IRS Wastes $12 Million on Unusable Email System

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Posted by Alexander Hendrie on Friday, October 14th, 2016, 12:46 PM PERMALINK

The IRS spent $12 million on an unusable email system, according to a report by the Treasury Inspector General for Tax Administration (TIGTA). The agency purchased two years’ worth of email software subscriptions before finding out the system was not unusable. 

The IRS was required to procure new software because of a 2014 Office of Management and Budget directive that required federal agencies to manage permanent and temporary email records starting December 2016.

As the report notes, the IRS failed to perform the required and necessary cost analysis, security assessments, and requirements analysis prior to purchasing the software. As the report notes:

“The purchase was made without first determining project infrastructure needs, integration requirements, business requirements, security and portal bandwidth, and whether the subscriptions were technologically feasible on the IRS enterprise.”

As a result, the software was never used despite $12 million in taxpayer funds being spent acquiring two years’ worth of licenses. In addition, the IRS failed to ensure the contract was awarded with full and open competition as required by federal law. As the report notes:

“The IRS violated the Federal Acquisition Regulation requirements by not using full and open competition in its acquisition of Microsoft Office 365 ProPlus and Exchange Online monthly subscriptions.”

This is not the only time the IRS has struggled with technology. A TIGTA report released last year found that the IRS failed to upgrade Windows software on its computers and servers by end of life deadlines, despite being expected to spend almost $140 million in taxpayer funds. At the time of the report, the agency had spent nearly four years upgrading this technology, but had only upgraded half of its servers.

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Community Banks Under Siege By Dodd-Frank

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Posted by Johnathan Sargent on Friday, October 14th, 2016, 12:39 PM PERMALINK

Regulations imposed by Dodd-Frank have crippled America’s community banks. In the years following its passage, the financial services industry has witnessed a steady decline in the number of community banks operating in America. As these banks disappear, so does the valuable services that they provide communities and small businesses every day.

The Dodd-Frank Act was an attempt by Washington to impose a new regulatory regime upon the financial services industry. With the goal of promoting financial stability and protecting consumers, Dodd-Frank brought about some of the most significant changes to financial regulation since the Great Depression. The result has been over 22,000 pages of large and complex regulations affecting the entire industry.

These regulations have not only made American banks less competitive, but also led to the decline in community banks. While larger banks can afford to hire compliance personnel, smaller banks simply do not have the same capacity to read and understand, let alone comply, with these complex, burdensome regulations.

According to a study by the Mercatus Center, 90 percent of banks stated that compliance costs have increased since the passage. These higher compliance costs have forced community banks to discontinue certain products and services. This trends has only continued as the Consumer Financial Protection Bureau (CFPB) has begun to actively regulate mortgage lending, which has further led to increased costs faced by community banks. According to the report a majority of banks are considering changing or even eliminating certain services such as residential mortgages, home equity lines of credit, and overdraft protection.

These added costs have led to smaller banks being sold to larger banks, leading to an unprecedented trend of consolidation in the financial services industry. According to one article, since the passage of Dodd-Frank one in five American banks have disappeared and virtually no new banks have been formed within the same time period. Community banks find themselves competing with larger banks that have vastly more resources.

In most cases, as we have seen over the past 6 years since Dodd-Frank has been enacted, has been to close completely. Leading communities across the country to lose the kind of detailed and personally tailored services that only community banks can provide.

Fortunately, the House Financial Services Committee approved H.R. 5983, the Financial CHOICE Act, to ensure the survival of American community banks. This piece of legislation, introduced by Representative Jeb Hensarling (R-Texas), undoes the regulations imposed by Dodd-Frank and helps create a fairer environment for community banks to compete in.

The efforts made by Representative Hensarling and other lawmakers are greatly needed in order to ensure that communities across the country continue to receive the crucial services that community banks provide.


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It’s Time to Modernize Beer Laws

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Posted by Quinn Gasaway on Thursday, October 13th, 2016, 4:52 PM PERMALINK

Current regulations, highlighted in a recent study by the Mercatus Center, make it difficult for brewers to enter and operate within the market, which in turn limits consumer choice.

