[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
MILLENNIALS AND THE GIG ECONOMY
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HEARING
BEFORE THE
COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
SECOND SESSION
__________
HEARING HELD
JUNE 6, 2018
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Small Business Committee Document Number 115-074
Available via the GPO Website: www.govinfo.gov
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HOUSE COMMITTEE ON SMALL BUSINESS
STEVE CHABOT, Ohio, Chairman
STEVE KING, Iowa
BLAINE LUETKEMEYER, Missouri
DAVE BRAT, Virginia
AUMUA AMATA COLEMAN RADEWAGEN, American Samoa
STEVE KNIGHT, California
TRENT KELLY, Mississippi
ROD BLUM, Iowa
JAMES COMER, Kentucky
JENNIFFER GONZALEZ-COLON, Puerto Rico
BRIAN FITZPATRICK, Pennsylvania
ROGER MARSHALL, Kansas
RALPH NORMAN, South Carolina
JOHN CURTIS, Utah
NYDIA VELAZQUEZ, New York, Ranking Member
DWIGHT EVANS, Pennsylvania
STEPHANIE MURPHY, Florida
AL LAWSON, JR., Florida
YVETTE CLARK, New York
JUDY CHU, California
ALMA ADAMS, North Carolina
ADRIANO ESPAILLAT, New York
BRAD SCHNEIDER, Illinois
VACANT
Kevin Fitzpatrick, Majority Staff Director
Jan Oliver, Majority Deputy Staff Director and Chief Counsel
Adam Minehardt, Staff Director
C O N T E N T S
OPENING STATEMENTS
Hon. Steve Chabot................................................ 1
Hon. Nydia Velazquez............................................. 2
WITNESSES
Ms. Betsy Dougert, Director of Communications, SCORE Association,
Herndon, VA.................................................... 4
Mr. Ryan Morris, Owner, Ruff House Dog Training, Stafford, VA.... 5
Ms. Anne Kirby, Founder, The Sweet Core, Lancaster, PA........... 7
Mr. Steven Olikara, Founder and President, Millennial Action
Project, Washington, DC........................................ 8
APPENDIX
Prepared Statements:
Ms. Betsy Dougert, Director of Communications, SCORE
Association, Herndon, VA................................... 28
Mr. Ryan Morris, Owner, Ruff House Dog Training, Stafford, VA 37
Ms. Anne Kirby, Founder, The Sweet Core, Lancaster, PA....... 39
Mr. Steven Olikara, Founder and President, Millennial Action
Project, Washington, DC.................................... 50
Questions for the Record:
None.
Answers for the Record:
None.
Additional Material for the Record:
None.
MILLENNIALS AND THE GIG ECONOMY
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WEDNESDAY, JUNE 6, 2018
House of Representatives,
Committee on Small Business,
Washington, DC.
The Committee met, pursuant to call, at 11:05 a.m., in Room
2360, Rayburn House Office Building, Hon. Steve Chabot
[chairman of the Committee] presiding.
Present: Representatives Chabot, King, Luetkemeyer, Brat,
Knight, Kelly, Blum, Comer, Gonzalez-Colon, Fitzpatrick,
Marshall, Norman, Curtis, Velazquez, Evans, Murphy, Lawson,
Clarke, Chu, Adams, Espaillat, and Schneider.
Chairman CHABOT. Good morning. The Committee will now come
to order. And as folks have to exit, they could continue to do
that, but just do it quietly, if you would.
Throughout history, technological advances have shaped the
economic landscape. With each advance, we see an increase in
efficiency or output within the market. Today, we will discuss
an example of an economic market that is not only shaped by
technology but defined by it, the so-called gig economy.
Today's hearing will allow us to explore the intricacies of a
gig economy while diving deeper into the questions of who is
participating in it, what does working in it look like, and how
is its growth affecting small businesses.
The concept of the gig economy is not new. It is a
marketplace of workers whose businesses are a collection of
individual projects or gigs. A gig can range from a short-term
contract lasting weeks or months to a single task that takes
hours to complete. This notion of short-term contractual
workers dates back centuries but has been re-envisioned with
the inclusion of technology.
The gig economy is characterized by the use of technology
as a means of connecting workers to employers. Digital
platforms and mobile apps have been created to not only provide
these connections but also to provide low-cost marketing and
basic business tools to those working within the gig economy.
Through the inclusion of technology, the economy that we just
mentioned has become more efficient and attracted more and more
market participants.
While the exact number of workers in the gig economy can be
difficult to estimate, the Bureau of Labor Statistics estimates
that the number of Americans earning income outside the
traditional 9-to-5 job to be more than 53 million individuals,
approximately one in three workers. On average, those workers
are currently estimated to be between 47 and 50 years old. By
2020, however, roughly 42 percent of those workers are expected
to be between 22 and 37 years old or of the millennial
generation.
Why are so many millennials pursuing careers in the gig
economy? Our witnesses today will offer insight into this
question and many others. We will hear about the role of
coworking in the gig economy, the reality of being an
entrepreneur, and small business impacts of the gig economy.
I look forward to today's discussion, and I want to thank
the witnesses for testifying here shortly, and I would now like
to yield to our Ranking Member, Ms. Velazquez, for her opening
statement.
Ms. VELAZQUEZ. Thank you, Mr. Chairman.
Technology has always been a catalyst for entrepreneurship.
Most recently, the gig economy has created new channels for
entrepreneurs to sell goods and services. Millennials are
establishing new digital platforms and markets to share
everything from apartment space to transportation to artisan
goods.
These rapidly changing dynamics have called into question
more traditional definitions of a business owner and an
employee. The majority of gig economy workers tend to be part-
time and independent contractors, many of whom appreciate the
flexibility and autonomy of this new sector. These jobs'
flexibility allow millennials to have different work
experiences without significant risks or sacrifices, so they
can gain job experiences and build their professional networks
quickly.
Additionally, the gig economy affords many millennials
greater workplace independence and improves work-life balance.
Not only can they determine their hours; they often control the
workday to select business partners and choose their work
projects.
Despite these benefits, we should also acknowledge one
reason for this sector's rapid growth may be rooted in broader
economic struggles. Many millennials were hit hard by the 2008
recession, when they were either entering the job market or in
the early stages of their careers. This disruption caused some
millennial workers to be more flexible on what they view as
work and how they earn a living.
The prolific growth of the gig economy also raises
important labor policy implications. While many of the workers
in the gig economy enjoy flexibility, they must be protected
from unscrupulous business practices. Most firms operating in
the gig economy classify their workers as independent
contractors, not employees. Such a categorization saves
businesses money through reduced benefits and tax withholding.
Businesses and courts have long struggled to determine
whether certain workers constitute employees or independent
contractors. Courts are currently overflowing with lawsuits
over whether companies have misclassified employees, and many
of these cases stem from the gig economy. As always, the
challenge is ensuring businesses and employees are protected
without discouraging innovation and economic opportunity.
As this technological revolution advances, government
policy must keep pace. It is, therefore, important this
committee deepen its understanding of what is happening in the
gig economy and has a grasp on how we can minimize risk for
millennial employees while maximizing growth and productivity
for small businesses.
I look forward to the insights of this panel on this topic,
and I want to take this opportunity to thank everyone that took
time to be here with us this morning. Thank you.
I yield back.
Chairman CHABOT. Thank you very much.
The gentlelady yields back.
And I would now like to take just a moment to explain our
timing, which, in general, is pretty simple. You get 5 minutes
to testify. The green light will be on for four minutes; the
yellow light will let you know you have got a minute to wrap
up; and then the red light will come on and you are supposed to
stop then. We will give you a little bit of leeway but not too
much. We would ask you to stay within that time.
And if Committee members have an opening statement
prepared, I would ask that they be submitted for the record.
And our first witness will be Betsy Dougert. Ms. Dougert
serves as the Director of Communications at the SCORE
Association, responsible for the Association's communications,
planning strategy, budget, and metrics. Prior to her time with
SCORE, Ms. Dougert served as Director of Communications and
publications at the--could you pronounce that school?
Ms. DOUGERT. Salesianum School.
Chairman CHABOT. Salesianum School. Boy, I am glad I didn't
try to do that. And the Marketing and Communications Manager at
Sacred Heart Academy at Bryn Mawr. Ms. Dougert earned a
Bachelor of Arts degree in literary and cultural studies from
the College of William and Mary--glad to hear that, my alma
mater--as well as a Master's Degree in communications from
Villanova University. We thank you for being here.
And our next witness will be Ryan Morris, who is the owner
of Ruff House Dog Training in Stafford, Virginia. Ruff House
Dog Training specializes in personalized dog training to
address the specific needs of both the animal and the family.
