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'The Valley has stepped up': Ro Khanna on layoffs, bailouts, Trump and crisis innovation

March 28, 2020
In The News

For years, California Rep. Ro Khanna has been trying to warn the country and the people who run it that America needs a stronger safety net. Even as the tech industry in his Silicon Valley district flourished and the broader economy soared, the former Stanford economics professor has argued that the average worker in America was standing on shaky ground.

He never wanted to be proven right this way.

As the coronavirus pandemic chokes off the global economy, millions of Americans have lost their livelihoods in a matter of days. Even the high-flying tech sector that comprises so much of Khanna's constituency is being hit. The $2 trillion stimulus package that President Trump signed on Friday includes line items Khanna could have only dreamed up a few months ago: unemployment benefits for gig workers and $1,200 checks for most adults making less than $75,000, among them. Still, Khanna says workers and the companies that employ them will need more support to weather the next few months.

Protocol spoke with Khanna this week about how the tech industry is being affected by the crisis — and how it's stepping up to help.

We've already seen a lot of layoffs at tech startups in and around your backyard in Silicon Valley. What can you tell founders and the workers of these smaller companies about how this stimulus package will affect them?

A lot of the startups and small companies [with under 500 employees] will be able to take advantage of the Small Business Administration loans. There's going to be an eight-week loan that, if it goes completely toward keeping people on payroll and paying the rent and utilities, it becomes a grant. Startups and small businesses should try to get that eight-week assistance. Then there are broader loans from the SBA that, if used for keeping people employed and if used for paying utilities, would turn into grants. Startups should apply for that, too.

The biggest challenge is: Under the current bill, if you're a startup, and you are funded by a venture capital firm, then every startup that VC funds has to be added up when you look at whether you qualify for having under 500 employees. That is a ridiculous definition of a small business. Probably the people who wrote those regulations never stepped into Silicon Valley. What we tried to clarify in the bill is that that shouldn't be the case. If you're a startup funded by a VC, and a VC is funding another startup, other startups' employees that have nothing to do with yours shouldn't be counted.

I'm now working with Speaker [Nancy] Pelosi to make sure the SBA, from an administrative perspective, will not use that absurd interpretation of what qualifies as a small business, and they'll have some administrative latitude. I'm going to encourage startups to apply, knowing we're trying to get the money out first and deal with all the bureaucratic red tape later.

But, in other words, VC-backed startups aren't necessarily going to see that in fine print in the bill. They'd have to trust that this is going to come out in SBA regulations later on when the loans are being doled out?

They would go to the bank, get the loan, and my guess is they won't be denied the loan right away, given that the priority is to get it out. They're going to do the paperwork on the back-end. The question is whether on the back-end they would qualify for the loans to be converted to a grant. To do that, they have to show they used the money for payroll and to pay rent and utilities. There is still a slight uncertainty in terms of the SBA's interpretation there. I would hope they wouldn't interpret things in a way that defies common sense, but there is that slight risk.

Was there resistance to getting that clarification in the bill?

It was more that we were in such a rush, they didn't want small things — from their perspective, a big thing from my district's perspective — to slow down the process.

The stimulus bill includes unemployment protections for gig workers, Airbnb hosts and other freelancers, which is something that Uber in particular was fighting for. What does that say to you about Uber's stance against AB 5 in California, which would classify drivers as employees?

I think it shows why we need drivers classified as employees. In moments like this, they need to have economic security. When the economy's doing relatively well, the classification doesn't matter as much, but when you have a situation like this, you really need health benefits, and you need the guarantees of unemployment insurance and the protections that come, like paid sick leave, from being an employee.

I really give Sen. [Chuck] Schumer credit for pushing to make sure unemployment covered those who are independent contractors. That's absolutely necessary. But I think this whole pandemic should make us reexamine the vulnerability of so many of our employees, and we ought to be working to strengthen their economic security after the pandemic.

There's some concern that since Uber and other gig companies don't pay into unemployment insurance, they're now basically getting a bailout from the federal level. What do you make of that?