Entering the craft brewing scene is costly and time-consuming. Before opening the doors for business, brewers must go through both federal and state hurdles.
At the state level, an aspiring brewer must acquire a license from the state’s alcoholic beverage regulator. The next step requires the approval of the brewer’s beer labels and, in some cases, formulas.

Now enter the high fees associated with entering the marketplace. For example, Virginia has strict fees based on the amount of barrels a brewer produces. According to Mercatus:
“The [Virginia] brewery license will cost $350 if she brews fewer than 500 barrels of beer in one year, $2,150 if she brews between 501 and 10,000 barrels in one year, or $4,300 if she brews more than 10,001 barrels.”

This structure deters growth, which in turn limits job creation and consumer choice. A better policy would repeal the licensing fees. The combination of nearly a dozen federal and state regulation hurdles, the roughly three-month waiting period required to complete these stages, and the dollars invested in licensing costs before a bottle of beer is sold all make for formidable barriers to entering the market.

If a brewer is fortunate enough to leap these hurdles, they find more waiting on the other side. At the state level, two of the most restrictive laws concern self-distribution laws and beer franchise laws.

Self-distribution laws require brewers to sell their product to wholesalers rather than selling directly to retailers. Once the product is sold to the wholesaler, the brewer loses influence as to how its beer is handled.

Adding to this load are beer franchise laws. These regulations strictly govern contracts between brewers and wholesalers, such as when and how a brewer can cancel or renew a contract with its wholesaler.

These laws make it very difficult for a brewer to switch to another wholesaler if they feel their current one is not meeting standards. Jacob Burgdorf further explains how these laws harm brewers:

“Even if a brewer can demonstrate good cause, many laws provide another level of protection for wholesalers by requiring advanced notice and a period, often 60 or 90 days, in which the wholesaler is allowed to address the grievance before termination or nonrenewal is allowed.”

This harsh regulatory climate limits the expansion and freedom craft brewers are entitled to as operators in a free market.

Both of these regulations restrict the freedom of choice for fans of craft beer. Data shows that states with tough self-distribution and franchise laws “averaged only 9.30 breweries per million people.” On the other hand, states with flexible regulations “had an average of 20.34 breweries per million people.”

Clearly, less regulation allows for craft brewers to expand not only their business, but also their product, which in turn benefits consumers. For example, look at California. The Golden State allows self-distribution and has no beer franchise laws.  Because of this, it has 518 breweries as of 2015, the most in the United States.

It’s obvious: neither craft breweries nor consumers benefit from the harsh regulations. Businesses and consumers would be best served by free market principles.


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Medicare Price Negotiation is a Destructive and Unnecessary Proposal

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Posted by Alexander Hendrie on Thursday, October 13th, 2016, 3:30 PM PERMALINK

Morning Joe host Joe Scarborough yesterday called for the government to “negotiate” prices for Medicare Part D prescription drug spending.

This is bad policy and would not fix the problems that Scarborough claims it would. Medicare Part D is a success because it empowers free market competition to ensure access to medicines at low prices.

The government shouldn’t mess with a program that isn’t broken, and doing so would do almost nothing to address runaway federal spending. Instead this proposal would decrease access to life-saving medicines and increase costs to the healthcare system over the long term.

Supporters of giving the government power to negotiate over Part D make it sound like a simple solution. But in practice the government would be a terrible negotiator.

Medicare Part D is a Success
Medicare Part D has been successful—for both beneficiaries and taxpayers—due to “rigorous competition in the program.” As noted by Grace-Marie Turner in Forbes, prices are already negotiated down because of “private sector competition through consumer choice and price negotiations by PBMs (Pharmacy benefit managers) and insurers.”  

There is a 90% satisfaction rate among Part D beneficiaries because the program provides a great number of choices for beneficiaries at affordable prices, without putting a price control on drug manufacturers. Part D spending is also 45 percent lower than initial projections and monthly premiums are just half the projected amount.

The program is effective because of “the competition among purchasers who also operate within the commercial market.” The clause that prohibits government interference in private negotiations has been crucial in the program’s success.  

Part D works much better than government programs that have price controls, like the Veterans Affairs Agency. Part D is able to provide far more innovative, life-saving drugs, than the VA does. The VA currently negotiates prices, but has to be selective about which drugs it covers. As a result, veterans are frequently locked out of accessing life-saving medicines, resulting in worse health outcomes, and higher costs to the system.