Previously, Mr. Morris has served as a Junior Analyst at
Pivotal Practices Consulting LLC and a Management Analyst at
CGI. Additionally, Mr. Morris previously served his country in
the U.S. Marine Corps, and we thank you for your service. Mr.
Morris received a Bachelor's Degree from the American Military
University. And, again, we thank you for being here as well.
And then our third witness will be Anne Kirby. Ms. Kirby
serves as the Founder and Art Director of The Sweet Core, a
creative studio and coworking space in Lancaster, Pennsylvania.
In addition to her work at The Sweet Core, Ms. Kirby is the
owner of Perkup & Company, a social enterprise cafe, and a
Founding Member of The Candy Factory and Rock Candy, two
coworking spaces in Lancaster. Prior to her current positions,
Ms. Kirby worked as an Art Director at Kinectiv, a Creative
Partner for Not Bad Design LLC, and a Creative Director for
Hunter Kirby Design. And we thank you for being here as well,
Ms. Kirby.
And I would now like to yield to the Ranking Member, Ms.
Velazquez, to introduce our fourth and final witness.
Ms. VELAZQUEZ. Thank you, Mr. Chairman.
It is my pleasure to introduce Mr. Steven Olikara, founder
and president of the Millennial Action Project, a nonpartisan
nonprofit engaging millennial policymakers and leaders across
the country. He also serves as senior adviser to recording
artist Akon Lighting Africa, an initiative to electrify over 1
million homes in Africa with solar power. Mr. Olikara was a 2-
month fellow at the World Bank and is a graduate of the
University of Wisconsin. Thank you and welcome.
Chairman CHABOT. Thank you. We thank and welcome all the
witnesses here this morning.
And, Ms. Dougert, you are recognized for 5 minutes.
STATEMENTS OF BETSY DOUGERT, DIRECTOR OF COMMUNICATIONS, SCORE
ASSOCIATION, HERNDON, VA; RYAN MORRIS, OWNER, RUFF HOUSE DOG
TRAINING, STAFFORD, VA; ANNE KIRBY, FOUNDER, THE SWEET CORE,
LANCASTER, PA; AND STEVEN OLIKARA, FOUNDER AND PRESIDENT,
MILLENNIAL ACTION PROJECT, WASHINGTON, D.C.
STATEMENT OF BETSY DOUGERT
Ms. DOUGERT. Chairman Chabot, Ranking Member Velazquez, and
members of the House Small Business Committee, thank you for
the opportunity to offer testimony on millennials and the gig
economy. The face of U.S. employment is changing, and recent
decades have shown a marked increase in participation in the
gig economy.
Businesses are increasingly hiring independent workers,
also called contractors or freelancers, to fill key roles
within their businesses. At the same time, increasing numbers
of people are entering the independent workforce. According to
the U.S. Census, gig workers can be defined as small
unincorporated businesses which may or may not be the owner's
principal source of income. Gig workers have a high degree of
autonomy, typically have a short-term relationship with their
clients, and receive payment by task, assignment, or sales.
Research estimates that there are currently between 54 million
and 68 million independent workers in the U.S., making up an
estimated 20 to 30 percent of the working age population.
Not everyone enters the gig economy for the same reason,
nor are they alike in their earnings. Research from McKinsey
shows that 72 percent of gig economy workers voluntarily enter
the gig economy because of the freedom it affords them. Nearly
a third of this group depends on gig work to provide their
primary source of income, while 40 percent earn supplemental
income. A much smaller group, 28 percent, of gig economy
workers enters the gig economy out of necessity as opposed to
choice. They are split 50/50, with half of them relying on gig
work as their primary source of income and the other half
earning supplemental income.
How can we explain this upswing in gig work? First, the
evolution of technology has made it easier and cheaper than
ever for gig workers to start their own businesses, to find
clients, and to conduct business from anywhere in the world.
Next, today's independent workers want to feel passionate about
their work. They value flexible scheduling and decisionmaking
power.
The good news for these independent workers is that small
businesses, which already employ half of American workers, show
increasing demand for qualified gig workers. In 2017, SCORE's
small business owners hired 122,000 independent contractors,
which is double the 61,000 full-time employees they hired. It
is also a dramatic increase from the 31,000 independent
contractors they hired in 2016. Twenty percent of small
businesses surveyed by SCORE's Megaphone of Main Street data
report in 2017 replaced employees, both full time and part
time, with contractors. More than half did so because the job
demanded specialized knowledge, followed by 41 percent who
cited temporary or seasonal needs. One surprising finding was
that nearly half, 47 percent of nonemployer firms, reported
hiring people to help them run their business, for an average
of 3.2 workers, including the owner. This dispels common
assumptions that solopreneurs are running their businesses by
themselves and shows that employment statistics that only count
traditional employees may be underestimating the full economic
impact of nonemployer firms.
So how do millennials fit into this new gig economy? First,
millennials represent the biggest share of the U.S. workforce,
at 35 percent. Next, statistics point to millennials making up
a bigger share of the gig economy than other generations of
workers. Forty-seven percent of millennials freelance compared
to 36 percent of the overall U.S. working population.
When it comes to millennials owning their own small
businesses, data from SCORE shows that more than two-thirds of
millennial entrepreneurs depend on their business as their
primary source of income. Similar to the general population of
small business owners, financing remains a significant
challenge. Just 29 percent of millennial business owners sought
loans or financing for their small business in 2017, and only a
third of those who sought financing successfully obtained it.
Despite these challenges, millennial small business owners
are an optimistic group. 2017 data from SCORE show that 82
percent of millennial entrepreneurs reported feeling optimistic
about their business growth, compared to 69 percent of all
business owners. Future discussions about U.S. jobs,
employment, and economic impact will need to take into account
the many workers who participate in the gig economy.
As businesses continue to increase their employment of gig
economy workers, solopreneurs will most likely continue to rise
at rates that outpace other types of small businesses. SCORE
looks forward to continuing to serve the growing independent
workforce, just as we serve all American entrepreneurs who
dream of starting or growing a business.
Chairman CHABOT. Thank you very much.
Mr. Morris, you are recognized for 5 minutes.
STATEMENT OF RYAN MORRIS
Mr. MORRIS. Good morning, Chairman, Ranking Member, and
members of the Committee. I want to say thank you for allowing
me to come and speak to you this morning.
Again, my name is Ryan Morris, and I am the owner and
founder of Ruff House Dog Training. I am also a 10-year Marine
vet who recently got out in 2014.
So my story is I--and during my time in the Marine Corps,
you know, I have been to some great places and I have been to
some not so great places. And my job, I had to--I was
responsible for putting smiles on people's faces. And I did
that in those less-than-happy places, and it made me feel good.
And I said: I would like to do that. And so, when I got out,
you know, I was job hopping. And if you have ever, you know,
had--done some activity a lot and then you just stop, you know,
your body has a chance to catch up and say: Oh, this hurts,
and, oh, that hurts. Right? So I said--I said to my wife, I
said: Honey, can you give me a massage?
And she said no, and so I said: Okay. All right. Well, I
said: How about if you let me get a massage chair? And I am not
talking about these, you know, the pads that you can put in
these chairs. See, I am talking about those real deal rocket
ships that swallow you up and do your back and your neck and
your toes, all of these things.
And, of course, she said no again. And feel free to put
whatever word you want in front of that.
But so this got me to thinking. You know, how can I make
some money on the side to not dig into our own combined income
to get this massage chair? So one day I was scrolling through
social media, and I saw this ad from a company called
Thumbtack. It said: Dog trainers wanted. And I said: Oh, this
is interesting.
So I clicked that. And that was in October 2015. In January
2016, I had broken four figures. I said: Man, this is great.
You know, I am still working my full-time job. And I was like:
This is wonderful. So, come June 2016, I had enough money to
get my massage chair. Oh boy, right?
So, you know, I am at that point, and I am saying: This is
a lot of money for this chair, you know.
But I did some thinking and I said: This is the reason that
I set out to do this business. And I got it. And it serves more
than a massage chair to me. It is more like a trophy to say
that no matter what you set out to do, you can accomplish your
goals, given the right tools and guidance.
Now, speaking of guidance, as I said, I was in the Marine
Corps. And every time somebody transitions from the Marine
Corps or the military, period, they have a transition program
to help you, whether you want to go to college or, you know,
start your own business or just work a traditional 9 to 5.
