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Prepared Remarks of U.S. Sen. Mark Warner (D-VA)

MITs On-Demand Economy Conference
Cambridge, Massachusetts
Tues., March 15, 2016
Introduction
Thanks for the very kind introduction.
I am really happy to be here today because I welcome this exploration of the challenges
and opportunities posed by the on-demand economy.
As one of the few elected officials in Washington talking about this subject, and as a
former venture capitalist, I recognize I am in a pretty good space when there isnt even
agreement yet on what to call it: is it the Gig, or 1099, economy? Or is it the sharing
economy?
I think most of us have coalesced around the on-demand economy, and I firmly believe
it reflects one of the most dramatic transformations in decades of both the American
workforce and the workplace.
My interest in the on-demand economy is driven in part by my own experience as a
technology disruptor. I was fortunate to get-in early in the cellphone industry in the
1980s, and I spent much of the 90s in venture capital.
My interest also is driven in part by watching my three daughters and their millennial
peers grow-up as the first generation of digital natives and seeing how comfortable they
are with the power of technology to disrupt the way weve always done things.
Millennials may be leading the push to re-imagine the very concept and nature of work,
but its now spreading well beyond that single generational demographic. And thats why
I fervently believe that policymakers must begin to think more creatively about ways to
provide more Americans with more footholds into the new world of work.
Now, I want to be crystal clear about a couple of core principles, right here at the outset:
Yes, the on-demand economy is creating exciting new pathways to economic stability
and greater economic mobility. Yet it is vitally important that we look for ways to
appropriately balance three complementary goals: encouraging the innovation while
providing consumers with appropriate protections and making sure that workers
are treated fairly.
We wont get there with circular arguments about making the new economy look more
like the old economy, or by simply tweaking outdated, 20th century labor classifications:
we need to constantly look for creative ways for this dynamic new economy to work
better for more people.

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Thats why todays conversations here at MIT are so relevant and timely.
The Conversation is Evolving
When you meet someone new these days in Boston, or Cambridge, or Richmond,
Virginia, your first question should not be Where do you work? The more appropriate
question today is What are you working on?
Thats because technological innovations have upended the world of work, and the pace
of that change is accelerating every day. After more than a year of work and study, and
conversations with thousands of workers, innovators, entrepreneurs, thinkers, and
policymakers, here are three things Ive learned:
First: the on-demand workforce is a significant part of our economy, and it will only
get larger.

When I started this journey, I believed this was a phenomenon that mostly
impacted young invincible millennials who place a premium value on freedom
and flexibility.

But it also includes middle-aged, mid-career Gen X professionals whove had

trouble remaining in, or rejoining, the full-time workforce after the 2008
recession.

It also includes 50-and 60-something Baby Boomers working in relatively highskilled jobs who, whether by choice or necessity, are making a go of it in this
new, a la carte world of work.

And if were being honest, the on-demand economy also encompasses a lot of
lower-skilled workers who have always worked two, three, or more jobs at the
same time. Thats how theyve always gotten by. For a lot of them, these ondemand platforms can make life a bit easier if they can access the tools and the
technology.

Last December, TIME Magazine and Burson-Marsteller partnered on one of the most
comprehensive surveys that Ive seen to date to attempt to size and define the on-demand
economy. This survey found about 42% of Americans have some experience as a
customer in the on-demand economy, and about 22% of the general population has
offered a service as an on-demand worker. While those numbers might appear to be
high, I think we all can agree this segment of the workforce clearly is continuing to grow
in breadth and depth.
Earlier this month, JPMorgan Chase released a study that helps illustrate why. They
looked at a quarter-million customers who received payments from one of 30 online
platforms over the past three years. While Chase found the sheer number of people