I think it's a fair criticism. They should be paying some of the unemployment insurance tax, and they're not doing that, and that's unfair to other companies that are paying. Of course, we have to provide for independent contractors, because otherwise they'd really be hurting. But I think it shows Uber needs to step up and treat these people like employees.

What would that mean? It would mean probably their valuation would go down a little because future profits would be less. So, fine. Their shareholders would suffer to some extent. But it would be a more equitable arrangement. Their valuation is so high. They've obviously been able to raise capital. What's relevant is they're able to raise capital at rates that are too low, because of a model that doesn't provide proper equity to workers. If they provided a proper model, they'd probably have to pay a little bit higher premium on getting the capital, meaning the shareholders would take a slight hit, but it would be a much more equitable model and longstanding model for an app that's quite extraordinary.

No one doubts the application in terms of efficiency, but it's a shame they've added this inequity, which has clouded people's ability to appreciate an application that makes life easier.

Before the outbreak became the top priority, you introduced the 21st Century Jobs Act, which aimed to spur investment in what could be future technology hubs. I know this has been a priority of yours since you got into office. Where does this sit on your priority list right now?

It's very high after we get past the crisis. Obviously, right now, the focus has to be on saving lives. The focus has to be on getting health care workers the medical equipment and protections they need, and it has to be on getting people the basic cash and assistance so they can weather this dark storm. Everything right now is focused on crisis management and crisis alleviation. But after these four or five months, after we get back to recovery, the technology hubs are going to be more important than ever.

First of all, I expect this whole period is going to lead to a tremendous amount of innovation in remote work. Innovations may not be technological, as much as work-process innovations. People may realize you don't need to have physical meetings for everything you do, and you probably don't want your whole workforce concentrated in urban centers.

The model of distributed work and remote work is going to be much stronger than before the pandemic, and that gives an opportunity to the central thesis I had: We've got to get more rural communities, minority communities, places left out, participating in the technology revolution and the digital revolution. I think the move toward understanding remote work and online work gives great promise as we rebuild the economy.

The second thing I'd say is this has highlighted the importance of science and technology. Is there anyone in the country who would question we should have been better prepared for the pandemic? One wishes we'd listened to Bill Gates in 2015 when he was giving his TED talk about our vulnerabilities to pandemics, and that we had made the investments in the National Institutes of Health that would lead to some of these vaccines. There was research being done on coronavirus vaccines that didn't get the sufficient funding it needed, because people thought it was too unlikely it would happen. So I think this whole pandemic is going to make us really appreciate the need for investment in science, in technology, in emergency preparedness, in infrastructure that's going to make us more resilient.

One of the things I'm working on with people in Silicon Valley is an app that would help hospitals figure out where there's a demand for ventilators and where there's a supply of ventilators, basically an eBay for hospital ventilators. The fact that we don't have those kinds of data management systems in place is a challenge. I don't know if they're going to be able to do it fast enough and get it up for this crisis. I'm hopeful.

Who are you working with on that?

Peter Relan. He has a tech incubator. It's a very preliminary idea. He's got 10 people on it, trying to develop this app. It's a race against the clock as to whether we can get this done. But that's just one example. There are so many innovative things that are being done in Silicon Valley.

I met a company that's trying to figure out how to solve the prepaid problem for hospitals in getting equipment from overseas. How can they get masks and ventilators without having the hospitals prepay? There are entrepreneurs working at [University of California, San Francisco] on gene therapy to possibly come up with a cure for coronavirus. Airbnb just announced an incredible program to help house medical professionals, because a lot of them don't want to go home to expose their families to risk.

I'm really proud of how the Valley has stepped up in a way that highlights how technology can be used for incredible good.

Obviously the last couple years have highlighted the negatives of technology, where you've seen disinformation campaigns, the radicalization of people to gun violence, concerns over privacy. This is a moment you're seeing that technology unleashed properly can make dramatic differences and save lives and help people.

