California Observer

Seattle is trying to reboot after tech cuts

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Customers were flocking to a florist in the shadow of Amazon’s offices to purchase bouquets. A bartender on the other side of the company’s huge Seattle campus was struck by the mass of people who had come out for happy hour.

The flowers and toasts were not festive. Instead, they were primarily expressions of sympathy as the computer behemoth terminated 18,000 jobs that January morning. On the same day, Microsoft announced the elimination of 10,000 jobs in nearby Redmond.

Smaller firms like OfferUp and Redfin had already started laying off employees in the Seattle area, and by the time Amazon announced an additional 9,000 layoffs in March, including in its formidable cloud division, Seattle-area tech firms had plans to cut 50,000 jobs in preparation for leaner times.

Similar calculations have resulted in layoffs in Silicon Valley, Boston, Austin, and elsewhere, bringing an end to a decade of feverish expansion for US-based software companies. Since early 2022, about 200,000 jobs have been lost.

The tech slowdown and the pandemic’s lasting impacts are shaking up in both predictable and unforeseen ways. The city has bet much of its identity and building, housing, and retail industries on the rapid expansion that has driven Amazon and Microsoft into trillion-dollar businesses.

Even without the sector’s rapid expansion, the local economy includes hundreds of thousands of well-paying tech employment as well as strongholds in healthcare, retail, maritime, and aerospace.

According to Jacob Vigdor, a public policy and governance professor at the University of Washington, this diversification protects Seattle against broader economic downturns or a tanking labor market. As he sees it, the technological backlash is less of a calamity and more of a transition.

Seattle’s economic development director, Markham McIntyre, sees the additional hurdles as “a little bit of a shock to the system.” Yet, he noted that towns across the country are experiencing similar “regrowth” phases in the aftermath of the pandemic.

Seattle and its corporate identity

Seattle, no longer a company town, is no stranger to the ebb and flow of corporate identity.

For decades, Seattle was known as “Jet City,” as it was the birthplace of Boeing in 1916 and the world’s largest plane manufacturer for many years. But, the 1970s recession decimated its employees (more than 60% were laid off), and Seattle’s unemployment rate soared above 13%.

Such was the city’s plight that a highway sign erected in 1971 famously remarked, “Will the last person leaving Seattle – Turn out the lights?” Two local real estate developers created it to tempt investors, but it represented the city’s economic pressures.

The joke was revived when Boeing relocated its headquarters to Chicago in 2001, despite its commercial aircraft plants and the majority of its staff remaining in Seattle. The maneuver had sent shockwaves all the way across Puget Sound. But, the burgeoning tech presence, led by Amazon and Microsoft, more than compensated for the loss. According to city financials, Seattle’s company tax revenue more than quadrupled from 2012 to 2021, rising from roughly $359 million to more than $816 million.

Seattle spent those years pursuing tech firms, portraying the region as a less expensive, more promising little sister to Silicon Valley. As a result, tens of thousands of tech professionals and corporations poured in. The Seattle Times said construction moved into overdrive, with 62 cranes in position by the end of 2016, nearly tripling New York’s.

The city was bursting at the seams by early 2020, right before the coronavirus epidemic took hold. The skyline was still being redrawn, and the city was magnetic, attracting an infusion of new young professionals. Microbreweries and coffee shops have sprouted up. Lines wrapped around the city’s famous food trucks, some spanning for blocks. Yet, housing costs have risen, pricing people out, and streets have become congested.

Amazon, which has over 15 million square feet of office space in the region, has established a “second headquarters” nearly 2,800 miles away in Virginia to accommodate more staff. (Amazon founder Jeff Bezos owns the Washington Post.)

But, like many other American cities, Seattle’s downtown was empty during the pandemic and is only now slowly filling back again. Restaurants and bars near Amazon’s headquarters report increased foot traffic. Pacific Place, a nearby upmarket mall that once housed Coach, Restoration Hardware, and Barnes & Noble, is home to small art galleries and independent stores.

According to Marlo Miyashiro, owner of the Handmade Showroom, which sells artisanal cards, jewelry, stuffed animals, and other items, the pandemic years have been a roller coaster.

Seattle has a $140 million budget gap, officials indicated late last year, due in part to falling real estate and the consequences of the pandemic. The city has proposed filling the deficit with a payroll tax imposed in 2020 that targets the city’s top businesses.

The center of Seattle is more subdued than it was in 2019. According to the Downtown Seattle Association, while office occupancy has increased, it is only 47 percent of pre-pandemic levels. Customers continue to flock to the food trucks outside Amazon’s South Lake Union office, but the lineups are shorter.

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But there are some bright spots. Two critical industries for the region are on the mend: Visitors have returned, and cruise ships are now docking at Seattle’s harbor. And Pike Place Market, one of Seattle’s most famous sights, is bustling with activity.



Opinions expressed by California Observer contributors are their own.