National Defense Authorization Act for Fiscal Year 2016

Floor Speech

BREAK IN TRANSCRIPT

Mr. WARNER. Mr. President, I come to the floor today to speak about the changing nature of our economy. I come to talk about a part of our economy that I don't think most folks in this Chamber understand. It goes by many names. It is called the sharing economy, the on-demand economy, the gig economy, the 1099 economy. There is a lot of discussion, actually, in some circles about exactly what to call this changing nature of our economy, but there is no dispute that it represents a new dynamic and growing part of our American economy.

It used to be that when you were introduced to someone, one of the first questions asked was, Where do you work? Today, particularly for the 80-plus million millennials who make up the largest age cohort in our society, the more appropriate question to ask is, What are you working on? That is because the American workforce is increasingly made up of freelancers, independent contractors, and the self-employed. Yet Washington mostly has remained on the sidelines as our economy, the workforce, and the workplace have undergone what may be the most dramatic transformation literally in decades.

By my count, as folks announced yesterday, almost 25 people are running for President in 2016. Frankly, I find it remarkable that none of them in either party are even talking about these fundamental changes in how, when, and where Americans are currently working because, whether by economic necessity or by choice, one-third or more of the American workers now find themselves piecing together two, three, or more on-demand opportunities to make a living. As I said earlier, it is called the sharing economy, the on-demand economy, or the gig economy. It includes, as I mentioned earlier as well, a lot of young and--at least they think so--invincible millennials, 80 million-strong, who began entering the workforce in the year 2000 and afterward.

The good news about this generation is it is the best educated, the most diverse and tolerant, the most technologically adept, and the most comfortable with disruptive change of any generation America has seen. And that is good. Most millennials grew up in the glow of a computer monitor. Since childhood, most have maintained an online identity and network in real time with friends. Members of this generation can, if they choose, graduate from a college or university without ever stepping foot on its campus. Armed with a tablet or smart phone, they can successfully work for an employer without ever sitting at a desk from 9 to 5. But it is not just the millennials who are pushing the envelope in how, when, and where people work. It also includes many middle-aged professionals, unexpectedly downsized at midcareer. It includes baby boomers--folks from my generation and a number of my college classmates--who have been hit with a premature end to what they thought before the recession was a solid career. Frankly, it also includes a lot of folks for whom working multiple jobs at the same time is nothing new. They call it survival, and it hasn't gotten any easier. Yet, here in Washington, too few policymakers are thinking creatively about ways to provide more Americans with more footholds into this new world of on-demand or freelance work.

In addition, today we have a whole set of new online platforms, companies that didn't even exist 5 years ago, such as Airbnb, Uber, TaskRabbit, and Etsy. Think about Airbnb alone--it already has more rooms available than Marriott. These platforms match supply and demand for things people never even thought about monetizing before--a room, a ride, a specific skill, even the whole notion of free time. But many of the business models in this on-demand economy are built upon the premise that workers are independent contractors, not employees. This means that employers can end the relationship at any time. Much of the work is project-based. Contracts and clients can dry up, and it is tougher to create new ones without an office to go to. It also means employers do not have to pay costs or contribute to health insurance or retirement. They also particularly don't pay a share of unemployment or workers' compensation.

The whole notion of the social safety net and social contract between the employer and the worker has totally changed. If we think back to my parents' generation 40 years ago--I think about my father. He didn't make a lot of money but knew that he would get benefits, that when he retired, he would get a pension. That changed in my generation, the baby boomers. You didn't work for the same place. You moved around to a few different jobs. We moved into what I would call the 401(k) generation, defined benefits. We moved to defined contribution.

The fact is, today these on-demand workers, even if they are doing relatively well, exist on a high wire with no social safety net beneath them. That may work for many of them when times are going well--until the day they aren't. That is why ultimately, when things go wrong for this new gig economy, workers without any safety net, without any unemployment, without any workmen's comp, could fall and ultimately end up on the taxpayers' dime.

That is why Washington needs to catch up and start asking some tough policy questions--but also with the recognition that with the growth in this part of the economy, Washington can't impose a solution.

First, the biggest challenge may be this fundamental change in the employer-employee relationship. Are there other options for providing a safety net of basic benefits for workers who are not connected to a traditional full-time employer? Who should administer it? Should it be opt-in or opt-out? We could look to the health care exchanges as a public-private model now--in many cases--that they largely appear to be working. Could we think about an unemployment or workmen's comp exchange that workers and employers could work with?

