First Cuts the Deepest?

Economists will argue whether unemployment is really a good indicator of a region’s economic health. Some say, because of how it’s measured, you really can’t put too much stock in how many people are out of work at any given moment.

Whether that’s true or not, nothing grabs headlines, or makes people feel uneasy, quite as quickly as layoffs – and the last two weeks have been a veritable layoff-a-palooza in the Northwest. Microsoft is letting 5,000 people go, Starbucks is cutting 6,700 jobs, including more than 300 from the corporate offices in Seattle, and this week, Boeing revised its layoff estimate from 4,500 to upwards of 10,000 -- 6% of its work force. At a press conference, Boeing Chairman Jim McNerney called this “one of the most difficult commercial and financial environments that most of us have ever seen."

Now, some might argue, as Seattle Times Columnist Joni Balter pointed out during the Roundtable on the last episode of KCTS 9 Connects, that layoffs for big companies such as Starbucks, Microsoft and Boeing aren’t necessarily a monumental deal. Successful companies grow and shrink from time to time, and don’t they have to respond to the economic downturn too? Others see these cuts by our region’s corporate giants as a sign that the recession has finally come to roost in the Pac Northwest.

Cat Stevens famously wrote, in a song covered by Sheryl Crow recently, that “the first cut is the deepest.” But if you’ve ever watched an episode of Law & Order or CSI, you’ve probably seen them refer to something called “hesitation wounds.” That’s where, in a stabbing case, the presumably novice killer makes several small, tentative stabs before being able to plunge the knife to the hilt.

The question I have is: are these layoffs by Microsoft, Starbucks and Boeing the first & deepest cuts, or are they hesitation wounds? We hope to answer that question on tonight’s episode of KCTS 9 Connects. We’ll be talking with noted local economist Dick Conway about the impact of all the recent local layoffs, if he sees a bottom, and to give us some (hopefully optimistic) advice about what the future holds for our region.

In the meantime, the layoffs remind me of a quote I once read:

“The best way to appreciate your job is to imagine yourself without one.” Oscar Wilde

By the way, for a great article about the reliability of unemployment as a useful economic statistic, check out this article by former Treasury Secretary and newly appointed Chairman of the National Economic Council Lawrence Summers.