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participating in the on-demand economy has grown rapidly among their customers, it
stood at four-percent of adults, or about 10.3 million people earnings remained a
secondary source of income.
And Chase also found that income volatility changes in income of 30% or more monthto-month -- is a fact-of-life for more than half (55%) of their customers. So it appears a
lot of people are dipping in-and-out of the on-demand economy episodically
monetizing their spare time, their skills, their car, or a guest room to counteract the
effects of wage stagnation and income volatility.
Heres a second thing Ive learned over the course of this year-long journey: these
are still early days in the conversation: Policymakers in Washington and in many
state capitals are still struggling to understand the potential impacts of what is occurring,
but that does not mean we need to stand still while we study it and study it and then
study it some more.
Ill be the first to acknowledge that, when the policymakers and politicians rush-in, they
usually get it wrong. But we can still try to move the needle in some modest and helpful
ways.
For instance, everyone agrees we need better data. The federal government has not even
surveyed the contingent workforce since 2005. That means we havent comprehensively
looked at the growth or the characteristics of this workforce since the days of the flipphone -- or since the launch of most of the on-demand platforms were talking about.
Look, I come from the business world: I believe you need to grasp the scope of a
challenge before you attempt to size potential solutions.

So Ive been pushing to get the Department of Labor to relaunch the contingent
worker survey it discontinued in 2005, and Im pleased to report weve been
successful: the Labor Secretary recently announced the first contingent worker
survey in a decade will be redeployed again next year. Now my colleagues and I
are pushing congressional appropriators to make sure this initiative is actually
funded.

And allow me to announce another small victory today: After speaking with
hundreds of on-demand economy workers across the country, I learned there is
considerable confusion about what the IRS will accept as a legitimate electronic
record of business income and expenses. This is a really big deal for contingent
workers and sole proprietors who track most of their business activities on-line.
So we contacted the IRS last month to explain how their current instructions are
murky and confusing, and actually work against the agencys goal of improved
tax compliance. As a result of those conversations, the IRS has agreed to update
the guidance about electronic recordkeeping provided on its website, in printed
instructions for taxpayers, and in its training of IRS employees. The IRS will now

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make it more clear which types of electronic records are acceptable, and how
those records should be backed-up and stored.
The relaunch of the workforce survey and the improved IRS guidance on electronic
records are admittedly modest victories, but you have my commitment to continue
pushing government to become more nimble in how we accommodate this growth in the
on-demand economy.
Which brings me to a third thing Ive learned over the past year: it is a mistake for
policymakers to simply try to fit this 21st Century phenomenon into the existing 20th
Century frame. The workforce distinctions and definitions developed over the previous
75 years are no longer effective in the way we view and accommodate this growing
workforce.
This cuts to the foundation of the social contract weve developed and adapted in the
post-World War II period. The American economy has been built on a mutual agreement
between employers and employees: both agreed to jointly contribute to social insurance
programs -- retirement, health care, workplace injury, disability, and unemployment
insurance.
For generations, this shared responsibility has provided a critically important safety net
for individuals and families. To be frank, it also helped protect taxpayers when the stuff
hits the fan, which it occasionally does over the course of anyones working life.
For the past 75 years, this system worked pretty well for people who were attached to a
traditional, full-time job. But trends in the workplace and changes accelerated by
technology and the real-time growth in on-demand work continue to dramatically
diminish that connection.

Starting in the 80s, employers began handing-off lower-skilled, non-core

business functions to contractors.

Starting with the 401k, and now with health care, workers increasingly bear more
of the responsibility for funding and maintaining these safety net functions, and
they increasingly are tied to the individual and not to the job.

And as full-time work morphs into on-demand payments for discrete, short-term
tasks, and with the growth of algorithmic scheduling, we need to re-examine some
fundamental questions about how to maintain a modern safety net: who
contributes, and how much? Who administers it? How should it be protected and
regulated?

