Should Uber and other sharing-economy firms face tighter regulation?

At a hearing on Tuesday, Congressional lawmakers raised questions about the pros and cons of 'disruptive' companies. 

Are sharing-economy companies – such as Uber and Airbnb – using technology to provide better services and new jobs?

Or, are they exploiting their workers by denying them benefits – like Social Security – available at more traditional jobs?

Federal lawmakers returned repeatedly to the second question at a hearing on Tuesday that focused on how Congress should regulate so-called on-demand economy firms like Uber, Airbnb and Thumbtack (which matches users with local service providers).

Perhaps predictably, the debate often fell along partisan lines. Republican members of the House Energy and Commerce Committee, which held the hearing, expressed wariness about regulating the industry. Democratic members were concerned about the industry’s potential to deny benefits to workers and noted that women and African Americans were often underrepresented in management positions in the tech industry, which the companies say they are part of.

“I for one am more concerned about existing regulations hurting new jobs than I am about the need for new regulations,” said Rep. Michael Burgess (R) of Texas, who chairs the Subcommittee on Commerce, Manufacturing and Trade.

Noting that the hearing was part of a series looking at so-called “disruptive” innovations such as Internet of Things devices, he added, “As we look at any disrupter, we should ask ourselves, is more regulation needed or is someone just worried about changes to the status quo?”

But Rep. Jan Schakowsky (D) of Illinois, the subcommittee’s ranking member, noted that the “transformational changes” brought by such technologically-enabled freelance work were not always positive, particularly for older workers who were used to receiving benefits like health insurance and Social Security in full-time positions.

“The workers are atomized and unable to collectively bargain in their own interest, and this shift [means that] many work-related risks go from employers to workers,” she said.

With 80 million Americans currently participating in some of form of freelance work – whether driving for ride-sharing services like Uber or Lyft or putting together furniture and making food deliveries for Taskrabbit, participation in the so-called on-demand economy has been growing dramatically over the past several years.

Committee members pointed out that the industry had generated $15 billion in revenue in 2013, according to a study by accounting firm PriceWaterhouse Coopers. And the industry is projected to grow to $335 billion in ten years.

Testimony during the hearing often focused on defending the industry from claims that it exploits workers, The Hill reports. Witnesses included Luceele Smith, who drives for Uber, and Michael Beckerman, head of lobbying group the Internet Association, who previously worked on Capitol Hill, including working for Rep. Fred Upton (R) of Michigan, who chairs the Energy and Commerce committee.

“I have worked in traditional jobs before, but there’s nothing else out there where you can set your own schedule and your own goals,” said Ms. Smith, an Air Force veteran who said she used the income from driving for the service to pay for travel to see her family in the British Virgin Islands.

The hearing marked one of the first times Republican lawmakers have focused on whether the sharing economy deserves further regulation, the Hill notes. So far, calls for further regulation have come from Democrats, such as Sen. Mark Warner of Virginia, and from Democrat-controlled statehouses such as Massachusetts. But The Hill reports that no legislation on regulating sharing-economy benefits has been filed yet. 

That trend looks like it is unlikely to change, with Rep. Upton, the committee’s chair, saying on Tuesday that “at a time when jobs are still hard to find and balancing the budget is a challenge, we should not risk hasty calls to regulate.”

Some studies reviewed by the committee found that ride-sharing can actually improve taxi service by decreasing the number of complaints, as one study in New York found, or by making additional rides available for patrons who find it difficult to get a traditional cab, as one survey of low-income Los Angeles neighborhoods showed.

Despite the ongoing labor disputes, the services are generating new jobs for people who might have been previously underemployed, several witnesses said.

“We’ve heard a lot of stories … of people who’ve been down on their luck, people who’ve just left the military, people who lost their jobs, or people who are looking for what next to do in their lives, and they’re able to come to these platforms, come online, and start finding new work,” said Jonathan Lieber, chief economist for the marketplace app Thumbtack.

[Editor's note: This story originally misidentified the state Sen. Mark Warner represents. He is from Virginia.]