[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




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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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