They also--well, not the military, but there is also a
program called the ACP, the American Corporate Partners, which
pairs you with a mentor that has a similar background that you
do and a similar path that you express interest in, which is
great. You also have the SCORE program that, you know, helps
you kind of put a reality check to your business plans. It
helps people who maybe have direction or don't have direction
to kind of find themselves, okay.
So I say all that. And, you know, in my opinion, that
American Dream is, you know, to be able to do something that
you really enjoy doing and could do it without getting paid and
get paid for it, you know. I get to choose who I work for, when
I work, how long I work. I didn't have to ask anybody to be
here today. I didn't have to juggle and say: Well, if I come
here today, I won't have enough leave for my 2-week vacation,
you know. And that freedom and just almost carefree attitude is
why I think a lot of people nowadays are seeking this freelance
kind of structure, if you will.
And I thank you again for letting me speak, and I look
forward to your questions.
Chairman CHABOT. Thank you very much.
Ms. Kirby, you are recognized for 5 minutes.
STATEMENT OF ANNE KIRBY
Ms. KIRBY. Chairman Chabot, Ranking Member Velazquez, and
members of the full Committee, thank you for inviting me today
and for giving me the opportunity to testify on coworking and
its role in what is known as the gig or freelance economy.
My name is Anne Kirby, and I am the founder of The Candy
Factory, a coworking space in Lancaster, Pennsylvania.
Coworking spaces are about building community. Per the
coworking wiki, the coworking concept is simple. Independent
professionals and those with workplace flexibility work better
together than they do alone. According to the 2017 Global
Coworking Survey by industry magazine Deskmag, an estimated 1.7
million people will be working in approximately 19,000
coworking spaces globally by the end of 2018. Twenty-nine
percent of all spaces have opened just this past year, and
nationally this growth is in step with the rise of the gig
economy.
Coworking is appealing for many reasons. Mostly located in
urban centers where commercial rates are high, flexible
memberships mean less risk, allowing members to use the space
as needed, avoiding the high cost of long-term leases. Space
operators manage all aspects of the facility, saving members
valuable time and money.
The gig economy has also helped drive the tech startup
culture. With the emergence of open source, skill sharing,
online collaboration tools, and social networks, we are
connecting in ways we could never have imagined. We are not
just working, but we are building relationships.
Freelancing in America 2017, commissioned by Upwork and the
Freelancer Union, estimates that 57.3 million Americans, or 36
percent of the U.S. workforce, are freelancing. This report,
considered one of the most extensive studies on the topic, has
predicted that the majority of the U.S. workforce will be
freelancing by 2027, millennials holding first place, with 47
percent freelancing.
These numbers speak volumes. We are facing new challenges.
How and where we work is changing, as are the skills needed to
be successful. Coworking spaces play a critical role in this
ever-evolving ecosystem, providing not only an escape from
isolation but also access to resources.
I have been an active member of the freelancer economy for
over 18 years and spent the last 11 years as a community
builder. During that time, I have learned that success in the
gig economy involves thinking collaboratively while seeking out
low-cost or no-cost resources.
After working from home for many years, I realized I was
craving social interaction with my peers. I immersed myself in
the emerging coworking movement and founded The Candy Factory
in 2010. Over the past 8 years, The Candy Factory has grown,
spanning across two locations and housing a community of close
to 150 members, with room to grow. Being the first coworking
space in central Pennsylvania, our diverse membership is made
up of freelancers, remote workers, small business owners,
startups, nonprofits, and students. Thanks to coworking, small
businesses are thriving. Take, for example, Candy Factory
member Doug Kauffman, a young certified accountant who formed
Kauffman CPA after leaving his corporate job in 2014. Since
then, he has been incubating his business in our space and has
become a go-to resource for many of us, including myself.
Partnerships with SCORE, SBA, Ben Franklin Technology and
others help our members stay competitive, and the coworking
space has become a natural client pipeline for resource
providers. SCORE has recognized this benefit and is partnering
with spaces throughout the country. And personally, SCORE and
my mentor, Jerry Glenn, have played an essential role in my
business development, offering third-party perspective, HR
expertise, and referrals.
Along with access to affordable real estate, other
challenges for our members range from healthcare to education.
We are helping to address rising healthcare costs through a
membership-based primary care service called Rock Medical. This
service does not replace health insurance, but instead gives
members access to healthcare for a low monthly fee. Education
is also critical to maintaining a prosperous gig economy. For
example, the Pittsburgh-based co-op Work Hard started Academy
Pittsburgh, a 12-week code boot camp that gives their students
real work experience in popular coding languages. We understand
that it is essential to work with our lawmakers on policy, from
simplifying the tax process for solo entrepreneurs and 1099
laws to infrastructure. Addressing these issues will allow us
to remain competitive in the global market.
Coworking spaces are here to help empower, connect,
educate, and support the needs of the evolving workforce, and
we look forward to partnering with our government to help enact
change and support policy that will have a positive economic
impact on the gig economy and those associated with it.
Thank you again for your support and for allowing me to
testify.
Chairman CHABOT. Thank you very much.
Mr. Olikara, you are recognized for 5 minutes.
STATEMENT OF STEVEN OLIKARA
Mr. OLIKARA. Good morning. Thank you, Chairman Chabot,
Ranking Member Velazquez, and members of the Committee. It is
an honor to join you today.
My name is Steven Olikara. I am the founder and president
of the Millennial Action Project, or MAP for short. We are the
largest nonpartisan organization of millennial policymakers in
the United States. In 2013, we organized the first ever
bipartisan caucus for millennials here in Congress, called the
Future Caucus, and since then, we have expanded that model into
26 States. Today, we engage over 600 millennial policymakers
and thousands of millennial leaders across the United States.
I would like to recognize Congresswoman Stephanie Murphy,
who serves as the vice chair of our Future Caucus, and
Congresswoman Velazquez, who is a member as well and probably
has the highest concentration of millennials in her district. I
have been there; it is a lot of fun.
MAP and its Future Caucus network are on the front lines of
creating and adapting policies to support this new economy.
When we founded MAP in 2013, we noticed that millennial
entrepreneurs were creating this new wave of gig work. Most
notably, ride-sharing services at the time. This new sharing
economy was not only disrupting old and incumbent industries,
but it was also disrupting old and outdated government
regulations. Not surprisingly, our millennial lawmakers,
Democrats, Republicans, and Independents, were early adopters.
They were rejecting the false choice between innovation and
safety. They brought both parties together to create the first
State laws authorizing these services, while also putting in
place crucial consumer protections. Through MAP, we helped
bring these best practices together from around the country.
And, interestingly, the divide that emerged was not so much
between the left versus the right, it was really the future
versus the past. Now, since then, entrepreneurs have expanded
these on-demand services to many other industries, from meal
delivery to hospitality, which really highlights millennials
peer-to-peer network-driven approach to solving problems. Other
millennials, as we have already discussed here, are simply
choosing to be their own bosses and pursuing their passions,
perhaps as a creative freelancer or a consultant on socially
responsible business.
We know from studies that this generation of workers will
not likely spend their entire career at one company.
Increasingly, we will see workers moving from gig to gig. At
their best, these opportunities will unleash creativity, create
a more dynamic U.S. economy, and provide more flexibility to
engage in work that best fits the worker. However, this
emerging gig workforce also raises a number of issues, from
access to health benefits to retirement security to disability
and unemployment insurance. In short, the social contract we
created in the 20th century needs to be updated for the 21st
century.
For context on why these opportunities are important, the
unemployment rate among millennials today remains above the
national average, around 8.5 percent. And that doesn't include
the roughly 50 percent of millennials who report feeling
underemployed. So, while we are the largest workforce in the
United States today, the labor force participation rate in this
age range has actually declined over the past decade, the
lowest growth rate among all generations. At the same time, we
are seeing gig work growing. Actually, the growth rate for gig
work is outpacing the overall employment growth in our country.
And millennials are disproportionately taking on this work. Not
only that, studies have found that millennials are more
willingly choosing this type of work, preferring the added
flexibility. At the same time, millennials are undergoing this
work with high debt levels, because of student debt and limited
access to benefits. So, while the proportion of household
income millennials receive from gig work is increasing, most
millennial gig workers make less than their traditional full-
time employed counterparts.
So, with these trends, we need to consider the disruption
between the traditional employee and employer relationship,
particularly around those benefits that are difficult or
impossible to obtain in this independent workforce. And if you
take retirement as an issue, for example, if you look at the
long-term trends, millennials are likely to have lower income
replacement from Social Security, less likely to have
traditional pensions, and more likely to have higher life
expectancies. So our country cannot afford to have a gig
economy that depresses retirement savings. We need to create an
economy that does the opposite.
