Is there a local tech jobs squeeze? While recent news has covered large layoffs at Seattle-area technology companies, optimism remains in some sectors, including in the local startup scene.
Lest we see this as a Seattle-only phenomenon, tech companies everywhere have experienced significant layoffs recently. According to layoffs.fyi, numerous companies, from Alphabet Inc. to Unity, have laid off 1,000 or more people since the start of the year. In Seattle, that number is at over 2,100 positions. According to Jeff Shulman, a professor at UW’s Foster School of Business, “The layoffs seem to be helping their stock prices, so these companies see no reason to stop.”
Amazon ended the fourth quarter of 2023 with 1% fewer employees than a year prior, sitting well below the peak of its workforce, which was at 1.6 million employees two years ago. All told, the company cut 27,000 jobs in 2023 across its entire footprint. Brian Olsavsky, Amazon’s CFO, commented that the company plans to hold the line on job growth to drive efficiencies. The approach “creates positive leverage pretty quickly, especially versus the headcount growth [Amazon] had seen in prior year.”
Adding to the layoff landscape, Microsoft was also in the news recently for letting go of 9% of its gaming-related staff, or nearly 2,000 jobs. This followed the company’s largest acquisition ever – $69 billion for Activision Blizzard – and impacted employees working across the Activision Blizzard, ZeniMax and Xbox teams. Beyond the gaming staff, Microsoft laid off more than 16,000 jobs in the first nine months of 2023, far exceeding the 10,000 they estimated in January of that year.
And yet, a recent panel discussion of potential tech investors at Bellevue City Hall called for optimism for startups even amidst tech layoffs. Despite layoffs, there is huge potential in the talent that has been locked up in larger companies, particularly in our region, says Marius Ciocirlan of Techstars Seattle. Additionally, younger startups needn’t worry as much about interest rates or broader public market forces as the later-stage companies do. Panelist Carly Kiser of J.P. Morgan pointed to Airbnb, Stripe and Uber, which all started after a financial crisis and were forced to be durable and innovative from the start. The overall message: For startups to successfully ride out this era, they’ll need to rely on actual revenue for growth, versus just investor cash. This may make their employment growth more sustainable.
Despite the recent tech sector belt-tightening, private sector wage gains in 2023 were higher than the previous year. According to the U.S. Bureau of Labor Statistics, compensation costs increased 3.8 percent in the Seattle-Tacoma area last year, after a 3.2-percent increase the year prior. Local wages and salaries rose at a 4.3-percent pace for the year ending December 2023.
This post was based on information found on Puget Sound Business Journal, GeekWire and the U.S. Department of Labor Statistics.