My colleague and friend Lindsey Graham, the Republican senator from South Carolina,
has an uncanny ability to cut-to-the-chase. Senator Graham recently endured my full
pitch about the future of work. He listened patiently for nearly an hour, and then he
distilled it into 30-seconds:

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Its like cable. In the past, you had to buy the whole package even if you only wanted
HBO or ESPN, but pretty soon youll be able to buy individual channels a la carte. The
same thing is now happening with work: In the past, employers had to pay for the entire
package in order to get the specific skills they needed, but today employers can purchase
only the skills they need for a specific task.
As elevator pitches go, thats not bad. I think Ill borrow Senator Grahams message
frame, because it helps people grasp some of the challenges were talking about today as
we re-imagine work for the 21st Century.
Three Challenges
Ive looked at the agenda for todays conference, and I believe you are asking all of the
right questions. I would like to leave you with some specific ideas which I hope will
inform some of your discussions today:
First, I appreciate that a lot of the players, thinkers, and policymakers represented in this
room today want to get this right. It was very significant last November when 40 tech
executives, public policy experts, and labor leaders came together to issue a joint
statement, committing publicly, to work toward a portable benefits package for ondemand contract workers.
I would challenge you today to explore carving-out some space and time for innovative
new models to emerge. Could we come up with a way to establish a safe space, an
innovation zone, where technology platforms could test new models on training and
benefits? Can we allow some flexibility and freedom to allow the time and the space to
experiment?
I am co-chair of the bipartisan Future of Work project at The Aspen Institute, and we are
having discussions with leaders in several U.S. cities who appear willing to explore
hosting an innovation zone to help us figure out what does and doesnt work.
I think we agree this could potentially increase business for the platforms and also boost
incomes for workers. So is there a way to allow willing platform companies to
experiment with expanded training and portable benefits without running afoul of
existing labor and tax regulation?
Second: As a policymaker, I worry that when the next recession hits, a significant number
of these on-demand workers who are operating without a safety net will suddenly find
they are in need of government services and taxpayer assistance. That would place
enormous fiscal pressure on every level of government.
So as you discuss worker benefits and the social safety net, I encourage you to shake-up
the traditional menu weve developed over the past 75 years. When individuals can
choose when, where, and how much to work, the whole notion of unemployment

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insurance or vacation time becomes a foreign concept. Instead of unemployment
insurance, maybe we should be thinking instead about income insurance. Be bold in
thinking about what a portfolio of portable benefits might look like.

Third: The same innovation that unleashed the growth in on-demand work platforms is
leading to innovative new fin-tech tools.
We know that customers today are more than comfortable managing their money and
conducting their business on-line. We know companies are not keen on administering
benefits for workers. We also know individuals can easily be overwhelmed by the
million-and-one financial decisions required to manage a portable benefits package
perhaps layered across multiple revenue streams.
This presents an opportunity to discuss new concepts, such as income insurance or tools
which help provide income smoothing to better manage month-to-month volatility. It
also creates opportunity for additional innovation and disruption in financial services,
allowing fin-tech to perhaps play role as the trusted intermediary in managing social
insurance and benefits derived from an individuals various income streams. I would
welcome a robust conversation about that today.
We Need a Sense of Urgency
In about ten months, a new President and a new Congress will gather in Washington, and
you can bet each will have an ambitious, 100-day agenda.
These issues around benefits and a redesigned social contract, and the very notions of the
gig and the on-demand economy, could be front and center. In many ways, what were
discussing today represents the tip of the spear. So I urge you to work together with a
sense of urgency, collecting better data, advocating for some creative experimentation,
and coalescing around new policy proposals. We cannot litigate these issues in 20th
Century terms.
We need the experience, the brainpower, and the sweat equity gathered in this room
today to make sure we get this right. If you dont like the tenor of the national political
debate, help us offer a new frame for American workers: not Red-versus-Blue, or leftversus-right, but future-versus-past.
America is always at its best when we lean-in to the future, and I thank you for the role
you will play today and in the weeks and months to come.
Thank you very much.

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