We also need to look at the portability of benefits from
gig to gig, such as healthcare, retirement savings, workers'
comp and others. States, as the laboratories of innovation, are
already drafting their own legislative plans that allow
employees to move from gig to gig more seamlessly. And at the
Federal level, there is already bipartisan legislation by
Future Caucus Member Senator Todd Young, along with Senator
Mark Warner, that would further support this type of
experimentation at the State and local level.
As the gig workforce grows, we need to be proactive in
creating this 21st century social contract because studies show
this workforce is only going to grow, and about 42 percent of
these workers by 2020 will be millennials. I often hear from my
millennial friends that they feel penalized for moving between
job to job as they are pursuing their passions. We need to take
steps to support this backbone of the U.S. economy so it is
properly supported to promote innovation, provide security for
workers, and maximize this new generation's potential for
economic growth.
Again, I want to thank Chairman Chabot and Ranking Member
Velazquez and all of those on the Committee for inviting me to
speak on this panel today. Thank you.
Chairman CHABOT. Thank you very much.
And now the members will have 5 minutes to ask questions,
and I will begin by recognizing myself for 5 minutes.
Ms. Dougert, I will begin with you. Just how cool is it to
be a graduate of the College of William and Mary? No, no.
Ms. DOUGERT. Chairman Chabot, it is fantastic. Pride, pride
for life.
Chairman CHABOT. Enough said. I yield back my time. No.
Ms. DOUGERT. I am glad that is settled.
Chairman CHABOT. Now my real question. We didn't prearrange
this, right?
My real question. You mentioned that only a third of
millennials successfully received the financing that they
sought. In general, I know it varies every time, but what do
the other two-thirds then do? Do they not ever get off the
ground? Do they not expand? Do they, you know--do they find
some other way, or what do you hear out there?
Ms. DOUGERT. Yeah. That is a great question. And just to
recap, the exact statistics are that a third of millennials are
seeking financing for their small businesses and a third of
that third are successfully obtaining it. So it is actually
even a gloomier picture than what you might think initially.
And that is actually true for the greater population of small
business owners as well. We know that only about a quarter of
them are successfully obtaining financing in the traditional
sense, loans and grants.
So what our small business owner clients at SCORE are
telling us that they do instead is a lot of self-funding. So
the average small business is started on about $10,000 or less.
And people are turning to methods, such as credit cards,
crowdfunding, family loans and personal loans to finance their
small businesses.
Chairman CHABOT. Very good. Thank you very much.
Mr. Morris, I will go to you next. Again, thank you for
your service to our country.
How do the skills that you picked up in the Marine Corps
translate to your success in the private sector? And you have
obviously done very well. How would you respond to that?
Mr. MORRIS. Thank you, sir. Well, the Marine Corps, as you
know, is the best service out there, right? And they set you up
for success. They give you that mindset that you do things
right the first time so you don't have to, you know, do it over
and over and over again.
And, again, being what I did in the Marine Corps, it gives
you the different challenges of dealing with people who are,
you know, from this place who have never done this job,
whatever that may be. And you have to adapt. And one thing that
the Marine Corps does is teach you how to adapt. It will make
you an adult even if you are not ready. So I think that is how,
you know, the military has helped me succeed, just knowing
that, you know, you got one shot, and sometimes that is all you
get.
Chairman CHABOT. Thank you very much.
Mr. MORRIS. Yes, sir.
Chairman CHABOT. Ms. Kirby, I will go to you next. Could
you discuss--you mentioned SCORE had been important. Would you
tell us how SCORE did impact your business, either early on or
how it is still continuing to affect you?
Ms. KIRBY. SCORE has been an amazing asset, not just for my
business but for a majority of our members. Our other SCORE
clients actually participate in SCORE workshops or roundtables
and activities. But for me personally, with my mentor, he
really helped me step outside of my day to day and helped me
kind of take a third-party perspective and hard look at my
company.
I was running multiple projects, and I really needed
someone to kind of step in and just--and help me assess the
numbers, take a look at HR issues that I was having. So I came
to SCORE a little later in my career. A lot of individuals will
go to SCORE initially, like I have this idea, help me get this
rolling. But I really feel that SCORE is beneficial for
companies no matter what phase of development that they are in.
And I came to them later in my career, because of the growth
that we were seeing and I needed help navigating that.
The other thing is they really become a family. The mentors
really come to the table, I have found, bringing their
expertise and then also their referrals and their networks,
which is just such an important asset to a small business who
is looking to grow.
Chairman CHABOT. Very good. Thank you very much.
And, Mr. Olikara, I know it is hard to predict the future,
but how do you see the gig economy changing as millennials age,
and do you see any further out what is coming beyond that with
the future generations? How do you see all that?
Mr. OLIKARA. Yes, absolutely. I think we are going to see a
rapid expansion of the gig economy, and it is going to--again,
we are just seeing the beginning of the types of industries
that it can enter into. Because of the increasing need for on-
demand services and demand for that, you are going to see
millennial entrepreneurs create all sorts of businesses to make
our lives easier.
But then, on the flip side, as you project out over the
next 10 to 20 years, as this workforce is aging and they are
thinking about starting families and buying cars and buying
houses, then we have to make sure that they have some basic
security that undergirds that type of work. So you are going to
have some dynamic entrepreneurs creating the services, and then
you are going to have a number of gig-style workers who will be
not employed but working as 1099 employees primarily in those
services. And I think if we provide some basic level of
security for those workers, that can serve as a platform for
more and more innovation. And I think the entrepreneurs
starting those businesses want to see their workers properly
supported.
Chairman CHABOT. Thank you very much. My time is expired.
The Ranking Member, the gentlelady from New York, is
recognized for 5 minutes.
Ms. VELAZQUEZ. Thank you. And, really, it has been quite an
interesting panel. Thank you so much for being here.
Mr. Olikara, I have 200,000 millennials in my district.
Mr. OLIKARA. Do you like all of them?
Ms. VELAZQUEZ. A lot of energy. It is a lot of energy, I
can tell you that. We did an event in my district where we had
a panel such as this one to listen to them.
So, Mr. Olikara, our nation's student loan debt is nearing
$1.5 trillion, and small business startups are lagging.
Mr. OLIKARA. Right.
Ms. VELAZQUEZ. What can we do to help millennial
entrepreneurs deal with their student loan debt while trying to
start a business?
Mr. OLIKARA. Thank you, Congresswoman. This is a huge, huge
issue for millennials. The student loan debt crisis is weighing
down millennial entrepreneurship right now. Currently, if you
total student loan debt, it exceeds credit card debt in this
country, and roughly, each millennial has about $26,500 of
student loan debt.
And what is interesting is that picture is contrasting this
other picture that is emerging of millennials who want to start
businesses. The Kauffman Foundation found over half of
millennials have either started businesses or would like to
start one. And the first thing you need when you start a
business is financing. And if you are not personally wealthy
yourself, you have to go out and find other forms of financing.
So I think there are a couple things that we need to look
at. One is that we can help incentivize employers to provide
student loan repayment programs. So the jobs that millennials
have prior to starting their businesses could help start to pay
down their student loan debt.
And then, for other millennials who are deciding to perhaps
go into public service, we need to have stronger public service
loan deferment or forgiveness for those millennials. But I
think the big picture here is it is not important just for
millennials; it is important for the entire economy because
studies have found, since 1980, virtually all net new job
creation has come from these types of startups. So, if we want
to see economic growth for the entire country, we need to do a
lot more to reduce the burden of student loan debt on
millennials.
Ms. VELAZQUEZ. I invite you to look into my legislation,
H.R. 201, to reward young entrepreneurs by offering loan
forgiveness when they start a business.
Ms. Dougert, the gig economy has changed the way employees
and business owners are defined. What is the primary difference
between a solopreneur and an employee, and why would a worker
want to be a solopreneur instead of an employee?
Ms. DOUGERT. Thank you for the question. So, when we are
talking about solopreneurs and nonemployer firms, we are
referring to small businesses that technically have zero
employees but, as the statistics are showing, are employing an
average of 2.2 people beyond themselves to run their business
operations. So, while there are no employees helping out, there
are gig workers helping to run these solopreneur nonemployer
firms and operations.
Ms. VELAZQUEZ. Anything else?
Ms. DOUGERT. Does that answer your question?
Ms. VELAZQUEZ. Yes, yes.
Ms. Kirby--thank you--as an entrepreneur who is also a
mother, can you talk about the opportunities and challenges
that mothers working in the gig economy face?
