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Brier Dudley offers a critical look at technology and business issues affecting the Northwest.

July 17, 2014 at 9:47 AM

Seattle dodges bullet in Microsoft layoff

While sympathizing with the thousands of Microsoft employees losing their jobs, Seattle and the state of Washington should breathe a sigh of relief that the company left its headquarters largely intact.

Microsoft image

Microsoft image

More cuts are likely to come later, but at this point just 1,351 of the 18,000 layoffs will happen in the Puget Sound region, where Microsoft is based. That’s affecting 3 percent of the company’s regional workforce.

As predicted, the brunt of the layoffs will be felt in places like Finland and Hungary, where Microsoft is deeply cutting the Nokia mobile-phone operations it acquired earlierthis year.

To put the Seattle-area layoffs in perspective, the cuts are a third of what was lost in Seattle when Washington Mutual folded. It’s far less than the number of engineering jobs that Boeing has phased out locally since the state gave it $8.7 billion worth of tax breaks last fall.

Unlike Microsoft’s last big layoff, which took place during the recession, this one comes when at a time when Seattle is bursting with tech companies’ hiring as fast as possible. That includes Amazon.com’s breathtaking growth, ongoing startup creations and the continuing flood of companies from around the nation and world coming to Seattle to set up engineering offices and tap the deep pool of software expertise.

Microsoft is the mountain whose runoff feeds these streams.

Demand for Seattle tech talent is now so great that startups are doing dot-com-era recruiting stunts, such as food-distribution startup Farmstr’sspelling is cq offer on Monday: a load of bacon — actually half of a pastured pig — to people who recommend an engineer who ends up getting hired.

Local competition for jobs in science, technology, engineering and math drove wages up 18.8 percent since 2008, the biggest gain for STEM jobs among tech hubs across the U.S., according to federal data compiled by Bloomberg.

In this heated environment Microsoft will have to work harder to keep its remaining employees, especially after in the wake of a painful layoff and drastic reorganizations.

Because of the way Microsoft has phased the layoff, employees will be unsettled by the prospect of additional cuts. The company It has not given any information on yet to specify another 5,000 of the 18,000 jobs that will be lost over the next year, a number of which are likely to happen locally.

Microsoft layoffs also have an outsized effect on the region, just as its hiring does.

In good times, the company touts economic studies saying that each employee generates up to seven additional jobs in Washington state. A 2010 study said Microsoft compensation averages $178,159 per employee, about double the average aerospace worker’s. compensation.

Microsoft’s steady employment growth has offset the swings at Boeing for decades and drove more than half of King County’s job growth in the boom years of the 1990s.

But unlike Boeing, Microsoft isn’t gutting and dispersing its historical base of operation in blind pursuit of shareholder value.

It’s too early to tell whether Chief Executive Satya Nadella has set the right course for Microsoft, but at least he’s inspiring employees to think big and create the next generation of software, services and devices.

That’s in sharp contrast to Boeing CEO Jim McNerney’s numbing pronouncement in May that his company won’t take more innovation “moonshots” for a while and will focus on cutting costs and reusing existing technology.

Other companies seem to be filling the voids.

A few miles from Microsoft headquarters, Google is doubling its Kirkland engineering center to accommodate 1,000 more employees.

After Microsoft completes the layoffs next year, it will have fewer employees than Amazon but probably a larger payroll, since many of Amazon’s employees are in lower-paying distribution jobs spread across the country.

Either way Amazon now has an opportunity to ease the regional angst over layoffs by finally sharing details about how many people it now employs at its sprawling Seattle headquarters. That, or set up a recruiting office in Redmond.

The new Amazon.com headquarters complex under construction in downtown Seattle.

The new Amazon.com headquarters complex under construction in downtown Seattle.

Comments | Topics: Amazon.com, Boeing, layoffs


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