Part D Protects Medical Innovation
Costs associated with medical development are already significant. On average it costs $2.6 billion and more than a decade of research time for each new medicine that hits the market.

While forcefully reducing the costs of medicine may succeed in reducing the upfront costs of drugs, over the long term it is an incredibly destructive policy. By forcing lower prices, the government creates a disincentive to innovate because there are less profits available to finance the next generation of life-saving and life-improving prescription medicines. In turn, this results in higher long term healthcare costs due to a lack of cures for a variety of illnesses.

As noted by Joseph Gulfo in the Hill, Part D ensures that medical innovation is encouraged:

The 2003 Medicare law exempts Part D drugs from "best price" rebates that drugmakers have been required to give to the state Medicaid programs since 1991. Medicare is prohibited from receiving "best price" to provide incentives to drugmakers to develop drugs for conditions that affect patients over 65 years of age. And this incentive is working — in the first few years after Medicare D was enacted, there was an estimated 40 percent increase in all clinical trials versus expected trends and a 59 percent increase in the number of drugs entering the final phase before FDA approval.

Part D Spending is a Small Percentage of Overall Medicare Spending
Scarborough is correct that spending on federal entitlements are unsustainable. By 2046, the Congressional Budget Office projects that Medicare, Medicaid and Social Security spending will account for half of all non-interest spending.

While there is a need to restrain these costs, Part D Medicare prescription drug spending accounts for a small percentage of overall Medicare spending (and an even smaller percentage of mandatory spending). As shown below, prescription drug spending accounts for just 12 percent of all Medicare spending -- roughly $76 billion. 

This is a small fraction of mandatory spending. In 2015, federal spending on Medicare totaled $634 billion, and all mandatory spending totaled $2.29 trillion according to CBO. Prescription drug spending equals roughly $76 billion.

Scarborough makes it sound as if this is the solution to runaway federal spending. However, reducing Part D prescription drug outlays would hardly dent federal mandatory spending.

Source: Kaiser Family Foundation (Note: Total Medicare spending differs because of updated CBO baseline)

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Leaked Emails Show Team Hillary Worried About Her 25% Gun Tax Endorsement

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Posted by John Kartch on Thursday, October 13th, 2016, 2:08 PM PERMALINK

On Sept. 8, 2015, Americans for Tax Reform published documentation of Hillary Clinton’s 1993 endorsement of a new national 25% retail sales tax on guns. “I am all for that,” said Clinton of the tax as she testified before the Senate Finance Committee. 

As the story picked up steam in conservative media outlets, the Clinton campaign team began to worry.

On Oct. 4, 2015, Clinton advisor Mandy Grunwald emailed the team saying, “I also saw something about her supporting a 25% tax on gun sales back in 1993. I didn’t see q and a on either of these in the briefing.”

Later that day, campaign communications director Jennifer Palmieri replied: “Being added today.”

It is unclear if the campaign team ever came up with talking points in an attempt to justify Clinton’s gun tax endorsement. The email thread either ended at that point, or any response has yet to be released by Wikileaks.

In the primary election, Clinton aggressively positioned herself to the left of Bernie Sanders on guns, and attacked Sanders relentlessly for his 1990s gun votes.

Hillary’s endorsement of the gun tax was reported at the time by the Associated Press, the Washington Post, NBC Nightly News and several other outlets.

As reported by the AP on Oct. 1, 1993:

Sen. Bill Bradley, D-N.J., picked up Mrs. Clinton's support for his idea of slapping stiff taxes on ''purveyors of violence:'' a 25 percent sales tax on guns and $2,500 license fees for gun dealers.

''Speaking personally ... I'm all for that,'' said the first lady. But she stressed she was just speaking for herself.

''Well, let me say that there is no more important personal endorsement in the country today, and I thank you very much,'' said a pleased-as-punch Bradley.

And the Washington Post on Oct. 1, 1993:

"I'm all for it," she declared in a response to a suggestion by Sen. Bill Bradley (D-N.J.) that the Congress should impose a 25 percent sales tax on handguns to "tax directly the purveyors of violence."

