How to make it in the Yukon’s gig economy

How would you like to be your own boss, work your own hours and pay for your Yukon lifestyle with lucrative contracts you get via a convenient app on your smartphone?

How would you like to be your own boss, work your own hours and pay for your Yukon lifestyle with lucrative contracts you get via a convenient app on your smartphone?

It sounds pretty good. There is a lot of hype these days about the “gig economy,” and the opportunities created by websites that conveniently match buyers and sellers of various services.

Uber and Lyft let you get paid for driving people around. Etsy lets you sell your creative crafts around the world. Taskrabbit offers the opportunity to find handyman or cleaning work. Amazon’s Mechanical Turk lets you sign up to do online piecework, sometimes paid just a few cents per item. Fiverr lets you sell your web design and digital marketing savvy on a global basis. Airbnb lets you rent out rooms in your house. The list goes on.

Wired Magazine defines gigs as “non-traditional jobs taken by independent contractors, temps or freelancers,” often via an internet matching service. The mania hasn’t fully hit the Yukon yet. Earlier this week, there were 10 rentals available on Airbnb in Riverdale ranging from $43 to $118 per night. You can find hundreds of Yukon creations on Etsy, although not all are by local artists. It is theoretically possible for Yukoners to offer their services on Fiverr or Mechanical Turk, but I couldn’t find any so far. Taskrabbit, Uber and Lyft don’t yet operate in the Yukon.

You will hear a lot more about this in the coming years. These internet startups have powerful incentives to expand as widely as possible. The costs of their internet platforms are largely fixed, so adding a new town means rich incremental profit. And investors often value such companies based on their user numbers, so rapid expansion can mean a bigger payoff for early investors.

Uber, for example, already tried to expand into Anchorage, but pulled out after some clashes with local regulators. The Anchorage media reports it plans to return soon, and possibly expand to other parts of Alaska too.

Despite the hype, however, you should think twice before quitting your day job. While there are plenty of anecdotes about success stories, there is also evidence that the gig economy may not be as attractive as its boosters sometimes suggest.

The Wall Street Journal published data that suggested the hype about the gig economy is not showing up in the statistics. It reported that 95 per cent of Americans who claim to have a job are on the payroll of a US employer, a similar percentage to a decade ago. Uber, one of the biggest gig economy employers, had around 160,000 active drivers in 2015. Even though this figure has likely grown substantially since then, it remains a fraction of the over 150 million US workforce.

In Canada, according to Statistics Canada, in July 2016 around 15 per cent of Canadian workers were self-employed. This figure has been roughly stable over the last 15 years.

It is likely that official statistics do not include a growing number of people supplementing their day jobs with gigs.

In addition, some caution workers about gigs. What happens if you get injured cutting down a tree in someone’s backyard, get sued by an angry client or have a guest trash your spare room? You may not be covered by traditional protections such as workers compensation. You also have to make sure you’re not violating a Yukon or municipal law and have the appropriate licenses.

So what does all this mean for Yukoners? Our economy can be challenging for those without a government job, so it would be good to figure out how to make the gig economy work.

The first thing to remember is that the gig economy is not exempt from the laws of economics you slept through in Econ 101.

The law of supply and demand is particularly harsh for those websites where you can offer your services globally. You will be competing to design websites or make digital ads with talented people from Estonia to India. You’ll have to see how much work you can get, and if what you make compares well to an hourly wage at a traditional job.

Even for websites offering services in the Yukon that people in Tallinn and Bangalore can’t compete with, you can be swamped by local competitors. All those Airbnb locations in Riverdale with prices less than $50 per night show that competition can be intense. Renting out your spare room at $43 per night will provide some useful supplemental income, but it probably won’t let you move to Easy Street.

You also have to remember the difference between marginal cost and total cost. Consider the Yukon Gold beer painting available on Etsy for $27.10. It may not take very long to make each one, but how many minutes were spent designing the first one? How many minutes on email answering buyer questions, packing it and taking it to the post office? How much time did the artist spend photographing the first one and uploading it to the website, and managing all the keywords so his beer bottle art showed up at the top of the search page?

It is important to think about this as a business and not a hobby with a small revenue stream (although that can be fun in its own right).

Despite these economist quibbles, the gig economy has a lot of potential. There is a small chance it might revolutionize your life, and a somewhat bigger chance it could provide some nice extra cash flow.

The best thing about it is that it is a relatively low risk way to dip your toe in the self-employment lake. If you have an idea or are good at something, you should give it a try. If it goes badly, you might have wasted some time and a few bucks and ended up with one of those seller web profiles that says “0 customer feedback.” But it might turn into something fun, perhaps even lucrative.

Keith Halliday is a Yukon economist and author of the MacBride Museum’s Aurore of the Yukon series of historical children’s adventure novels. He is a Ma Murray award-winner for best columnist.