Seattle’s tech scene got the national treatment this past weekend as the Wall Street Journal detailed the fallout from layoffs in a city heavily dependent on Microsoft and Amazon.
The story opens with a striking anecdote from a coffee shop near Microsoft’s headquarters that is seeing former tech workers apply for barista roles. It then details broader trends in the Seattle region — decreased retail spending in tech-heavy districts; restaurant closures; a cooling housing market; commercial real estate vacancies; and service businesses such as moving companies seeing slowdowns.
The story also highlighted weakness in payroll and sales tax revenue, contributing to Seattle’s projected $146 million budget deficit.
Amazon and Microsoft account for nearly 40% of the workforce in the Seattle area. And after years of growth, they are cutting jobs or curbing hiring.
- Redmond, Wash.-based Microsoft has cut more than 3,200 jobs in Washington state since May. Globally, the company has laid off more than 15,000 people in the same period.
- Amazon, which had significant layoffs in 2022-2023, continues to trim its workforce. Its Seattle headcount has fallen to about 50,000 in recent years, though it continues to expand in Bellevue, where it now employs roughly 14,000.
- Microsoft employed around 54,000 people in the Seattle region before this year’s cuts. Amazon has around 50,000 employees in Seattle and another 14,000 in Bellevue.
And while the AI boom may be a boon for their stock prices, it may slow hiring at both tech giants. Amazon CEO Andy Jassy wrote in June that he expects the corporate workforce to shrink in the next few years due to “efficiency gains from using AI extensively across the company.”
Here’s more from Wall Street Journal reporter Sebastian Herrera, via LinkedIn:
Of course, broader economic factors play a role in any local economy. And local and state politics are also important. But from the many sources we talked to for this story, the message was clear: This prominent tech hub that was largely built by Amazon and Microsoft is now on wobblier ground, and locals are feeling the impact. What’s happening in Seattle is a study of a tech-heavy economy transforming as many tech jobs disappear or are upended by AI.
The tech industry accounts for a whopping 30% of the economy in the Seattle region, according to a report from CompTIA. That ranks second in the U.S. behind San Jose. Tech also accounts for more than 12% of the overall workforce in the Seattle area.
Perhaps it signals a need to diversify Seattle’s economy beyond tech — an idea echoed by Seattle mayoral front-runner Katie Wilson in a recent interview with GeekWire.
Layoffs are also hitting the region’s startup ecosystem — Rec Room, Glowforge, and LevelTen Energy have all cut staff in recent months, as noted by GeekWire’s layoff tracker.
But perhaps all the layoffs and hiring pullbacks could lead to opportunity for entrepreneurship in Seattle.
The WSJ story ended with two examples of former tech workers who were laid off and launched their own endeavors.
Tech community leaders at a recent GeekWire party noted the hiring opportunities for startups amid layoffs at larger companies — a stronger talent pool, with less competition from tech giants. There is also potential for startup creation. “There are some great people being let out of these companies — which could mean more founders and first-time founders,” said Voyager Capital’s Erik Benson.
In our story last month — Can Seattle own the AI era? — investors and founders shared optimism for the city startup ecosystem, in part due to the density of engineering talent that’s crucial to building AI-native companies.
Meanwhile, venture capital funding to Pacific Northwest startups has nearly doubled through the first eight months of this year, compared to the same time period in 2024, according to GeekWire’s funding tracker.
So while old jobs vanish, new opportunities in AI could emerge — perhaps not at the same scale as a big tech hiring boom, but in a way that could redefine the Seattle region as a hub for startup creation.