Ms. KIRBY. Well, there is a lot. Speaking to debt, which I
think--and access to financing is definitely always an issue
across the board. As for mothers, childcare, we are finding a
lot of women who would like the opportunity to be able to
explore their passions but feel that the cost of childcare is
cost-prohibitive, and they are choosing not to explore those
businesses.
We are looking at solutions of coworking and childcare, so
childcare being provided within our coworking spaces. That is
definitely something that is on the rise that we are seeing
more and more of. As a female entrepreneur, I also run a
networking group called Kick-Ass Female Entrepreneurs, with
1,200 women throughout Central PA. And childcare is probably
one of the number one issues that we face.
Ms. VELAZQUEZ. Well, the Democratic Women's Caucus has four
pillars, and one of them is childcare, to help women.
Mr. Olikara, over 20 million people gained health insurance
through the ACA, but the continuing effort to undermine the law
has undone much of this accomplishment. Can you talk about the
importance of the ACA and the access to adequate healthcare for
millennial entrepreneurs?
Mr. OLIKARA. Sure. Thank you, Congresswoman. Well, it has
been extremely helpful not only for this emerging workforce but
for me personally. I used to be in the gig economy, and one of
the most important things during that time period was being
able to stay on my parents' health insurance plan, because I
was under the age of 26 at that time. And I remember thinking
as I was taking advantage of those benefits that I wish we
could just take the partisanship out of that issue because if
you think about it, that provision in the healthcare law has
helped bolster the entrepreneurial prospects of a generation of
young people who otherwise wouldn't have that type of health
security.
So I think that is extremely powerful and relates to the
earlier point I was making in terms of creating this platform
for young entrepreneurs to succeed. That includes healthcare
benefits but also many of the other benefits that we have been
talking about. It is not so much a debate, in my opinion,
between, you know, big and small government. It is how
government can be a jumping-off point for entrepreneurs to
succeed and create growth in the economy.
Ms. VELAZQUEZ. Thank you.
Chairman CHABOT. Thank you. The Ranking Member's time has
expired.
The gentleman from Iowa, Mr. King, is recognized for 5
minutes.
Mr. KING. Thank you, Mr. Chairman.
I want to thank all the witnesses for your testimony.
I am sitting here thinking how things might have changed. I
was a young entrepreneur in 1975, when I looked around, and I
came home, and I told my wife: Today I am a man.
And she looked at me with that bored ``what else is new?''
Well, it actually was new because I had decided to take
responsibility for our lives together. And a couple of months
later, I managed to convince a banker to loan me 100 percent to
buy an old beaten-up bulldozer. And the rest is I guess a long
saga of ups and downs that today is a second-generation company
that is I think very successful, at least by my standards.
And a week ago Monday, the banker that loaned me that money
and took a bit of risk to do so passed away, and we celebrated
his life, how many lives he changed with that financing. And
just through the things that that enabled me to do, from a
company that is spreading out and taking care of the third
generation of my family, the politics that flowed from it, the
career that flowed from it. My message to them was there is a
lot of us that had a wonderful life because of the one
wonderful thing that he did.
So, when I listen to the difficulty in reaching financing,
Ms. Dougert, and one-third of one-third is one out of nine. So
I want to ask you first, what are some of the reasons for
turning down the finances on that? What are some of the
barriers that are there? Are they different now than they were
then?
Ms. DOUGERT. Sorry, can you clarify turning down? You mean
why----
Mr. KING. When they are denied financing. I mean, I am
going to say here are some things I know. Like, you don't have
a cashflow plan that works. You don't have any capital. We
don't really measure that you have the character to come
through, the judgment of those kind of things.
Is that generally still the same reasons that were there 43
years ago, when I began a business? Because I had a few that
said no to me. I had to find a way to sell them. And I think
this marine knows how to solve some of these problems too. But
you can't let up. So what I am trying to get to is, yes, we
have a gig economy going on, and that is a result of a number
of things and you have described some of that, but the barriers
seem to be the same to me. You have to find--you have to have
the instinct and the intuition to find a way to penetrate in,
get your start.
Maybe I will swing over here to Ms. Kirby. You have done
this. You have got this operation going on with about 16,000
square feet and lots of people churning around in there.
Can you tell us a little more about day-to-day? I didn't
get that out of your testimony. How did this get built? What
does it look like when you walk in there and you see this buzz
of activity? Tell me how that all came together in your mind
and how it looks today.
Ms. KIRBY. Well, I was working from home, and I was really
isolated, so I was looking for opportunities to network. And I
started a group called the Creative House of Lancaster back in
2007. And that was just a meetup basically of freelancers and
creatives, and we started just getting together once a month.
And we identified a need fairly quickly that we were all kind
of working from home and isolated and needed that support.
So what I did was I grew a community for 3 years before I
opened up the coworking space. And that is something that we
actually advocate for a lot of coworking spaces to do. It is
not a ``if you build it, they will come'' kind of philosophy.
If you can grow that community first, then you have the support
that you need. We opened our doors in 2010 with 15 members, and
we were completely sustainable because we asked those members
to come to the table and actually help get this space open.
That was when we first started in our first location, which
was about 5,000 square feet, and we have grown to two locations
and 16,000 square feet. Again, we just go back to our
community. We say, hey, together, we can actually, you know,
share space, share resources. But----
Mr. KING. Did you have trouble with financing?
Ms. KIRBY. So it was really funded by the membership. And
because I run my design and marketing company out of The Candy
Factory, I actually don't pull any salary from The Candy
Factory, so it is all reinvested into the growth of it.
Mr. KING. I get it. You are a natural entrepreneur. You saw
the need, you built your company. You saw the need, you built
the community. And then the demand is what set this up then.
Ms. KIRBY. Right.
Mr. KING. And I would say that to anybody out there is that
don't grow to anticipated demand, but grow to that demand that
exists so that you are satisfying your customers.
Just as my clock ticks down, I just want to say that my
observations are that there are some barriers that are greater
than there used to be, and I believe one of them is the ACA
because we have unaffordable healthcare. And the other one is
Dodd-Frank and achieving finances. I talk to bankers
consistently, and they say: I can't give those kinds of loans
anymore because I am too tied down by too much heavy
regulation.
So I think some of these solutions are open the door up so
that a little more risk can be taken by the lenders, and they
can take the risk with the borrowers.
And another thing that, if the Chairman will indulge me and
just a concluding statement here, is that I think that your
generation, the youngest among you anyway, has lost something
that used to be. And that is that young people--when I was a
young man looking at these, we would say--we would look around,
and we would come up with an idea, and we would say: Well,
there is no law against it. It meets our moral standards; let's
go do it.
Now I hear: Nobody is doing this. There must be a rule
against it. I guess we have to get permission.
If you think in terms of you have to get permission, it is
a lot harder to be a successful and robust entrepreneur.
So I appreciate the testimony here today.
And thank you, Mr. Chairman. I yield back the balance of my
time.
Chairman CHABOT. I thank the gentleman. The gentleman's
time has expired.
The gentleman from Pennsylvania, Mr. Evans, who is the
Ranking Member of the Subcommittee on Economic Growth, Tax and
Capital Access, is recognized for 5 minutes.
Mr. EVANS. Thank you, Mr. Chairman.
I would like to ask this question to the panel as we talk
about this gig economy. The current subcontracting process is
vast and sometimes complex while the contracting economy is
ever merging with the gig economy. So I am interested in asking
you that question across the board because you describe this
gig economy, and then we have the subcontracting process.
Obviously, the Federal Government is huge as opportunity.
Is there some way that you view, in terms of bringing that
together, that contracting economy merging with the gig economy
and your thoughts? Start down the line. Anybody have a
reaction? I feel like you have a reaction----
Mr. OLIKARA. I always have a reaction. Well, I think, if I
understand your question correctly, you have the contract
economy and the gig economy, and those create slightly
different types of work.
Mr. EVANS. Correct.
Mr. OLIKARA. And then creates potentially some confusion as
here thinking about benefits and just doing your taxes and
things of that nature. That is an interesting point that I
honestly hadn't thought of previously, but I do think if there
was some level of merging between all of the paperwork that is
required for the separate economies, then I do think it would
make it to be a more seamless and easy process for the workers
who are going through this.
I will say, you know, in the early days of being an
entrepreneur, I was self-employed, and I remember thinking just
the difficulty of dealing with all the paperwork and all the
things that you actually take for granted when you have a
traditional employer. So I think the things that we can do to
make that easier for these young entrepreneurs, especially in
those early days when they are just starting out, would be very
helpful.
Ms. KIRBY. One thing that we try to do, kind of
piggybacking off of that, is we really try to get small
businesses or if you have an idea to the resources that they
need as soon as possible. And that is why I think coworking is
so essential is because we become these pipelines.
