforms that are removing friction between the
    transaction, and they are connecting the supply and the demand.
    Be it a plumber, or a driver, a home that you are trying to
    rent----
        Mr. Lance. Um-hum.
        Mr. Beckerman [continuing]. And having that frictionless
    transaction, I think, helps the economy----
        Mr. Lance. Um-hum.
        Mr. Beckerman [continuing]. And it certainly helps the
    individuals on both sides of the transaction.
        Mr. Lance. Thank you. Finally, in the last 50 seconds, I
    will relate a story--when I sold real estate, the real estate
    broker told me that if the property was 20 minutes farther west
    from where the potential customer wanted to live, I was to
    create interesting conversation in the automobile and drive as
    fast as I could. Thank you very much. Mr. Chairman, I yield
    back 27 seconds.
        Mr. Burgess. The gentleman yields back. The Chair thanks
    the gentleman. The Chair recognizes the gentleman from
    Mississippi, Mr. Harper. Five minutes for questions, please.
        Mr. Harper. Thank you, Mr. Chairman. Thanks to each of you
    for being here today. And, Mr. Chriss, if I could ask you a
    question? What has been your clients' feedback as they
    transitioned successfully to sharing platforms as a source of
    income, and then are they happy with their choice. So looking
    for what the feedback would be that you are hearing right now.
        Mr. Chriss. Thank you for the question. The feedback we are
    hearing right now is certainly a happiness factor from being
    able to be their own boss, and control their own income
    streams. The shadow to that has been--not sure that they
    understood they were becoming a small business when they
    entered into this.
        Again, if you think about the--for many of them the
    feedback was it was so easy to download an application and
    create income, and then I realized I now have to pay quarterly
    taxes, I have to track my expenses, I have to track mileage.
    Many of these folks are working in an app that is on the palm
    of their hand, and yet when you ask a driver to open up their
    glove box, it is littered with receipts. And so this change in
    mindset, of going from, hey, this was very easy to enter into
    this economy has been a true positive, with the shadow of, I
    now have a whole bunch of obligations that I wasn't sure I was
    set up to do.
        Mr. Harper. And has there been a change in the way that is
    now initiated, so that there is a better understanding from the
    beginning for these?
        Mr. Chriss. You know, there is, and, I mean, this is why we
    created the QuickBooks Self-Employed product that we have, and
    we have seen--certainly we track our customer success metrics
    as well, and we have seen that with our product we put $3,800
    of tax savings back into our customers' hands.
        The difficulty, though, is there are still challenges
    when--January to April of every year, when an independent
    contractor receives a 1099, their first call is to their
    platform, who sent them the 1099, and the response from that
    platform is, I am sorry, I can't even answer your question, you
    have to go find a tax professional.
        Mr. Harper. Right.
        Mr. Chriss. So there are still some real challenges in the
    system that I think we could, again, create some clarity around
    to make things easier.
        Mr. Harper. You had mentioned in your testimony that people
    who provide services through sharing platforms would benefit
    from some guidance from the platforms on how to operate
    successfully, and I guess that would be the main takeaway,
    then, on what you are saying, is that training up front, that
    knowledge up front, would be the biggest benefit for them?
        Mr. Chriss. There are a number of our users that have come
    in that, again, didn't even know what they were getting into.
    They are happy to be where they are, but being able to provide
    some guidance from the platforms, again, not necessarily
    providing the answer, but at least providing the guidance would
    certainly be beneficial.
        Mr. Harper. So what they have to do on their income tax,
    but also the regulatory requirements that may go with that as
    well, it sometimes--can take some of the joy out of it if they
    don't know that on the front.
        Mr. Chriss. What we have seen from our customers is, once
    they know, and once they are able to do the calculations
    through our product, or through whatever, they are happy to do
    it.
        Mr. Harper. Good.
        Mr. Chriss. It is the lack of transparency, and the lack of
    understanding, that is the most difficult.
        Mr. Harper. Mr. Passmore, when we talk about property
    casualty insurance, and what that entails, what are the
    incentives for the insurance industry to participate in the
    sharing economy?
        Mr. Passmore. Opportunity. Insurers like to sell insurance,
    and----
        Mr. Harper. Sure.
        Mr. Passmore [continuing]. They are--these businesses
    certainly represent opportunities to do that by developing new
    products. A good example is the transportation network
    companies, particularly in the States where they put in place
    the clear insurance rules, so the rules of the road are
    established, and certainty is established. We have seen
    companies introduce a lot of different products.
        One--a PCI member company, Erie Insurance, was one of the
    first to introduce an endorsement that you could buy for your
    personal auto policy to provide coverage for transportation
    network drivers. And other companies, such as Geico, and
    Progressive, and MetLife and Home, have all introduced
    products. Some have had--some have introduced even separate
    policies just for TNC drivers. Some have had partnerships with
    some of the TNCs to develop products just for their drivers.
        Mr. Harper. So do you see the future--how would you
    describe the future for property casualty insurance in this
    economy?
        Mr. Passmore. Well, I think it is a great opportunity for
    insurers, as long as there are clear rules of the road, and
    certainty has been established. You know, with the TNCs, we
    have had--we had a little bit of a bumpy road, but we got there
    in the end, and we are making excellent progress on it now. We
    may not need that kind of clarification in every other kind of
    sharing economy model, but there may be some needs for that. So
    the ability to develop that certainty, so the insurance
    industry can grow along with the sharing economy, is going to
    be very important.
        Mr. Harper. And with that, I yield back, Mr. Chairman.
        Mr. Burgess. The gentleman yields back. The Chair thanks
    the gentleman, and the Chair wants to thank all the members,
    and the witnesses, for being here today. Seeing that there are
    no further members wishing to ask questions, I do want to thank
    each of you for participating in today's hearing. Before we
    conclude, I will yield to Ms. Schakowsky for a unanimous
    consent request.
        Ms. Schakowsky. Yes. I would like to add a statement of
    Vaughn Armour from the New York Committee for Change into the
    record, testimony that I referred to earlier of Indir Pamar, a
    New York taxi worker, and, let us see--Uber worker, actually--
    testimony from the Taxicab, Limousine, and Paratransit
    Association, and testimony from Working Partnership U.S.A., San
    Jose, California, into the record.
        Mr. Burgess. Without objection, so ordered.
        [The information appears at the conclusion of the hearing.]
        Mr. Burgess. I also want to include the following documents
    to be submitted for the record by unanimous consent: a
    statement for the record from the American Hotel and Lodging
    Association, a statement for the record from the Hotel
    Association of New York City, a statement for the record from
    the Texas Hotel and Lodging Association. Without objection, so
    ordered.
        [The information appears at the conclusion of the hearing.]
        Mr. Burgess. Pursuant to committee rules, I remind members
    they have 10 business days to submit additional questions for
    the record. And I would ask our witnesses to submit their
    responses to those questions within 10 business days upon
    receipt of the questions.
        So, again, thanks all to everyone here. Without objection,
    the subcommittee is adjourned.
        [Whereupon, at 11:55 a.m., the subcommittee was adjourned.]
        [Material submitted for inclusion in the record follows:]

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