We might borrow the idea of the hour bank used by the traditional trade unions for 60 years. A carpenter would move from one contractor to another, committing a little bit of resources, the employer committing resources, but it was administered by a trusted third party.

Other countries--primarily in the EU--are experimenting with worker-administered pools. Freelancers put in a certain amount of income based on the income they would need to replace if they got sick or injured, and they collect it if they are sidelined for more than a month.

Part of a solution might even be consumer-driven. What if customers could designate a portion of their payments to Uber or Airbnb into a designated fund that helps support workers--a social insurance fund? There may be other public-private models out there, and they deserve a look, too.

Second, this is too important to leave to the courts. While litigation is underway about whether on-demand workers are independent contractors or employees, we cannot and must not leave this to the courts alone. We learned just today of a ruling from California labor regulators--a ruling that is expected to be challenged. California labor regulators have determined that Uber drivers are to be considered employees and not independent contractors. This ruling demonstrates yet again why Federal policymakers need to reexamine the whole notion of 20th-century definitions and employment classifications when we are thinking about a 21st-century workforce.

As I mentioned, as many as one-third of American workers are participating in some aspect of this on-demand economy. We have a responsibility to provide clarity and predictability instead of allowing inconsistency as these issues are litigated on a case-by-case, State-by-State basis.

Third, the Federal Government needs to become much more nimble. Frankly, folks on both sides of the aisle would acknowledge that the Federal Government operates at less than dial-up speed. We need better data about how many people are a part of the gig and sharing economies.

At the request of Senators Murray and Gillibrand, the GAO reported last month that the Department of Labor has not been tasked with a deep-dive on workforce data in more than 10 years. Better data would tell us a lot about who is working in this sharing economy and what characteristics they share. Better data would result in better policy.

As Federal policymakers, we also need to recommit to extending broadband to underserved and unserved regions. You can't be linked in if you don't have a link.

In addition, we should streamline the hodgepodge of Federal programs we have set up to support innovators and entrepreneurs. These programs are scattered across dozens of Federal agencies, and they exist in a budgetary cycle of feast or famine.

We cannot ignore the opportunity costs of this generation's combined $1.2 trillion in student debt. It is limiting options, opportunities, and economic mobility for an entire generation.

Finally, this millennial generation is beginning to fuel a tremendous shift in one of the most traditional anchors of America's economy, and we need to, quite honestly, recognize and respond to it. Younger Americans are making it clear that in many cases they prefer sharing and renting over ownership.

I was talking to Brad Chesky, the CEO of Airbnb, the other day. As I mentioned, Airbnb already provides more rooms than Marriott, and this is a company that didn't even exist 5 years ago. The CEO offered this comparison: His parents' generation--my generation--defined the idea of success in America as owning a nice house, having two cars, putting your kids through college, and maybe, just maybe, if you did well, getting a little house at the beach or on the lake. But he says the hallmarks of success for this millennial generation are much more different. Younger people want control of their data and online reputations. They don't necessarily aspire to own things such as cars or houses; they want to collect cool experiences, which they can best document and share online.

I ask all my colleagues, the next time you are at a townhall, ask your audience: Would you rather have a home mortgage deduction or a direct credit against your student debt? It doesn't matter what the age group is, 90 percent overall will say: Give me that credit on my student debt rather than on a home mortgage deduction.

Think about this. As policymakers, this generational move away from ownership and toward sharing and renting could have huge impacts for every level of government. That is because we currently use our Tax Code to reward ownership of everything from homes, to vehicles, to factories. Property taxes are how State and local governments pay for public schools, public health, and public safety. If we have an economy increasingly built on sharing and renting and not ownership, that could have tremendous ramifications.

I mentioned that 5 years ago no one had even heard of Airbnb or Uber. And while we don't know what the disruptive technology of tomorrow might look like, we know developments such as driverless cars, same-day drone deliveries, and 3-D printing are right around the corner. Some version is here to stay. As policymakers, we need to ask the right questions, discuss the appropriate rules of the road, and know when we need to get out of the way. Instead of trying to make this new economy look like the old, Washington should encourage more of this innovation, and we need to work to create more opportunities and more upward economic mobility for everybody.

I, for one, look forward to continuing this discussion today and in the weeks to come.

Mr. President, I yield the floor.

BREAK IN TRANSCRIPT

Source