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Tuesday, June 6, 2023
June 6, 2023

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For laid-off tech workers, Seattle job market is no longer quite so friendly

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A pedestrian with a laptop enters Meta offices in Bellevue, Washington, on Feb. 23, 2023.
A pedestrian with a laptop enters Meta offices in Bellevue, Washington, on Feb. 23, 2023. (Erika Schultz/The Seattle Times/TNS) Photo Gallery

Like many of the thousands of workers cut recently by Seattle-area tech firms, Eric, a former Amazon software engineer, recalls his layoff as a kind of one-two gut punch.

On top of the shock of losing a $200,000-plus salary-and-stock package, the 30-something Seattleite found himself in a job market that was more crowded, and much less generous, than it had been even six months before.

There were fewer openings, especially with Big Tech firms like Amazon, Microsoft and Facebook that had ruled the job market but were now in cost-cutting mode. And job offers rarely came with the jaw-dropping compensation tech had become famous for.

When a smaller tech firm offered Eric less than he’d made at Amazon and he tried to negotiate, he was flatly told, “‘We can’t pay you any more,’ and that was it,” says Eric, who asked not to use his full name to protect his job prospects. Eric eventually accepted a job, and a pay cut.

Stories like Eric’s may get little sympathy outside tech. In Seattle especially, where years of escalating tech salaries (even at the pandemic’s height) were often blamed for rising inequality, tech’s retreat can feel like a correction that was isolated, self-inflicted and long overdue.

But given tech’s still outsized role in the Seattle-area economy, its recent downturn is likely to have broader, hard-to-ignore impacts.

Some of those will be positive. Big Tech’s retreat has been a blessing for some non-tech firms in the Seattle area that until now struggled to hire desperately needed tech talent.

At Alaska Airlines, job openings for software engineers it had struggled to fill are drawing “a ton more applicants … just in the last couple of months,” says Jen Keller, who directs Alaska’s hiring.

But Big Tech’s woes could also mean pain for other parts of the economy that depended on those big salaries.

When the first big cuts were announced last fall, “it was like somebody hit the pause button” on the housing market, says Debbie Barbara, a real estate agent for Redfin based in Seattle’s eastern suburbs who has helped many tech workers find homes. Some were now telling her, “‘Hey, we’re just going to be in a holding pattern until we know for sure if we’re getting laid off or not.’”

“It was absolute insanity”

By some measures, the recent wave of tech layoffs has been modest.

Although Seattle-area firms have announced plans to cut around 31,000 jobs, according to tracking site layoffs.fyi, so far, many appear to be outside Washington. To date, tech firms have reported around 5,400 in-state layoffs, according to the state Employment Security Department.

For context, that’s half the number of jobs lost in the dot-com bust of 2001 — and roughly a quarter of the 24,000-plus tech-sector jobs Washington has gained just since the start of the pandemic. Tech may be going through a correction after too much growth, but it’s not disappearing.

Still, there’s no guarantee the layoffs are over, especially if the industry’s post-pandemic slump lingers and investors clamor for more cuts.

“I would not be surprised to see more rounds of layoffs,” says Jacob Vigdor, an economist with the University of Washington’s Evans School of Public Policy who follows state and local job markets. To the contrary, he says, tech firms may find, “now that they’ve adapted to this somewhat smaller workforce, that they could make deeper cuts.”

More broadly, for a sector whose seemingly unstoppable growth had begun to define the Seattle area’s job market and its economic image, the mere fact of mass layoffs has been a stunning reversal.

Over the past decade, tech employment in Washington state ballooned by nearly two-thirds, or more than three times the rate of the entire job market, according to state data. As recently as April, nearly a fifth of the job listings in King County, Washington, were for computer and mathematical occupations.

And much of the hiring action was fueled by Big Tech firms, whose pricey war for talent dominated the job market.

For month after month in late 2021 and early 2022, Amazon was the state’s biggest employer by number of job openings, while Microsoft bounced between No. 2 and No. 6, according to state data. In October of 2021, tech or tech-heavy firms accounted for nine of the top 25 biggest employers by job openings in King County.

That demand gave job applicants a kind of star status. There were bidding wars among eager recruiters, signing bonuses that could hit six figures and comp packages that dwarfed nearly anything outside of tech, in part because Big Tech firms could bolster their cash offers with company shares.

A senior software engineer with seven to 15 years experience could expect anywhere from $300,000 to $450,000 in total compensation from a Big Tech firm, or nearly twice what the typical non-tech employer could offer those engineers, says Albert Squiers, who runs technology recruitment for Seattle-based Fuel Talent.

Even younger candidates could hit the jackpot. “We were seeing people with two, three years of experience getting over $200,000 in total comp,” Squiers says. “It was absolute insanity.”

That started to ebb last spring. In May, job postings for computer and mathematical jobs in Washington began to fall sharply. When layoff rumors surfaced in late summer, it was a brutal wake-up for many tech workers, especially younger ones who’d known only a hot job market.

“It’s all been uphill — until now,” says Zach Lubarsky, 31, who has been in Seattle-area tech since joining Microsoft in 2013, but is now waiting to hear if he’s among 7,000 cuts planned by his current employer, Disney.

Spillover effects

When layoffs started, economists worried about the potential “spillover” effects that the disappearance of so many big salaries would have on the rest of the economy.