To your point about how this moment is showing technology can be used for good, I wonder what more you think these tech giants like Facebook, Amazon, Apple, Microsoft and Google should be doing right now to help, and furthermore, what their very rich founders and CEOs should be doing?

I think on this issue tech has been pretty ahead of the curve. They're working on creating websites to provide information on testing. They're funding getting medical equipment to health care personnel. They're funding initiatives for research on how to get a vaccine and how to get a cure. They're providing housing for medical personnel. That's incredibly important.

I'm sure there are other things they can be doing, but I think the question we have to ask is: A lot of them, like Bill Gates, literally in his TED talk, warned about this pandemic and how we were unprepared. I'd ask them how can we get people to listen to what they're saying in the political process, before we have a pandemic.

You've been a critic of Amazon, in particular, in the past. Disclaimer: My husband literally just started a job at Amazon …

That's great. Look, I was critical that they weren't paying their Amazon workers $15 an hour, but after Sen. [Bernie] Sanders and I did the Stop BEZOS Act, within a few weeks, Bezos increased the pay to $15 for all Amazon workers. They just agreed on paid leave.

My view is Amazon is an extraordinarily innovative company. We get Amazon boxes on our door every other day. The fact that people are sheltering in place and able to get Amazon deliveries is a huge innovation. I just want to make sure the warehouse workers and delivery workers are participating in that innovation, and they're getting a livable wage and proper benefits.

Putting aside Henry Ford's views on political matters, which were wrong, when you look at what Henry Ford did doubling the wage in the early 1900s, Bezos has that opportunity. He could say, "I want my workers to clearly understand that participating in the digital economy is a huge benefit, not just to the shareholders, but to the workers, and I'm going to make a dramatic bet on the equity of those workers."

I've been thinking about the fact that tech's bigness is sort of a blessing and a curse right now. A blessing because you can have a single point person like Jeff Bezos or Mark Zuckerberg decide, OK, we're going to put all of our resources into this crisis. But it's also a curse, because now these companies can become a single point of failure. When this is all over, what impact do you think this period of time will have on the push to regulate tech? Will we see more of it, because this is showing they are these massive monopolies or less because Congress will understand how essential they've become?

I think we'll see a call for well-crafted regulation. Bezos is doing what Trump should be doing with the Defense Production Act. It's not like the regulation isn't there. Trump could literally order these tech companies to be producing things. But he's not exhibiting leadership. Bezos, in saying we're going to produce essential medical equipment and essential supplies, is. Yes, we're going to need regulation, but that regulation has to be well-crafted. It can't be a blunt instrument. It has to come with an understanding of technology's promise in addition to its peril.

What do you think this period might do to these calls we've been hearing to break up big tech and see more antitrust enforcement?

I think it will trigger more deliberation about how we can harness technology for the public good while regulating it. My sense is there will be a wariness to have a blunt instrument that impedes innovation and impedes technological progress. At the same time, people are going to want to make sure these technology companies are being competitive and have competitive platform privileges, and that they're being open in terms of access.

Concretely I think people will say Amazon is doing a lot of good in this crisis, and it's a good thing Amazon exists. They're hiring people. They're delivering. But we need to make sure they're paying their workers well, that they're providing paid leave. That they're not discriminating on the platform against small businesses and competition. But we should recognize Amazon is overall a force for good in American society and work toward making sure their benefits are more shared with workers and make sure they aren't hurting other competitors.

There have been some reports that the White House is looking to tech companies for location data to track the spread of the virus. What is your take on whether and how that kind of data should be used?

It needs to be anonymous. We can't turn into a surveillance state. I don't want a situation where we have data on individuals, and people are showing up and knocking on their doors with thermometers or testing or figuring out where they're traveling to as individuals. That's a surveillance state like China we should completely resist.

If tech companies are taking data thats anonymized and doing analysis with artificial intelligence of where social distancing is working and where it's not and using that kind of analysis to better inform public policy, that I think it's reasonable, as long as that data is collected with informed consent and is used in a way that's not targeting or surveilling individuals.