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Uber and Lyft are here, but Alaska still trails other states in the gig economy

  • Author: Annie Zak
  • Updated: July 25, 2017
  • Published July 24, 2017

Amy Nicolaisen, owner of Wooden Spoons Alaska catering company, runs the East Anchorage Commercial Kitchen, where she rents out kitchen space to other aspiring food entrepreneurs, on Tuesday, July 18, 2017. (Bill Roth / Alaska Dispatch News)

When ride-hailing companies Uber and Lyft debuted in Alaska last month, Lance Ahern was among the first people to get signed up to drive for the services.

Ahern, who works as a business adviser for the Alaska Small Business Development Center, said he gave about 300 rides in the first three weeks the platforms were live in the state. Working roughly 50 hours a week driving, on top of his full-time job, he said he made about $5,000.

"Suddenly there's a new set of tools and platforms out there that wasn't there before," Ahern said.

The arrival of Uber and Lyft in Alaska is perhaps the biggest development for Alaska's gig economy, which appears to be growing even though it seems to still lag behind other states.

The so-called "gig economy," also known as the sharing economy or on-demand economy, can be hard to define. Generally, it involves people monetizing the assets or skills they have through peer-to-peer transactions facilitated by mobile apps.

This is somewhat distinct from contract or freelance work, though lines blur easily. Gig-workers are also hard to count because they aren't clearly identified in employment and earnings surveys, according to the U.S. Bureau of Labor and Statistics, so it's hard to know exactly how much of the economy they comprise.

Many sharing economy services that exist in big metro areas across the country — Postmates, TaskRabbit, UberEATS, WeWork — aren't available in Alaska, just as they aren't available in many smaller communities or the more rural parts of the Lower 48.

Katherine Jernstrom is CEO of the coworking space The Boardroom in downtown Anchorage. She said Alaska's largest city is included in the growth of the gig-economy that's happening nationwide. But many smaller platforms have yet to arrive.

"Uber and Lyft, because they're in markets of transportation and hospitality, everyone uses it, and you can move into a smaller market like Anchorage and still pick up a large market share," she said. "The case for smaller gig economy or sharing economy infrastructure such as TaskRabbit or UberEATS, all of this other stuff — we just don't have a big enough market here."

Alaska is no stranger to being among the last stops for many national chains when it comes to brick-and-mortar stores. It's only within the last year or two the state has seen its first Victoria's Secret, Krispy Kreme and Panda Express outlets.

But some people in Alaska are filling the gig-economy gaps themselves.

"That means more local entrepreneurs do it themselves here, but it's hard to make money if you can't scale it," Jernstrom said. "So then it turns into more of a hobby project."

The Boardroom is a local version of the shared coworking spaces across the country that have been on the rise in recent years. People, usually freelancers, pay a membership fee in order to have a spot to work.

Amy Nicolaisen rents kitchen space in Anchorage's Northway Mall for her catering business, Wooden Spoons Alaska. But when her rent shot up this year from $300 to $2,000 per month, she was looking for ways to help offset it.

Amy Nicolaisen, owner of Wooden Spoons Alaska catering company, runs the East Anchorage Commercial Kitchen, where she rents out kitchen space to other aspiring food entrepreneurs. (Bill Roth / Alaska Dispatch News)

In April, she started to rent the area to other small-scale food entrepreneurs at a rate of $25 per hour, along with a deposit. She calls the space the East Anchorage Commercial Kitchen.

"I think of myself as a facilitator," she said, "because there aren't that many kitchens and because they're expensive. I'm a gateway to independence and starting something."

Pans and utensils hang along the walls near a massive eight-burner industrial stove. Recipes and postcards hang on one of the huge stainless-steel refrigerators. The kitchen is available at any hour of the day for people who sign up to use it.

Nicolaisen uses an app called Food Corridor, which matches businesses looking for cooking space with commercial kitchens like hers, to get the word out about the place. She said she hasn't turned a profit yet, but hopes to score an anchor tenant to help her do so.

"There have been, nationally, a lot of businesses that are trying to take this model of 'What's an asset a lot of us have that we can try to monetize?' " said Nolan Klouda, executive director of the Center for Economic Development at the University of Alaska Anchorage. "I think we should expect to see people applying that type of logic to more things than just rides or lodging. It's something we should expect to see in-state as well as nationally."

It's hard to know exactly how many people, here or around the country, work in the gig economy. A Brookings Institution report from October said the sector is "significant and growing fast."

"Overall, there has been a clear surge in nonemployer firms' — a measure of contractor and freelance individuals — business activity in the last decade," the report found, "which almost certainly reflects, at least in part, the rise of online platforms."

It's also unclear just how much the gig economy will upend the future of more traditional work. That Brookings report found that while platform-based freelance work isn't yet displacing payroll employment, "that could change."

App-based freelance gigs offer upsides such as flexibility in scheduling and low barriers to entry. You can generally work as much or as little as you want.

But such jobs also often lack security and benefits, and "some experts see the rise of gig work as an increase in the precariousness of jobs and part of a larger erosion of labor power that began decades ago," a 2016 research paper from the Massachusetts Institute of Technology said.

When Uber first arrived in Alaska in 2014, it ended up in a dispute with the Alaska Department of Labor and Workforce Development over not paying workers' compensation insurance for its drivers. Both Uber and Lyft have faced scrutiny for classifying drivers as independent contractors rather than employees.

"I think the gig economy is not a new concept," said Jernstrom. "People have been doing it forever; the only thing is it's more mainstream with technology and ratings apps. And millennials have a higher culture of sharing and not buying everything, but renting it."

Klouda, at UAA, said the biggest winners in the gig-economy are generally the consumers. While many people can supplement their income with jobs renting out rooms or giving rides in their free time, it's "a relatively small number that can make a living off of it."

In rural Alaska, the meaning of "sharing economy" takes on a less tech-dependent definition. In those areas, subsistence resources are highly shared, and cash isn't exchanged as much, said Alyssa Rodrigues, an economist at the labor department.

"There, economies only work because there's such high levels of sharing," she said, adding that the ability to offer up work in major cities on websites like Craigslist has been around for years.

"These things have existed. It might just might be a matter of it becoming easier and easier," she said.

Opportunities doing piecemeal work might also offer a boost in Alaska's recession. If you lose a full-time job or get your hours cut, it's easy enough to start driving for a ride-hailing company if you have your own car.

When Ahern was signing up for Uber, he said, the line of people who wanted to get started driving with the platform was out the door.

"One of the things I think is interesting to me is where this particular industry is going to fit in Alaska as we go into these economic hard times," said Jon Bittner, executive director of the Alaska Small Business Development Center. "Is it something people will use to supplement income? Is it something people in rural Alaska will use to generate new income?"

Usually these gig economy companies are centered on dense urban centers. So what does that mean for a state with so many remote, tiny communities?

"That's not really what's going to happen if this gets deployed out in rural Alaska in Anaktuvuk Pass or something," Bittner said.