Eric, the former Amazon engineer, says he used to spend “a lot of money” in Seattle on clothing, entertainment and dining out. “When I got laid off,” he says, “I stopped doing most of that.”

But so far, broader effects have been mixed.

For example, tech firms have vacated some offices in downtown Seattle and Bellevue, Washington, although that also reflects the persistence of remote work.

Companies that provided services to tech firms have taken hits. Compass Group USA, a food services company, recently laid off 110 employees, according to state data. Many of those workers had worked at cafeterias on Microsoft’s Redmond, Washington, campus, according to a worker who said he’d been a Compass dining manager.

“Everyone talks about the tech workers and the layoffs,” says the former manager, who asked to remain anonymous to protect his severance. “But there’s more to it than that.”

Compass did not respond to questions about the layoffs, and Microsoft declined to comment.

The layoffs’ ripple effects have also been mixed in the Seattle-area housing market, and hard to distinguish from the impacts of higher interest rates

Some real estate agents, like Redfin’s Barbara, felt shock waves as the layoffs were first announced. Others said the impact was short-lived.

Sales inquiries fell off when the layoffs hit the news last fall, says Josh Nasvik, who manages sales at two downtown Seattle condo buildings for Polaris Pacific. But once pink slips actually went out “and people had a better understanding of whether their jobs were going to be affected, we actually saw an uptick,” he says.

The relatively modest spillover may partly reflect generous severance packages many tech workers received. Depending how fast workers find new jobs, that severance could mean that the spillover may never show up, or that its effects have merely been postponed.

For example, although the number of tech workers filing unemployment claims is still fairly low, it’s also up two-thirds since May.

And, of course, the chance of significant spillovers grows if tech companies announce additional layoffs.

Last month, thousands of employees at Facebook parent Meta Platforms reportedly received poor performance reviews, “a signal that more job cuts may be on the way,” according to The Wall Street Journal. Last year, the Menlo Park, California-based firm cut 11,000 jobs, including 726 in Seattle and Bellevue.

But other sorts of spillovers are already happening. Although most tech firms haven’t publicly broken out layoffs by demographics, newer employees may have borne the brunt of the cuts.

According to research on layoffs early in the pandemic among a subset of tech workers — those at venture-capital backed firms — the average laid-off worker had been in the role just two years, says study co-author Fabrizio Core at Erasmus University. A large share were also in higher-paying, software-related roles, versus other roles such as sales.

“It seems that companies tried to get rid of the most expensive, most recently acquired talent,” Core says.

Another group especially hard hit by the layoffs: tech employees who had been in the United States on work visas when they were laid off, and who then had just 60 days to find a job in a rapidly cooling job market.

“I had no choice but to return to Europe,” says Ambroos, a Belgian national who was cut by Meta last fall and asked not to use his full name to avoid any problems with his current employer. “With all the hiring freezes and layoffs, there was no point in trying.”

Winning the layoffs

Not all the news from the tech job market has been bad. Big Tech’s retreat — as of December, only Microsoft was still on the state’s top 25 employers by job openings, at No. 24 — has allowed many smaller tech firms as well as non-tech companies to pick up much needed tech talent.

“The job market hasn’t entirely dried up, if you’re willing to look at smaller companies and ones that aren’t just [in tech],” says John Franco, a Seattle software developer who has been busily interviewing since his layoff from a remote position with PayPal.

Despite the opportunities, candidates often must adjust — to lower compensation and fewer perks but, sometimes, also to employers really wanting people back in the office.

“We’re not as, shall we say, open to remote work,” says Kaj Pedersen, chief technology officer at AstrumU, a small, Kirkland, Washington-based artificial intelligence firm that has seen a recent uptick in applicants.

Pedersen says in-person work was always key to AstrumU’s startup model, which emphasizes collaboration and mentorship. But other employers may see today’s softer tech job market as a chance to require more in-person work without risking too much turnover.

Last month, after numerous postponements, Amazon told remote employees they’ll need to be in-office at least three days a week starting May 1.

Stay or go?

Inevitably, the uncertainty and volatility of the new job market are leading to existential career questions.

Many workers who were laid off from tech appear ready to jump right back into it — including into Big Tech, once the broader sector recovers and hiring freezes thaw.

“I liked working in Big Tech,” says Eric, the former Amazon engineer. “You have an opportunity to work under great managers and that’s important to grow your career.” And, he adds, Big Tech pays — or paid — better, a not-inconsequential factor for many local tech workers. “Seattle is a very expensive city to live in.”

But some are done with tech. “Other industries were still actively hiring when tech was frozen across the board,” said a Seattle-area woman who’d spent years in tech, including Amazon, but moved to a transportation company after being laid off in October. Almost overnight, she said, tech had “a lot of uncertainty.”

Ricardo Viñas, who in November was laid off from his Seattle-based job as an information taxonomist for Meta, also wants less of that uncertainty.

Since his first job 11 years ago, Viñas says, “I’ve worked at three different companies. I’ve gone through five different mergers. I’ve had nine bosses. I’ve survived around eight rounds of layoffs.”

As glad as Viñas is for the work experience, he’s “willing to sacrifice the high-tech salary for something that is more stable,” he says.

“I’m very tired of going year after year concerned about a layoff.”