And I really think that helping identify what you are, how
you incorporate and your business plan and figuring out taxes,
which is incredibly difficult, kind of helps define contract
versus freelancer, that kind of thing. But I think it is really
access to resource and support and information. And I think
that that is something that we need to keep continuing to grow.
Mr. EVANS. Any thoughts, Mr. Morris?
Mr. MORRIS. No, sir.
Mr. EVANS. Any thoughts?
Ms. DOUGERT. I think another important step to take going
forward is to make sure that we are properly counting these
types of workers because, right now, you hear a lot of
different terminology from the workers themselves being
independent contractors, freelancers, gig economy workers, and
then, on the small business side, nonemployer firms,
solopreneur firms. And we know that some of these gig workers
may, in fact, be running small businesses and not even realize
it and just think of themselves as a babysitter, a part-time
dog walker. So I think until we know who exactly we are talking
about and how many of them there are, we will possibly be
underestimating the economic impact. And I think that that is a
good first step.
Mr. EVANS. Ms. Kirby, the prediction that the majority of
the U.S. workforce will be freelance by 2027, does this mean
the end of traditional companies as we know it, and what is the
most prevalent gig business in Lancaster? Since I am from the
great State of Pennsylvania.
Ms. KIRBY. Yes. Well, what we are seeing is more and more
companies are seeing the value in hiring freelancers. They are
saving time, money, on-boarding, all of that. So that is one
thing that we are seeing as why this is growing so rapidly, and
the benefit it can actually have for small businesses as a
whole is being able to bring these contractors in who are
experts and then their companies can scale. That is something
that we do with The Sweet Core is that we are a small team of
six, but as a company comes to us and has specific needs, we
can bring in experts from inhouse, from The Candy Factory, and
scale as we need it. So I think that that is a huge benefit.
I think for the largest gig company you were saying in----
Mr. EVANS. Yes.
Ms. KIRBY. Oh, well, that is a good one. I am not 100
percent. I can actually get that information and send that to
you in writing, if that is okay.
Mr. EVANS. Mr. Morris, again, thank you for your service.
Obviously, as a former member of the military, you probably
were the ideal person to start your business, requiring
discipline and motivation and ability. You know, who are your
role models, as you were pushing to think about entering this
aspect of dealing with the economy?
Mr. MORRIS. That is a great question. And surprisingly
enough, some of my inspiration, so to speak, would be some of
the people that were my officers, who looked at me and said, in
so many words: I don't see anything in you, you know.
And a lot of times, it is those who kind of push you down
that help you. You know, you say--and this is what was in my
mind when I started this: One day you are going to work for me.
So that was my motivation. I don't care how old you are;
you are going to work for me one day. So that was my
motivation.
Mr. EVANS. Thank you, Mr. Chairman.
Chairman CHABOT. Excellent answer.
The gentleman's time has expired.
The gentleman from Iowa, Mr. Blum, who is the Chairman of
the Subcommittee on Agriculture, Energy, and Trade, is
recognized for 5 minutes.
Mr. BLUM. Thank you, Chairman Chabot.
And thank you to our panelists for being here today.
Mr. Morris, thank you for your service to our country, and
I love your attitude.
Mr. MORRIS. Thank you, sir.
Mr. BLUM. As I am thinking of the gig economy and whatever
we call this, I am 63. So, back in my day, we used to think of
your retirement as a three-legged stool, of which the person
contributed to their retirement; the corporation, back in those
days that they worked for for 20, 30, 40 years, contributed to
their retirement; and then, lastly, the government contributed
to it.
And when I hear about the gig, the entrepreneurial type of
economy, what immediately comes to my mind is so that corporate
piece, most, not all, most corporations offer 401(k). They
offer health insurance. They offer disability. They offer some
type of retirement plans. If you're home in your garage--and I
was one of those folks--working for yourself, you don't have
those benefits.
I somewhat see this trend putting pressure on our rapidly
depleting government social program resources. The Trustees
Report just came out yesterday. And Social Security they say
will be out of money in 2034; and Medicare will be out of money
in 8 years, 2026. So, not having a corporation there to help
you with some of these things, tell me about what are your
thoughts about that?
A lot of people stay at companies because they have a
retirement, which takes some of the pressure off the
government; because they have benefits, takes pressure off the
government. When you are doing your own thing, which I did,
which I think is great, you don't have those things. So, all of
a sudden, when you are in need, it is falling pretty much
solely on the government. Thoughts on that?
Ms. DOUGERT. Yeah. It is a great question. And those
statistics are certainly sobering. I think that millennial gig
economy workers are incredibly self-motivated as a group. That
is part of their success is that they are excited about getting
out of bed every morning and pursuing successful work that they
believe in. And they value freedom and flexibility. But with
great freedom comes responsibility.
So we would hope and some statistics are pointing to
millennial gig economy workers making enough money that they
can potentially be putting it aside for their own retirement
and healthcare and long-term planning. So this is an incredibly
motivated and smart group of individuals, and I would certainly
hope that they are planning to continue taking care of
themselves as much as they can.
Mr. BLUM. Mr. Morris.
Mr. MORRIS. Me personally, I think that the millennials now
are so concerned about right now. You know, we got the
Instagram or the Facebook and all of these things that give
information right now. I think the job market, at least as far
as the freelancing is concerned, is in that same kind of path.
I want something right now. And, like I said, I started my
business because I wanted a massage chair. There was no, you
know, future, ``Oh, I want a big house, you know, in 30
years.'' I just wanted a massage chair. And it has turned into
this--I will call it an empire, but it has turned into this
empire that, you know, has been wonderful for me.
So I don't honestly know if we are thinking of retirement
or Medicaid, Medicare, whatever, because, you know, we are
young, we are healthy and, you know, we are not worried about
those things right now. That is my thoughts.
Mr. BLUM. And that is a concern for the government. That
would be of concern. Our savings rate I think is not very high
in this country, maybe a percent. So I am just concerned that,
because we are thinking of the here and now, that there is not
being moneys set aside. I am not advocating working for big
corporations; don't get me wrong. I am just concerned about the
rapidly depleting government resources, that the money is not
set aside.
Ms. Kirby.
Ms. KIRBY. I am optimistic. I mean, I see some amazing
creative innovative young individuals working out of our space
who are actually coming up with ways to be able to save money.
We have a 19-year-old software developer who is investing. It
comes down to education. He had education to learn how to
properly invest, to properly save. I think a lot of people have
kind of missed that. So I think coming--resources and education
are really key. But I am seeing our members kind of rally
behind each other as well and collectively try to support each
other. But I think that those are all topics that are top of
mind for this generation as well as the rest of us who are
self-employed.
And so trying to come up with creative solutions to help as
much as possible, like the medical membership program, that
kind of thing. How do we reduce some of the cost so that we can
save more and we can give back more as well? And maybe that
happens collectively.
Mr. BLUM. If the chair would indulge me, could our last
witness answer the question? Thank you very much.
Mr. OLIKARA. Thank you, Congressman.
Just to add one piece to that, I think if--you are right
about I think the long-term concerns. If we want to focus on
just a few years of where having some security would be very
helpful, it is just in those early days of starting your
company. As I am sure you recall from your own story, those are
often the most difficult. And for the successful millennial
entrepreneurs, then they can start to create more traditional
HR platforms and create payroll and things like that. So they
might be able to get onto a more normal field of, you know,
human resources and benefits after they get their startup going
for a little bit. So, in terms of our, you know, policy, if we
can figure out a way just to be supportive in those early days,
in the first, you know, year or 2 years, 3 years, then I think
that can have a huge, huge impact.
Mr. BLUM. Thank you for your indulgence. I yield back.
Chairman CHABOT. The gentleman's time has expired.
And, Mr. Morris, I think I am speaking for a lot of us
here, but we have got to see this massage chair.
Mr. MORRIS. It is, indeed, a rocket ship.
Chairman CHABOT. It sounds like it.
I would now like to yield to the gentlelady from New York,
Ms. Clarke, for 5 minutes. Thank you.
Ms. CLARKE. Thank you, Mr. Chairman.
I thank our Ranking Member. I thank our expert witness for
your testimony today.
I just have a quick question as a followup to my
colleagues. Are all of you paying into social security and
Medicare?
Mr. MORRIS. I am not.
Ms. CLARKE. You are not?
Mr. MORRIS. No.
Ms. CLARKE. Interesting, okay. I thought that that was
something that was mandatory, but I guess not.
Let me just ask a couple of questions for this panel.