The Sept. 30, 1993, NBC Nightly News reported the incident as follows:

“Others urge a hefty sales tax on guns, and much higher fees for gun dealers. Today, they got a powerful ally.

Ms. HILLARY CLINTON: I'm all for that. I just don't know what else we're going to do to try to figure out how to get some handle on this violence.”

The Bill Clinton White House made it clear that Hillary's 25 percent gun tax endorsement was hers and hers alone, as shown by the Oct. 1, 1993 White House press briefing transcript:

Q: "Do you know if the President supports the First Lady's endorsement of an idea yesterday by Senator Bradley that there be a 25 percent tax on the sale of guns in America?"

WH Press Secretary Dee Dee Myers: "Well, as you know, she was expressing her opinion."

On April 14, 2016, ATR released previously unseen video footage from a non-C-SPAN camera showing Hillary’s visceral facial expression during the moments she endorsed the gun tax and as gun owners and dealers were described as “purveyors of violence.”

On June 5, 2016, during an interview on ABC’s This Week hosted by George Stephanopoulos, Clinton had the video footage played to her and was given the opportunity to renounce her gun tax endorsement. She refused to do so. In fact, Clinton has never renounced the tax, and her aggressive anti-gun, anti-Second Amendment statements do nothing to indicate she’s changed her mind.

On Sept. 20, 2016, ATR noted yet another Clinton gun tax endorsement from 1993: a doubling of the existing federal excise tax on guns. In a closed-door meeting, she told the anti-gun Rep. Mel Reynolds (D-Ill.) that his bill to double the tax was a “great idea."

Clinton’s deeply held belief in higher taxes on the American people is documented at ATR’s dedicated website,

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Those that buy guns to protect themselves are "purveyors of evil," and that tax would not affect the illegal guns purchased in Chicago by gangs that actually use them for evil.

Such a tax would not make a single American safer!


About 243 years ago a tax on tea paved the way to #2A. #NeverHillary

Hillary Clinton: Dodd-Frank Passed for "Political Reasons"

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Posted by Justin Sykes on Thursday, October 13th, 2016, 1:42 PM PERMALINK

Hillary Clinton has made it a point throughout her campaign to make it clear that she is the candidate that will hold Wall Street and the banking industry accountable, and continue to carry the torch of big government control over the market that was lit by the Dodd-Frank Act six years ago. Clinton even made it a point to have the Dodd-Frank poster child, Senator Elizabeth Warren (D-Mass.), appear with her repeatedly on the campaign trail.

However recently released e-mails from inside the Clinton campaign detail excerpts from her infamous paid speeches to Wall Street that show her so-called principled stance against Wall Street and support for Dodd-Frank was not so much principled as it was a complete and outright lie to the American people.

In a speech to Goldman Sachs in 2013, Clinton evidenced her true lack of support for the Dodd-Frank Act, alluding to the fact that Dodd-Frank and the over 20,000 pages of resulting regulations were not passed for the benefit of American consumers, but simply for political optics at the time. Clinton stated that: 

“There was a lot of complaining about Dodd-Frank, but there was also a need to do something because for political reasons, if you were an elected member of Congress and…everybody in the press is saying it’s all the fault of Wall Street, you can’t sit idly by and do nothing…and I think the jury is still out on that because it was very difficult to sort of sort through it all.”

In similar remarks to Deutsche bank in 2014, Clinton made it clear that deep down she thought financial reform following the financial crisis should come from the financial industry, thus calling into question her praise of Dodd-Frank. Clinton remarked that:

“Teddy Roosevelt…took on what he saw as excesses in the economy, but he also stood against the excesses in politics. He didn’t want to unleash a lot of nationalist, populist reaction…Today there’s more that can and should be done that really has to come from the industry itself…and I really believe that our country and all of you are up to that job.”

Thus the questions that arise are if Dodd-Frank was passed solely for “political reasons” and not as a real and necessary response to the financial crisis as Americans were lead to believe, then why is Clinton still supporting Dodd-Frank and how many other lawmakers supported Dodd-Frank solely for political reasons?

If big government “excesses in politics” are not the answer but instead, as Clinton remarked, the industry and market itself should correct such issues, why does Clinton continue to advocate for anti-free market policy such as Dodd-Frank? 

