Microsoft Drove Early ‘90s Growth Study Says Microsoft Saved King County From Recession

While Boeing was cutting back in the early 1990s, Microsoft Corp. was steaming along, making it the single largest contributor to Washington’s economic growth in the first half of the decade, a new study says.

Through salaries, stock options, construction spending and jobs in support industries, Microsoft pumped so much money into the state economy over the last five years that it saved King County from recession and supported 66,140 jobs, the study released Thursday concludes.

“The economic impact is interesting,” said Seattle economist Dick Conway, who conducted the study for Microsoft. “Relative to the size of the company, it’s as large as you’re going to find.”

Microsoft employed 9,940 workers in Washington when the study was conducted in 1995. It now has about 11,000 in the state and more than 18,000 worldwide.

The average Microsoft employee earns $58,860 a year, and Microsoft employees in Washington earned $585.1 million in wages, salaries and nonwage benefits in 1995, Conway found. Those salaries are comparable to the average salary and benefits at Boeing, but twice the state standard.

But in addition to that pay and benefits, Microsoft employees cashed in on $793.3 million in stock options in 1995 - not counting the stock sold by Chairman Bill Gates, who owns about 25 percent of the company. So, including exercised stock options, the average employee at Microsoft last year earned $138,270, Conway said.

“We’re pleased to be a part of Washington’s economic success, and we’re even more pleased to be part of this community,” said Bob Herbold, Microsoft’s chief operating officer.

“Despite all the success we’ve had, we’re not resting on our laurels. We are continuing to invest in research and development, which keeps us competitive and creates more jobs here in Washington state.”

Conway said Microsoft asked him to do the study after he released a similar study on Boeing in 1990.

“They’re just curious,” Conway said. “They know they play a role in the economy. They want to quantify it.”

Conway’s Boeing study found the state was heavily dependent on the aircraft manufacturer. Boeing is still Washington’s largest private employer, with 85,000 workers, and one out of every five jobs in the state is dependent on Boeing, Conway said.

Microsoft “is no Boeing,” Conway said. “But it has provided a lot of clout in single years.”

During the early 1990s, while Microsoft was booming from the widespread adoption of its Windows computer operating system and applications software, Boeing was cutting back on production and employment because of a global recession and effects of the Gulf War.

In 1995, Microsoft spent $195 million on construction. The wages from its 9,940 state workers supported 33,590 other jobs and created $1.8 billion in personal income. “The multiplier is higher than that found in most industries, including aerospace, because Microsoft in effect pumps more money per employee into the state economy,” he said.

Adding the effect of new building construction and exercised stock options, Microsoft has supported 66,140 jobs in the state and created $3.5 billion in personal income, Conway said.

The company bought $667.7 million worth of goods and services from Washington suppliers last year, and directly and indirectly generated $216.8 million in state and local taxes.

In King County, the company supported 30,400 jobs, or 2.5 percent of the county’s total employment, and generated $45.8 million in county taxes.

Conway said Microsoft has helped diversify the region’s economy away from aerospace and forest products, helping keep the Seattle area out of the recession felt elsewhere in the country.