Microsoft’s historic layoffs — 18,000 jobs total, at least 1,351 in the Puget Sound — will give us a sense of how strong and deep the Seattle economy is during what has been a frenetic upswing.
Each layoff is a tragedy for the individuals and families involved. For the metropolitan area, Microsoft’s move comes at a relatively good time, as I wrote about in detail last Sunday.
June’s preliminary unemployment rate for Seattle-Bellevue-Everett fell to 4.8 percent, which to economists is near full employment. Startup activity is strong. The other big tech dog, Amazon.com, is still expanding. House prices are on a tear. At 52,900 employees in May, the software publishing sector is at record employment. With luck, some of that talent shed by Microsoft will benefit other companies here or start new ones.
As my colleague Brier Dudley writes, Seattle appears to have dodged a bullet.
Still, this stress test carries some unknowns. Of course Seattle is not Silicon Valley — no place is or will be. But it is also not San Francisco, Boston or Washington, D.C. — places with many more big companies, startups, access to venture capital and multiple research universities. San Diego and Austin are peer competitors with distinct advantages in technology. And remember, our competition for talent and capital is global.
We’re not minting new giants. Budget cuts over recent years have hurt the University of Washington, one of the region’s critical engines of world competitiveness. Nihilistic federal austerity is hurting research grants, too. Russell Investments has been sold and its future here is unknown. Nationally, the slow expansion is likely to continue — but if it faced a shock (stock collapse, bond bubble, China meltdown), the affects would eventually trip the Seattle boom, too.
In addition, Microsoft may face pressure to make more layoffs. There’s a good case to be made that the Colossus of Redmond was too unwieldy and this streamlining was long needed. To the extent that it is part of a strategy that makes Microsoft more competitive, so much the better for metro Seattle.
But in today’s “shareholder rights” climate, raising the stock price short-term is seen as the prime goal of corporate management, no matter the damage to the enterprise long term or to the economy. Wall Street’s looter mentality, a key cause of rising inequality and economic wreckage to so many communities, will be fighting with Microsoft’s leaders for the future.
Thursday Reading: Former Comcast employee explains that horrifying customer-service call | Slate
Today’s Econ Haiku:
Look on the bright side
As you’re hauled into H.R.
There’s no stack ranking