Clearly Mrs. Clinton has no problem playing politics when it benefits her, and is all too willing to support legislation that throws the economy and American consumers under the Dodd-Frank bus solely for political reasons. 

Sadly, average Americans do not see the benefit of Clinton’s political reasoning, and are instead stuck with the Dodd-Frank behemoth that has led to increased financial costs, reduced access to capital, and a general sense of helplessness in the face of an out of control regulatory regime.


Photo credit: Brookings Institution 

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ATR Opposes Nevada Senate Bill 1

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Posted by ATR on Thursday, October 13th, 2016, 12:05 PM PERMALINK

The Nevada General Assembly will be voting on a bill that would raise lodging taxes in Clark County to help pay for a new $1.9 billion stadium. Americans for Tax Reform is encouraging members of the Nevada Assembly and Gov. Sandoval to reject this tax increase.

Unfortunately for taxpayers, the bill – Senate Bill 1 – quickly moved through the Senate on Tuesday in a 16-5 vote.

If approved by the Assembly and signed into law by Governor Brian Sandoval (R), the bill would increase the room tax nearly 1.4 percent in order to fund $750 million of general obligation bonds over 30 years to finance a new football stadium.

While advocates may believe pouring tax dollars into a new football stadium to attract the Raiders may lead to economic growth in the state, the weight of the evidence says otherwise. As noted by the Wall Street Journal in 2015, stadiums “displace entertainment dollars that would be spent elsewhere locally” and do not lead to economic growth:

Research on the issue has piled up during the past two decades. The general conclusion: A city’s economy doesn’t get a bump from bringing in a new sports team or building a stadium—and scarce economic-development dollars could be put to better use with other investments.

“You’re not going to get income growth; you’re not going to get tax growth; you’re not going to get employment growth,” said Dennis Coates, an economist at the University of Maryland, Baltimore County who studies the economic effects of professional sports teams and facilities.

A 2007 study in the Journal of Sports Economics examined cities that gained professional teams. It found adding a team did “not have a positive economic impact on the local community” and didn’t raise regional incomes.

What’s more, some teams want to move after only two or three decades in a facility. The Miami Arena, a onetime home to the Miami Heat, was open just 20 years before being demolished.

Mr. Coates, who has published work with similar findings, said even in cities that lure teams from outside, the new facilities generally attract entertainment dollars that would be spent elsewhere locally.

Government has no business taking millions of hard-earned taxpayer dollars to pay for a stadium for a private sports team. Stadiums should be funded with private money. A good example can be found locally with Nevada’s new NHL franchise and its T-Mobile Arena, built with private funds.

Americans for Tax Reform opposes Nevada Senate Bill 1 and urges members of the General Assembly to vote against it.

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Thomas Hawk,

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Report Finds CFPB Fastest Rulemaking Body in Federal Government

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Posted by Johnathan Sargent on Thursday, October 13th, 2016, 10:10 AM PERMALINK

According to a report from the American Action Forum, the Consumer Financial Protection Bureau (CFPB) is the fastest rulemaking body in the federal government. In the 5 short years that the agency has existed, it has issued nearly 50 rules at a rate 3.5 times faster than any other government agency. The CFPB has quickly become synonymous with the overkill regulatory mindset that Washington is known for. Having unelected bureaucrats make rules and regulations without the input of the American people will not benefit consumers, but harm them.

The CFPB was born out of the Dodd-Frank Act, passed in 2010 in response to the financial crisis. Much like other provisions of Dodd-Frank, such as the Volcker Rule and the Durbin Amendment, the CFPB was intended to protect consumers and promote financial stability. However, again like much of Dodd-Frank, the CFPB has done nothing but burden American consumers and businesses with additional costs.

Of the nearly 50 rules that the CFPB has imposed, according to the report, 26 of them have directly resulted in “$2.8 billion in costs with an associated 16.9 million in paperwork burden hours”.

Additionally, with such a fast pace of rulemaking there will undoubtedly be errors. In the CFPB’s case that means an error rate of nearly 25 percent, meaning that of nearly 50 rules that the CFPB has passed, they have had to issue 13 corrections. This agency is a prime example of what happens when unelected bureaucrats are not held accountable and are given complete autonomy.

