Microsoft’s announcement today of 5,000 job cuts – many of them layoffs here in the Puget Sound Region – will send waves of Fear Uncertainty and Doubt (FUD) throughout the Region and the Industry. While Microsoft sneezes, Government here will catch a cold.
In a word (or three): Uncool. UnMicrosoft. Un-Seattle-like.
Microsoft – like the stock market – always expands, doesn’t it? Microsoft dominates any endeavor it undertakes. Web browser leaders Netscape and Mozilla fall to Internet Explorer. VisiCalc and Lotus 1-2-3 wither away in front of Excel. WordPerfect evaporates in favor of Word. Personal computers running Windows – in a very real sense – transformed the very landscape of American society.
In terms of people this is a real psychological shift. Microsoft is THE place to work here in the Seattle area. Young employees, exciting projects, bright futures. Spin-off, start-up and creative companies in our Region bask (almost literally) in the glow of the Microsoft sun. Microsoft Research attracts Ph.D.’s and smart people from around the Globe. But not even Microsoft Research is immune to the cuts.
For local government, tax revenues will plunge further as consumers and businesses rein in their discretionary spending.
We have a regressive tax system, heavily dependent upon sales and property taxes, with no State or City income taxes. While the real amount of money and wages flowing into the Region may not change much as a result of these layoffs, the psychological effects will hurt government.
As people in the region see that even Microsoft is not immune to the present economic troubles, they will rein in their consumer spending. “If it can happen in Redmond, it can happen to me.” Property values (and therefore taxes) have suffered a bit here, but not as badly as elsewhere. Those values will drop a more because of this. People will be less willing to buy, more willing to sell.
Right now – today – Washington State has a $6 billion two-year budget deficit and King County an $80 million one. The City of Seattle’s general fund budget was basically unchanged – $920 million in 2009 compared to $926 million in 2008. (See page 13 of the budget document here. )
But every one of these government budgets will need re-evaluation in the months to come.
I’m convinced that Microsoft’s dominance will continue. The personal computer, Windows servers, netbooks running XP, Windows mobile devices will continue to dominate the industry. (Well, they could drop the Zune just like they dropped floppy disks!)
Computing hardware will continue to get faster and require more powerful and functional software from Microsoft. Technology innovation will continue and Microsoft will be in the forefront. The bloom is off the Rose, but the Rosebush in Redmond still lives and will blossom again.
Until that re-blossoming, however, the effects will be keenly felt here in Seattle.