Consider a successful mid-sized American city. One with decades of population growth. Median household incomes on par with or exceeding New York City. A bustling port in a prime location. Bold civic architecture. A vibrant arts and cultural scene. And home to some of the world’s biggest and most valuable companies.
That could be Seattle. It also describes Cleveland about 75 years ago. In the 1950s, Cleveland was an epicenter for the era’s “Big Tech.” Industrial giants like Standard Oil, Westinghouse, Republic Steel, and Sherwin Williams were all founded in Cleveland. Like engineering outposts in Seattle, other leading companies including General Motors and U.S. Steel were well represented locally.
Yet Cleveland’s success unraveled remarkably quickly. Within 20 years, when the Cuyahoga River caught fire in 1969, the city was seared into history as “the mistake on the lake.” The population has declined by 60% since 1950 (and is still shrinking). Cleveland has gone from the seventh largest U.S. city in the country to the 56th. Median household incomes are now less than half the national average — and less than 40% of the Seattle area.
Today in Seattle tech circles there is great trepidation about the region’s next act. Seattle is not punching above its weight in the AI era the way we did in the software era. We might not even be punching our weight.
Entrepreneurs, executives, investors, and technologists are departing, either because they don’t think they can be competitive here in the white-hot AI market and/or are concerned about a deteriorating business environment. And the exodus appears to be accelerating.
You might take solace that our little corner of the country hosts two of the world’s five biggest companies (which is a little crazy). But it is easy to believe both Amazon and Microsoft are past peak employee count, as they become more capital-intensive and lean into AI-driven productivity. Other local tech companies and engineering centers are also shrinking, while new job listings have plummeted.
While the tech sector confronts existential dread, the political class in Seattle and Washington state seems oblivious. They don’t have much to say about creating jobs or nurturing industries of the future (or even of the present). Revenue is their focus above all else, with considerably less emphasis on how our taxes translate into efficient and effective provision of government services.
The traditional Seattle civic partnership between business and government has frayed. Few lessons have been learned from Boeing’s slow-motion migration out of the Seattle area (Washington is now home to just over a third of Boeing employees, and due to decrease further).
Relations between the tech industry and government are rocky, with the industry seen almost exclusively as a bottomless source of revenue. It would be shocking — but not surprising — to one day learn Amazon and/or Microsoft are moving their headquarters out of the state. (Bellevue already looks like Amazon’s HQ1 in all but name).
The tech boom has been an immense boon for Seattle, as the city attracted talent from all over the world. Seattle’s population has grown by almost 40% in the 21st century, and the City of Seattle rode that tailwind. The city’s inflation-adjusted budget grew over three times faster than the population over the same period.
That growth raises some obvious questions. Are city services three times better? How long can government spending keep outgrowing the population? What happens if population growth slows — or even reverses?
Meanwhile, city issues loom large in the desirability of doing business in Seattle. Downtown is barren, with record vacancies. Public safety, housing and homelessness are perennial hot topics, but progress is scarcer. After the recent election, we’re apparently going to take another shot at those persistent problems with progressive panaceas that have seen limited success, both locally and elsewhere.
Completely missing from any discussion is the crisis in our schools, where the majority of fourth and eighth graders in Seattle are not proficient in reading or math. Education is one of the most effective solutions to many social ailments — and a mandatory prerequisite for an advanced civilization — yet we’ve seemingly given up.
Which brings us back to Cleveland. When its fortunes began to shift, Cleveland’s politicians made a bad situation worse. A confrontational, short-term posture from government made it easy for companies to put Cleveland plants at the top of their closure lists. Contrast that with another Rust Belt city, Pittsburgh, where politicians and business worked together to accept and manage the inevitable transition. They defined the post-industrial playbook for cities — one Cleveland belatedly adopted.
Seattle has always been a lucky city. Prosperity has often come from unexpected sources. The Alaska gold rush was, quite literally, a gold rush. Bill #1 (Boeing) made Seattle synonymous with aerospace. Proximity to Alaska gave us a competitive container port, while rival ports like Portland and San Francisco dried up. Bill #2 (Gates) catalyzed a software industry in Seattle (and beyond). Jeff (Bezos) famously drove to Seattle in his Chevy Blazer, where he pioneered e-commerce and created a million and a half jobs along the way.
Maybe the luck holds and the next big thing just shows up. It could be space, energy, robotics, biotech or something unimaginable today. Hopefully we get lucky again, but hope, as they say, is not a strategy.
So I’ll offer a catchphrase as you think about Seattle’s next act: Don’t be Cleveland.
(I want to be very clear that I mean no offense to Cleveland. The people there today are still digging out of a hole created decades ago. Let’s learn from them and not repeat the errors of their forebears.)
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