House Subcommittee Considers “How Sharing is Faring”

Of the witnesses, only one pointed out that lumping these companies and issues together as the “sharing economy” was a mischaracterization and a problem.

Yesterday, as part of the ongoing “Disrupter Series,” the House Commerce, Manufacturing, and Trade Subcommittee held a hearing on the “sharing economy” entitled “How Sharing is Faring: Growth and Adjustment in the Sharing Economy,” although it was evidently later retitled “How the Sharing Economy Creates Jobs, Benefits Consumers, and Raises Policy Questions.”

Witnesses included a vice president of Intuit, a personal finance software company, an assistant vice president of Property Casualty Insurers, a driver-partner with Uber, the chief economist at Thumbtack, an online marketplace for specialized services, the president of the Internet Association, a trade association representing Airbnb, Intuit, Lyft, Uber, and others, and the co-director of the Center for Economic and Policy Research.

Of the witnesses, only one, Jon Lieber, the chief economist at Thumbtack, pointed out that lumping these companies and issues together as the “sharing economy” was a mischaracterization and a problem.

Lieber said:

A quick note on terminology – because these services are essentially connecting people to other people, they have attracted a variety of ever-changing terms to describe them. One popular term – the “sharing economy” – is particularly inapt due to the fact that the one feature each of these services has in common is that money is being exchanged for a service. There is no actual “sharing” in the sense of which we learned about in preschool. The gig-economy, 1099-economy, collaborative consumption, peer-to-peer, on-demand… these terms confuse the issue of what is actually happening with the changes we are seeing in how people are turning their time and effort into money.

He went on to explain why this has policy implications:

Being precise in how we talk about these issues is important because the differences in the business models raise different sets of policy considerations. To take two prominent examples, Uber and Airbnb have both figured out how to take underutilized resources, private cars and private dwellings, and create productive assets out of them by enabling people to “share” them with others for a fee. But saying they are both part of the same sector totally obscures the radically different policy issues raised by both. Airbnb doesn’t have the labor issues that Uber does, and Uber doesn’t have the zoning and other issues that Airbnb does.

In spite of these points, it seems likely that the tyranny of the phrase “sharing economy” will continue, since statements by other witnesses and from the Energy and Commerce Committee use the phrase without question or air quotes.

Michael Beckerman answers some follow up questions.

Michael Beckerman answers some follow up questions.

“These companies have an extraordinary story to tell,” said Michael Beckerman, the president of The Internet Association. “Their story is about job creation, economic growth, opportunity, and life changing flexibility.” His breathless testimony invoked the metaphor of the “tale of two cities” to describe the difference between states and cities that have tried to regulate new companies (“growth is stifled, and opportunities are lost”), and those that have not (“consumers and the local economy have seen job creation and growth”).

Beckerman also made an interesting clarification about the nature of the “sharing economy” platforms he represents:

But first, I’d like to put the sharing economy in the proper macroeconomic context. Sidecar, Uber, and Lyft are neither taxi companies nor transportation companies. They are technology platforms connecting supply and demand. Likewise, Airbnb is not a hotel or lodging company. It is a technology platform that connects supply and demand. In 1980, for example, if you wanted a ride to the airport, you might pick up the Yellow Pages and look up a phone number for a car service, then call to arrange a pickup. In that pre-Internet age, the Yellow Pages served a similar function that Lyft and Uber do today connecting supply (the driver) with demand (the rider).

Whatever Uber and Airbnb are, they are not merely the Yellow Pages.

Job growth and creation were front and center, and for the most part the “sharing economy” was presented as being unquestionably good in this area. In the background memo sent to the subcommittee members before the hearing, a section on “Observed Benefits” cited the “new income opportunities.”

The reasons for seeking freelance work or renters vary widely,” the memo reads, “and individual success stories come in myriad forms, but it is clear that a significant number of Americans are taking advantage: one survey finds that about 34 percent are freelancing, and another report projects 40 percent will be “contingent” workers by 2020.”

Note the positive-sounding phrase “taking advantage,” when some cases must also be “falling back on” or “resorting to.”

Representing Uber driver-partners, Luceele Smith testified to the benefits of working for the company, praising the flexibility: “I have worked in traditional jobs before, but there’s nothing else out there where you can set your own schedule and set your own goals. Sometimes drivers ask me, ‘how much do you make?’ I tell them, ‘you can make as much as you want.’”

Reading through the testimony—of all the witnesses, not just Luceele Smith—it’s interesting to see how easily the benefits of self-employment and the “sharing economy” are conflated as one and the same.

David McCabe reported for The Hill that the questions that followed split along partisan lines, with Republicans expressing concern that regulation would hurt job creation and stifle innovation and Democrats raising questions about worker protections and rights, as well as the safety of consumer data.

McCabe writes that the “hearing represents the first move by Republican lawmakers to exert their authority over the issues associated with the on-demand economy,” and points out that Republicans in Congress are playing catch-up with the GOP contestants in the presidential primary in this regard.

The voice of caution in the proceedings was Dean Baker, the co-director of the Center for Economic and Policy Research, who Politico identified as the “Democratic witness.”

He outlined a litany of risks and issues that arise from the so-called sharing economy, and his testimony should be required reading on the subject. The four categories of regulatory issues Baker identifies are: labor regulation; consumer protection regulation; property rights; and rules prohibiting discrimination in the provision of services—an issue which had received little to no attention from others.