Piggybacking off of a question that Ranking Member Velazquez
spoke of initially, some workers in the gig economy classify
themselves as small businesses, but they gain neither loyal
employees nor control over the product or business that they
want to grow.
So is it fair for them to be considered small businesses?
If not, doesn't that strengthen the argument that they are more
like employees? And I want all of you to give some thought to
that.
Mr. MORRIS. I am sorry; I missed part of the question.
Ms. CLARKE. Sure. Some workers in the gig economy classify
themselves as small businesses, but they gain neither loyal
employees nor control over the product or business that they
want to grow, so they don't have a controlling interest.
So is it fair for them to be considered small businesses?
And if not, doesn't that strengthen the argument that they are
more like employees?
Ms. DOUGERT. May I start?
Ms. CLARKE. Sure. That was actually for the whole panel.
Ms. DOUGERT. Okay. I will kick it off. So, at SCORE, we
follow the U.S. Small Businesses Administration's definition of
what counts as a small business, which can vary in terms of the
number of employees and the amount of revenue that qualifies.
It is widely still accepted that fewer than 500 employees
counts as a small business, which a lot of people would argue
is quite a broad definition.
But we believe that any entrepreneur, whether they are
officially a solopreneur or a gig economy worker, could be
considered as working for or owning a small business because of
the business activities that they engage in. So, regardless of
their official classification as a sole proprietor or a C corp
or what have you, they are most likely serving multiple
clients. They are possibly engaging contractors to support them
in their business operations, and they have the ability to keep
growing or to fail.
So, actually, 43 percent of SCORE clients are considered
prestart business owners, meaning they are still in the idea
phase. They are planning. They are learning how to structure
their business activities to help them achieve success. And we
are very proud to support them in their dream of growing or
even starting their small business.
Ms. CLARKE. Did anyone else want to try at that particular
question? I see heads nodding.
Ms. KIRBY. Just to add to that, I mean, I think a lot of
our solopreneurs are doing just what you had said, where they
are working with multiple clients. They are able to then go
into these companies and offer the expertise that they have to
help those companies continue to grow. So classifying them I
think as small businesses does make sense because they are a
small business offering a service and then scaling potential
other businesses as well.
And we see a lot of our solopreneurs actually grow into a
more kind of official company with hiring additional either
contract employees or hiring employees. So they are using that
as a place to kind of spearhead to a larger company.
Ms. CLARKE. Let me ask you, Mr. Olikara, how do we assure
that the gig economy workers get paid and sick leave?
Mr. OLIKARA. Thank you, Congresswoman.
I think it is a very good question. We are seeing a few
models at the State level that we should look at closely,
bipartisan models that, again, in the early days of being an
entrepreneur. In the State of Washington, for example, they
have a bill right now that would require, you know, gig economy
services to pay into basically a portable benefits entity that
would provide those benefits like childcare, sick leave, et
cetera. And then, as a result, when they are moving from gig to
gig, those benefits would stay with them.
Ms. CLARKE. It is portable.
Mr. OLIKARA. Yes, it is portable. Exactly, exactly. And I
think that is good for not only, you know, a particular State,
but it is good for our whole country because that really helps
that entrepreneur have the security to be able to really get
their business going. So I think that is one option.
Ms. CLARKE. This is a law that they are developing in
Washington State?
Mr. OLIKARA. It hasn't become law yet. It is a bill that
has been drafted and introduced. And there are a few examples
of that around the country as well.
Ms. CLARKE. Very well.
Mr. Chairman, I yield back.
I thank all of you once again for your expert witness here
today.
Chairman CHABOT. Thank you very much. The gentlelady's time
has expired.
The gentleman from Utah, Mr. Curtis, is recognized for 5
minutes.
Mr. CURTIS. Thank you very much, Mr. Chairman.
And, Ranking Member, I don't want to contest your claim
about the most amount of millennials, but I will say this, that
my district has the youngest age of all districts in Congress
at 27 and a half years of age, and certainly, we have a lot of
millennials in that group. Utah was actually ranked in the top
10 for the best places for millennials, and we are in the top
five for unemployment for millennials.
Now, I know you are looking at me and you are seeing my
hairline and my pending AARP age, but I consider myself a
millennial.
Mr. OLIKARA. We accept you, Congressman.
Mr. CURTIS. Thank you. I think if you could see my socks.
Like you, I struggle what to watch on Netflix. I mean, I am
right there with all of you. I actually believe being a
millennial is far more a state of mind than an age.
Mr. OLIKARA. Absolutely.
Mr. CURTIS. And to demonstrate that, and I will apologize
to my fellow colleagues here who may not be up on their GIFs
and their memes, I actually think that me and Steve Buscemi
have a lot in common. How do you do, fellow kids, right?
Now, with that in mind and my feeling like I have a
connection with millennials, I have observed a couple of
problems that I would like to brainstorm with you. And one of
them is the seemingly lack of desire or unwillingness to engage
in government. And a lot of the things that you are asking for
need engagement. They need advocates.
Can you give me, from your perspective, anything that you
have seen that successfully engages them in government and gets
them to care about their Congressman or their voting or local
officials?
Mr. OLIKARA. I can take a stab at that. Thank you,
Congressman. It is the issue that keeps me up because it has
truly been the calling of my life so far to be able to engage
millennials in the political process. And the great dichotomy
we have in our country today is that you have a highly
idealistic generation that has the highest service
participation rates in the country and yet at the same time
have the least trust and confidence in government. There is a
study from Harvard that showed a majority of millennials don't
believe that government and politics will solve the problems
that we face.
So it is my opinion that the way we start to change that
narrative is demonstrate real impact through politics on the
issues that matter. And I think this is the perfect example of
it. If, you know, this Committee and this Congress can come
together in a nonpartisan fashion to support millennial gig
workers, that is an example of impact, and that creates a
feeling of motivation for more millennials to engage in
government.
It is a bit of a chicken and egg problem, as you are
referring to, Congressman, because you actually need more
engagement ideally to get the right policies done. And I just
think it really falls on us, you know, it falls on the
Millennial Action Project, it falls on Members of Congress to
be actively engaging millennials in that process.
Mr. CURTIS. I agree with you in several areas. One, this is
a demographic that is very giving. They will jump into a cause
really very quickly. But to try to get them to jump into a
civic government cause is more difficult.
And one of my worries is that, as we try to get them to do
that or as we pass legislation that would accomplish some of
the things, it is going to actually suck the life out of some
of the innovation, right, and some of the beauty of what you
have got. And we are trying to structure you, right? And part
of your success is not being structured.
And so, to myself and my colleagues, you know, just a
warning that, as we try to help you accomplish these goals, we
have got to kind of come at it with your mindset rather than
our traditional mindset of we are going to structurize this,
and it worked for us, and it is going to work for you.
I don't know if you have any other comments on, how do we
get them engaged? Another question I would have, I know, at
least in my district, we don't have near the representation
from women in our entrepreneurial demographics, and I am
wondering if you have any suggestions on that as well.
Ms. KIRBY. I can speak to that a little bit. We have found
that there are a lot of, you know, female entrepreneurs who are
under the radar that we don't even really know are there. And
so what we have actively tried to do is create opportunities
for them to gather and to connect. And so that is what the
meetup that we have every month is. So it is like drawing them
out and showing them that there are resources here available,
but there is also a network here to support each other, or if
you are an aspiring entrepreneur, you don't even have to be a
small business owner to participate. It is really about saying,
how do we cultivate that? And a lot of times it is having some
leaders within the community help stand up and help rally
women.
Mr. CURTIS. I regret that we are out of time because I
would love to continue this discussion and invite all of you to
come out to my district in Utah to further this discussion and
see if we can help you. Thank you.
Chairman CHABOT. Thank you very much. The gentleman's time
has expired.
The gentlelady from North Carolina, Ms. Adams, who is the
Ranking Member of the Subcommittee on Investigations,
Oversight, and Regulations, is recognized for 5 minutes.
Ms. ADAMS. Thank you, Mr. Chairman.
And let me thank all of the folks who are testifying today.
I don't necessarily consider myself in that group. I have
children and grandchildren who are, though.
I was really fascinated by the story about the chair and
the work that you are doing with dogs, and I thought you were
going to get to where your dogs also participated in the chair
and----
Mr. MORRIS. Absolutely not. The chair is too much money.
Ms. ADAMS. Just for you. Okay, all right. Now we have
cleared that up.
Let me ask Ms. Dougert, I want to basically continue with
the discussion about women. Mentoring has been mentioned as a
helpful tool, and some studies suggest that women benefit even
more from mentoring than men. So how do we better facilitate
successful mentorships for millennial women?
