The wave of mass layoffs by big tech (large technology corporations) that has continued since last year is shaking the economy of Seattle, Washington, one of America's major "technology hubs." The Wall Street Journal (WSJ) assessed that, compared with other areas where big tech is concentrated such as San Francisco, Seattle is taking a bigger hit from the layoffs.
For decades, Seattle grew its regional economy on the back of technology corporations. The area is home to Microsoft (MS) and Amazon headquarters, and Apple and Google also have offices there. As high-earning employees of technology corporations purchased large numbers of dwellings, housing prices and tax revenue rose. Seattle was also a city where talent from large corporations launched their own startups and attracted strong interest from venture capital (VC).
However, as Seattle's major corporations embarked on mass layoffs in recent years, the regional economy began to take a hit. According to Layoffs.fyi, a site that tracks workforce changes at corporations, MS and Amazon have laid off more than 45,000 employees since 2023, accounting for 85% of all layoffs among technology corporations in the Seattle area. On the 20th (local time), the WSJ said the "virtuous cycle" of Seattle's economy expanding through corporate growth "is wobbling."
The reason Seattle is feeling the shock of layoffs more than other tech hubs is its unusually high dependence on employment by technology corporations. While Alphabet (Google's parent company) and Meta Platforms, big tech corporations in San Francisco, employ about 15% of the local tech workforce, MS and Amazon employ about 40% of the Seattle-area tech workforce.
Moreover, after layoffs at the two giant corporations, other Seattle corporations such as the online travel agency Expedia and real estate information firm Redfin followed suit one after another, spreading the layoff fallout to other industries. As a result, due to declines in tax revenue such as payroll taxes, Seattle's income is expected to fall by about $146 million (about 203.5 billion won) over the next two years.
Hannah Andrews, manager of Five Stones Coffee, located right next to MS's Seattle headquarters, said applications from highly skilled tech workers have recently increased for cafe positions paying the local minimum wage of $16.66 per hour. Andrews noted that applicants frequently listed experience at technology corporations such as MS on their resumes or held master's degrees.
Seattle's commercial districts are also wobbling from the mass layoffs of big tech employees. According to U.S. fintech corporation Square, restaurant and retail expenditure has fallen in the commercial and shopping districts near Amazon and MS headquarters, and in some popular areas total transaction volume declined by up to 7% last year. In the first half of this year, about 450 restaurants, or 16% of the total in Seattle, closed.
Justin McKay of Adams Moving Service, a popular moving company in Seattle, said, "The number of IT employees planning to move this year has dropped sharply," adding, "A year ago, customers booked moving services three to four weeks in advance, but now you can book just a few days ahead."
According to the WSJ, offices built during the boom remain vacant for extended periods, and dwelling prices are flat. In King County, where Seattle is located, the average time on market for dwellings has doubled since 2022. Kelly Fukai, who served as chief executive officer (CEO) of the Washington Technology Industry Association (WITIA), said, "For a long time, we were thriving," adding, "But a boom can't last forever, and when conditions changed, the regional economy took a significant hit."
Although technology corporations have recently reduced remote work, temporarily increasing foot traffic in Seattle, the trend of local jobs shrinking due to advances in artificial intelligence (AI) will likely be hard to avoid. Noel McDonald, executive vice president at the recruiting firm Aquent, which counts Amazon and MS as major clients, said, "Seattle technology corporations are hiring at smaller scales than several years ago," adding, "Hiring cycles have lengthened, and the number of applicants has increased by about tenfold."