Trying to find consensus about the expected economic impact of the thousands of local layoffs announced recently by Seattle-area tech companies is about as difficult as choosing which social media platform will replace Twitter and Facebook.
Some business experts say the recently unemployed will quickly find new jobs in an industry that continues to grow in the Puget Sound area. Others are calling the almost-daily layoff news the beginning of an economic downturn.
“People can get the next job,” said Anneliese Vance-Sherman, who analyzes the King County job market for the state Employment Security Department.
Major layoff announcements in recent months include:
- Amazon cuts 18,000 workers, including at least 2,300 in Seattle and Bellevue.
- Microsoft cuts 10,000 workers, including about 900 in the Seattle area.
- Salesforce cuts 8,000 workers across its footprint.
- Meta cuts 11,000 workers globally.
- Google cuts 12,000 employees globally. The company has more than 7,000 employees in Washington.
“Many of those who may be laid off are in high-demand occupations and will be snatched up by other communities,” Vance-Sherman wrote in late January in a report on the layoffs.
The state’s technology sector still has significantly more jobs now than it had 12 months ago, she said. “That is little consolation to the people getting laid off, but looking at the industry, it’s not that large a decrease.”
Other experts say the layoffs are devastating and will have a long-term impact on the Seattle area.
“The tech industry has fueled tremendous growth over the last decade,” said Jeffrey Shulman, a University of Washington marketing professor.
The rapidly growing tech workforce gave developers the confidence to build office towers and new homes and apartments. “All the tech workers spend their money here,” Shulman said. “It seemed to have no end.”
“Now we’re not only slamming on the brakes, we’re putting it in reverse,” he said, predicting the ripple effects of the layoffs will have a wide-ranging and negative impact on the region.
He acknowledged, however, that the tech layoffs are not that large against a background of more than two million jobs of all kinds in the Seattle region.
“We have a relatively diversified economy,” Shulman said. “But tech was fueling so much growth.”
The workers who lose their jobs are people, not statistics.
Two of those workers at Amazon are recent college graduates who worked for the company for less than a year.
Ilana Miller is a 23-year-old Seattle resident who began at Amazon in May after graduating from Washington University in St. Louis.
She began hearing rumors of pending layoffs later in the year, then received an email around Thanksgiving offering her a severance package if she chose to leave the company.
Miller took the package, which she characterized as “fair,” and left Amazon in December.
“I wasn’t upset or super-happy,” she said. “I just accepted it.”
The severance “gave me mobility and I am not locked down,” she said, as she searches for a new job.
Miller worked in human resources for Amazon. Now she is interviewing for a new job, while also considering returning to school or doing consulting work.
“I feel like I’m laid off so young, it’s a little scary,” she said. “I’m not established.”
Because she took a severance package, Miller said she is not eligible for unemployment.
But her situation is far from bleak. “Now is a cool time to do something different,” Miller said.
Miller’s friend, Nick Matthews, had worked at Amazon about six months when he received a layoff notice in mid-January.
Matthews, 22, got an email notification of the layoff, but will be paid until March 20.
“I have no responsibilities, but I am getting paid,” he said.
Matthews graduated from Middlebury College last year, and was also performing work in human resources for Amazon.
“I had been bracing for it,” he said of the layoff, because of all the rumors floating around. “We were the least experienced.”
He has not yet started looking for a new job, relying on savings and his last paychecks to pay bills for now. He can also apply for unemployment.
“I enjoyed working there,” he said. “My co-workers were all great.”
Many business analysts do not see widespread doom even after Seattle-area companies like Amazon and Microsoft announced thousands of layoffs in January. Boeing, for instance, has been on a hiring binge, taking on some 25,000 new workers last year and this coming year, Vance-Sherman said. That will soften the blow of the other layoffs.
Boeing grew 8% in Washington in 2022; with 60,000 workers, it’s the second largest employer in the state after Amazon. Microsoft is the state’s third largest, with a headcount similar to Boeing’s.
As a result, Vance-Sherman said, recent tech company layoffs are not showing up in monthly unemployment estimates yet. Other reasons for that are that employers may change their minds about some announced layoffs, and severance packages can delay when people file for unemployment insurance, she said.
From February 2020 to last September, information technology jobs grew by 27,400 (18 percent) in the state, as telecommuting made it possible for people to keep working during the COVID-19 pandemic.
“Tech saved us,” Vance-Sherman said.
And may continue to do so, despite the almost-daily announcements about more layoffs.
Washington’s unemployment rate remains low and job postings remain high. “Although the number of job openings is beginning to moderate, opportunities are still historically plentiful,” she said.
Markham McIntyre, director of the Seattle Office of Economic Development, said the region is much more diversified than it was during the Boeing bust of the 1970s.
“Seattle’s economy is resilient,” he said. “We have proven we can weather boom and bust cycles.”
He noted the region has a lot of jobs in sectors like health care, life sciences, maritime manufacturing and construction. He also predicted many tech workers will find new jobs in the region, including some who will apply their skills in new industries.
The Washington Economic and Revenue Forecast Council is a small agency that issues quarterly predictions on the direction of the state’s economy and tax revenues.The council’s next forecast is due in March, according to director Stephen Lerch.
Lerch said one problem with making the prediction is that it is not clear exactly when and where the tech layoffs will occur. But one thing is clear, he said: “The tech sector has an above-average impact on Washington’s economy.”
Seattle, one of the nation’s largest high-tech hubs, was already suffering from a business downturn. The pandemic forced many workers to abandon offices and work from home. Commercial building landlords and downtown businesses suffered as a result.
Before the pandemic, Seattle was among the fastest-growing cities in the country, adding more than 128,000 people from 2010 to 2020. That may change, as the layoff notices are already having a real estate impact.
Amazon has announced plans to vacate a 28-story office tower in Seattle when the lease expires in April.
Since 2010, Amazon’s Seattle workforce has grown tenfold to top 50,000, generating economic growth but also pushing up home and rent prices.
“Tech was fueling so much growth with such an impact on society,” Shulman said. “There’s an uncertainty [the layoffs] create. Are people going to spend as much, invest in the region?”
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This post was previously published on CROSSCUT.COM.
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Photo credit: Amazon employees seen exiting Day 1 headquarters in South Lake Union, Nov. 13, 2018. (Matt M. McKnight/Crosscut)