Ms. DOUGERT. Thank you, Congresswoman Adams.
I would like to draw your attention to the latest Megaphone
of Main Street data report from SCORE, which was on the topic
of women's entrepreneurship. I would be happy to send that your
way for more detailed statistics.
But basically, what that research shows is that women are
starting businesses at a much faster rate than men, about five
times the national average, and yes, that mentoring matters and
mentoring works for women entrepreneurs, just as it does for
all entrepreneurs.
One very interesting finding was that women entrepreneurs
did not necessarily have more success with women mentors. That
was something that we had expected to see and did not see in
the research data. More important than the gender of the mentor
was the effectiveness of the mentor. Five characteristics were
pulled out as particularly important, things like their
helpfulness, their listening skills, how respectful they were,
how accurately they were able to assess an entrepreneur's
particular situation with all of its unique challenges and
advantages, and last and possibly most important, the ability
to provide useful, specialized advice.
So that is great news for SCORE because we have always
known that mentoring matters because it works. Small businesses
are more successful when they have the help of an experienced
mentor, like the 10,000 that we have at SCORE. And more than
half of our clients are women, but we want to make sure that we
are continuing to bring in all sorts of different clients and
help them however they need to be helped.
Ms. ADAMS. Thank you. I was just really excited about
SCORE, and I actually sponsored the bill for that, and I think
it is doing a lot of good.
So let me ask Ms. Kirby, a mentor relationship adds
enormous benefits to any entrepreneur, including building
confidence, providing advice, facilitating a larger network,
and helping to develop skills.
So what are some of the challenges that women face in
assessing high-level mentors, in your opinion?
Ms. KIRBY. I think that one thing that we have noticed with
dealing with female entrepreneurs is the fact that they do like
to see other women in leadership roles helping guide them,
whether or not the efficiency is there. But just seeing, you
know, individuals who are going through similar struggles who
can--you know, as women, we have unique challenges. And so we
have found that if we can find women within our community who
are leaders within the community to kind of help rally the
women who are considering becoming solo--you know,
entrepreneurs and/or trying to grow a business, if we can try
to help pair them up with the resources that we have available.
I think, again, it just comes down to access to low-cost/no-
cost resources to help women especially connect to what is
available there and really kind of encouraging leaders within
our community to help kind of step up and actually give back as
well.
Ms. ADAMS. Thank you. You can be what you see.
Mr. Olikara, how do we ensure that the gig economy workers
get paid and sick leave?
Mr. OLIKARA. I think that is a very good question. Thank
you, Congresswoman. I think on this topic of portable benefits,
we are seeing some great innovations and experimentations at
the State and local level. And I think under business as usual,
those benefits are not going to be provided. So I do think
there is something we need to do to provide paid and sick leave
to gig economy workers.
Ms. ADAMS. Thank you.
Mr. Chair, I yield back.
Chairman CHABOT. Thank you. The gentlelady yields back.
The gentleman from Florida, Mr. Lawson, who is Ranking
Member of the Subcommittee on Health and Technology, is
recognized for 5 minutes.
Mr. LAWSON. Thank you, Mr. Chairman.
And welcome to the Committee. I want to let you all know
that I am from the government, and I am here to help you. And
so my question, can all of you discuss the future of the gig
economy and what role Federal regulations play in promoting,
stiffen the growth of the gig economy?
Mr. MORRIS. I can't speak to the Federal portion, but as
far as the future of the gig economy, I think platforms like
what I am using, Thumbtack, which make it a lot easier to be
put out in front of, you know, the bigger businesses that have
the $20,000 and $30,000 for advertising. I think with those
kind of tools and things, you know, people will start to say:
Oh, man, I am great at underwater basket weaving, you know.
Somebody wants that.
And they can use a platform like Thumbtack to put their
name out there without spending, you know, the $10,000 and
$20,000 and get recognized.
So I think the more that people start to see that their
talent, whatever that may be, can be marketed and it doesn't
cost an arm and a leg to begin or start, I think that is going
to grow the gig or the freelance work exponentially.
Mr. LAWSON. I would like each one of you to comment on that
question. How the Federal Government--I mean, I shouldn't say
the Federal Government, but Federal regulations.
Ms. DOUGERT. So our clients tell us that they are not
making the decision to start or grow their business, based on
regulations, changes to the Tax Code, things like that. We know
that it does affect them in their operations, and certainly any
policies that are lessening the financial burden for
entrepreneurs are a good thing. But when we have asked them,
you know, whether some of the bigger changes in the past couple
of years are affecting their decision to start or to expand,
they tell us that it is really not affecting them on that
level.
As to the technology portion of your question, I think that
is a huge part of why the gig economy is continuing to grow and
will continue to grow. The research shows that solopreneur
firms are outpacing employer firms in their growth and that
independent workers are also on a strong upward trajectory.
And I think technology is a huge part of that because
different tools like videoconferencing, even things like online
banking and virtual assisting, are making it more possible than
ever to efficiently conduct business from anywhere in the
world, wherever you want to be working. And all of these tools
are only getting better and better as we move forward.
Mr. LAWSON. Ms. Kirby, did you want to respond?
Ms. KIRBY. I really can't speak to the Federal regulation
piece. But I think for growth, why we think coworking is such
an important essential role to the growth of the gig economy is
the networking that happens and the collaboration that happens
within our spaces. We also have a coworking visa program, which
allows our members to have access to coworking spaces all over
the world when they travel because you do find a lot of workers
within the gig economy are a little more transient. They do
travel a good bit as well. And so we want to make sure that
they are tapping networks and resources that are available
throughout the country and also globally.
Mr. OLIKARA. Thank you, Congressman. I will just add a
couple quick comments here. Building on what Ms. Kirby
mentioned, the most important thing that I think helps, you
know, gig economy entrepreneurs is the power of networks, being
able to easily get in contact with potential partners,
potential buyers, potential vendors, et cetera. We actually
work in a coworking space as well. I often talk about the
office space dividend when you are surrounded around other
entrepreneurs and other startups.
The hardest thing for entrepreneurs is often the
administrative side of things, which I think does intersect
with your question about Federal regulations. And I think all
of you can probably speak to this. As a young entrepreneur, you
get into that. You take the big leap of faith because you care
about the mission of what you are trying to do. The whole
administrative and compliance aspects of that are not what got
you into it in the first place but are extremely important to
be running as a legitimate business. And so I think thinking
about those areas where we can streamline Federal regulations I
think will have a very strong upward effect for these
entrepreneurs.
Mr. LAWSON. Okay. Mr. Chairman, if I can get one answer
from Ms.--and I know my time is running out. May I?
Chairman CHABOT. Yes.
Mr. LAWSON. Recently, we passed a major tax package, which
everyone said that it bails out big businesses, and they are
going to reinvest in the economy and stuff. How has the tax
package that we passed really caused any problem for the gig
economy, or have you even thought about it?
Ms. DOUGERT. Me?
Mr. LAWSON. Yes.
Ms. DOUGERT. So that question was asked in a different form
at a hearing that the entrepreneurial development partners
attended with the Subcommittee on Infrastructure that
Congresswoman Adams runs. And the I think surprising answer was
that it had not--I think there hadn't been enough time for it
to affect the business owners' bottom lines, budgets,
paychecks. So that the impact hadn't really sunk in yet because
the consensus from them, which is consistent with what our
SCORE clients have told us, is that it wasn't having a huge
effect on them at the time.
Now, we know that, of course, it will have an effect on how
they conduct business, possibly who they can hire, but I think
it might be a little bit too soon to tell.
Chairman CHABOT. The gentleman's time has expired.
Mr. LAWSON. I yield back, Mr. Chairman.
Chairman CHABOT. Thank you very much. We have had lots of
questions from both sides. I think it has been an excellent
hearing this afternoon, and that is thanks to the really great
panel that we have had here this morning and now into this
afternoon.
The gig economy in some form or called perhaps by some
other name has been with us for a long time, but with the
growing importance of millennials in the American economy, it
is even more important and growing all the time. So it is
important for us to understand its role and to be able, through
the policies that we impact here in this Committee and with the
committees that we interact in, whether it is tax policy or
regulations or access to capital, to understand it, and you
have really helped us to do that.
So I want to thank each and every one of our panelists here
for really great testimony here this morning, especially the
one from William and Mary. But, you know, you guys were all
great, all great. Go Tribe.
I would ask unanimous consent that members may have 5
legislative days to submit statements and supporting materials
for the record.
Without objection, so ordered.
And if there is no further business to come before the
Committee, we are adjourned.
[Whereupon, at 11:05 a.m., the Committee was adjourned.]
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