The CFPB is given this broad mandate and invested with a large amount of regulatory power, but is not subject to Congressional oversight. This large, bureaucratic agency thus has the power to affect millions of Americans however it sees fit with no avenues for retribution from consumers or Congress

Earlier this year, the CFPB proposed a new rule to regulate short-term lending. These added restrictions and regulations, according to one article, will “force thousands of small businesses to shutter, but also severely restrict the availability of credit for millions of Americans”. This is just one of the many rules that the CFPB has unilaterally implemented that will hurt hardworking Americans and American businesses.

Representative Jeb Hensarling (R-Texas), Chairman of the House Financial Services Committee, recently issued a statement about the CFPB’s leadership as “neither elected nor accountable to the American people”. The purpose of the CFPB is to make sure that financial products and services that Americans depend on every day work better for them. But how can unelected bureaucrats know what is best for the American people? The answer is that they cannot.

Hensarling’s sentiment, and the sentiment of many CFPB opponents, was further validated this week when the Washington D.C. Court of Appeals ruled the structure of the CFPB to be unconstitutional. The court found that the director of the CFPB, Richard Cordray, “enjoys significantly more unilateral power than any single member of any other independent agency” and that he is the “single most powerful office in the entire United States Government.”  

Fortunately, a handful of lawmakers are now looking at ways to fix the CFPB and make it more accountable. Last month the House Financial Services Committee approved H.R. 5983, the Financial CHOICE Act, introduced by Representative Hensarling.

This piece of legislation undoes much of Dodd-Frank, but most importantly it turns the director of the CFPB into a bipartisan commission subject to congressional oversight. Thereby subjecting the CFPB to Congress, the true representatives of the American people. It adds transparency and makes bureaucrats accountable to the American people.

Such reform efforts by Hensarling and other lawmakers are greatly needed and justified given the rampant rule making the CFPB has subjected American consumers to, and the recent ruling by the D.C. Court of Appeals.


Photo Credit: Christian Schnettelker

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Show Notes: Empower Real Americans' Voices in Presidential Debates

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Posted by Alec DiFruscia on Thursday, October 13th, 2016, 9:00 AM PERMALINK

In Episode 62 of the Grover Norquist Show, ATR President Grover Norquist discusses the importance of the American people having a voice in the Presidential debates. Norquist is a part of the Open Debate Coalition, a bipartisan group that focuses on having questions asked in debates about topics the American people care about.

All too often, the debate questions are chosen by the moderators who have little interest in the problems facing Americans, leaving substance by the wayside. Guns, vaping, and school choice are all examples of issues that impact millions of Americans, but not a word is muttered about them in the Presidential debates.

Click here or use the link below to listen.

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McKinsey Report: The Real Size of the Sharing Economy

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Posted by Laurens ten Cate on Wednesday, October 12th, 2016, 5:29 PM PERMALINK

This week a new report by the consulting giant McKinsey was released, and it shows the real size of the gig-economy in the US and the EU. McKinsey estimates that 162 million people in the USA and the EU work in the gig-economy, this is about 20% to 30% of the workforce.

The impact of this report might be bigger than you'd think at first. Not only does it prove what people have been seeing over the past few years, namely that traditional job formats are changing very rapidly, but also that the people that are working in these new type of prefer the flexibility afforded by being their own boss.

They find that for these 162 million people 70%, or 113 million people, working in the gig-economy is their preferred choice. This group can then be divided into two subgroups based on whether for them it is primary income or supplemental income. They call these groups 'Free Agents' and 'Casual Earners'.

Next to that McKinsey finds that another 16%, or 26 million people, work in the gig-economy because they are financially strapped. Basically all these companies allow people to do some part-time extra earning with incredible flexibility. Allowing those in financial need to choose a few hours every week to earn a little bit extra, completely on their terms.

Research by Arun Sundararajan and Samuel Fraiberger from New York University and Harvard University respectively from October 2015 figured this effect out already. They found that: “Peer-to-peer rental marketplaces have a disproportionately positive effect on lower-income consumers across almost every measure.” They also say that the Sharing Economy is: “a force that democratizes access to a higher standard of living.”

McKinsey's report adds to the growing list of evidence of the positive effect the sharing economy has on our society. Especially for those on the lower end of the earnings spectrum the sharing economy has a huge positive effect. 

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