Lots of Green Left in the Emerald City
By Stanley Holmes
For two decades, Seattle has beckoned, like Shangri-La, for people and businesses across the country. Heck, even Californians flocked to the misty, green city seeking affordable homes, a beautiful view, and a livable urban center. The influx, coupled with the growth of such New Economy icons as Microsoft and Amazon.com, turned Seattle into one of the most prosperous regions in the U.S.
Lately, though, the Emerald City has lost its luster. The most recent blow came in mid-March, when Boeing -- a company as identified with Seattle as salmon -- said it plans to move its corporate headquarters to Chicago, Denver, or Dallas ( click here for a video interview with Boeing CEO Philip Condit). The surprise announcement came on the heels of an earthquake measuring 6.8 on the Richter scale, racially tinged Mardi Gras mayhem, and anti-World Trade Organization riots in December, 1999.
On the economic front, the markets have pounded Microsoft, Amazon, and scores of dot-com startups, obliterating billions in paper wealth. Even Nordstrom, the tony retailer that seemed to define Northwest attentiveness, is struggling to regain its financial footing. "We're feeling a bit like an urban Job. What's next? Boils? A plague of locusts?" says Seattle historian Walt Crowley, who runs a Web site called historylink.org.
NO SIGNS OF SICKNESS.
But before cynics push Seattle out to sea, let's all get a grip. Sure, the city's ego is bruised. But Seattle still ranks far above the national average in both job growth and personal wealth. The regional economy is blessed with a sector-by-sector diversity that most states would kill for. From 1998 to 2000, for example, the Puget Sound economy absorbed the loss of 25,000 Boeing jobs, while employment still grew at nearly 2% a year. The metro area's jobless rate actually dropped by 1% this year, leaving it at a healthy 3.9%.
A close look at the numbers shows no sign of economic ills. Not since 1982 has the region plunged into a recession. That's nearly 19 years of consecutive economic growth and more than 1 million new jobs. This growth train kept chugging even during two sizable Boeing layoffs in the early and late 1990s. Software companies, biotech outfits, dot-com startups, nationally prominent retail chains, new building and housing construction, and a strong services industry all helped to soften the state's dependence on all things Boeing.
Result: Only 2.5% of the state's eligible workforce is employed at Boeing today vs. more than 10% in 1968. "Clearly, the economy has diversified over the years, and that's why it expanded during Boeing's job reductions," says Chang Mook Sohn, the state's chief economic forecaster.
Heck, even Bill Gates & Co. -- the colossus of nearby Redmond that has been the great white whale for trustbusters -- is still going strong. Just last year, Microsoft hired 4,200 people, and it expects to add 2,100 new jobs this year, about half of them in the Puget Sound region. Despite the dot-com layoffs and weakness in the technology sector, the Seattle area added a total of 10,800 new computer-technology jobs over the past 12 months.
And Boeing's decision to move 500 executive positions out of 1,000 to new corporate headquarters is negligible. It represents only 1.3% of Boeing's 78,000 statewide jobs and a tiny fraction of the Puget Sound region's 1.7 million jobs, economists say. So, when Governor Gary Locke boasts that his state's economy is still "very, very strong and well poised to take advantage of the new global high-tech economy," the numbers back him up.
Yes, economic trouble could break out. A U.S. recession, rising energy prices, and a continued shakeout of the high-tech sector could reverse the momentum in a heartbeat. Seattle economist Dick Conway estimates that the region could lose $4.5 billion in potential stock-option income from 2000 to 2002 if the market stays where it is. And if Boeing were to relocate its manufacturing operations outside the state, not just its headquarters, life would get considerably grimmer.
But don't bet on it -- and even if Boeing moves its entire HQ elsewhere, its manufacturing activities aren't going away anytime soon. The bloom may be off the rose, and the city may be looking a bit more like paradise lost these days. But Seattle still remains a gleaming New Economy city.
Holmes covers Seattle-area companies for BusinessWeek
Edited by Douglas Harbrecht