The impact of Washington Mutual's massive layoffs has been felt in the surrounding downtown Seattle business community, emotionally as well as financially.
Laser-printed photos of their children smile above the cash register, the only reminders James Pak has of the former Washington Mutual workers he used to call regulars. From his spot behind the counter of Melange Market, he used to gaze across the intersection of Second Avenue and University Street and see lunchtime crowds streaming from the lobby doors of WaMu Center, a stone’s throw away.
“Now there’s hardly anybody,” he said. “Foot traffic is just dead. There are no people.”
Much of his clientele has dissipated in the wake of massive layoffs after the failed bank’s acquisition by JPMorgan Chase.
Pak’s revenue, as with others in the neighborhood, has taken a hit: Businesses report up to 30 percent drops, with some cutting back work hours or reassigning employees elsewhere to adjust.
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But the impact has been felt emotionally as well as financially.
David Narazaki, who manages Caffe Ladro on Union Street, just north of WaMu Center, knows the power of relationships formed in a minute’s worth of contact poured daily over the course of a year.
“My object is to have a person walk in as a customer and leave as a friend,” Narazaki said. “… With WaMu, many of my friends have lost their jobs.”
Washington Mutual last fall became the biggest bank to fail in U.S. history when federal regulators seized the 119-year-old company. Once the nation’s largest thrift, the Seattle-based bank forged its demise on a foundation of shaky loans, cut down by the collapsed market for mortgage-backed securities.
In December, JPMorgan Chase announced it would lay off more than 9,000 at WaMu operations nationwide, including 3,400 at WaMu’s former headquarters. Workers at the recently completed 940,000-square-foot headquarters on Second Avenue, with the Seattle Art Museum at its feet — have been dismissed in periodic waves that will continue through this year.
While the shocks were felt nationwide, the layoffs have unleashed ripples felt in a more intimate way in the neighborhood around the center, bordered by First and Second avenues and Union and University streets.
“It’s a sad thing”
For local businesses, it means the loss of friendly faces and a clientele it had come to rely on.
For James Pak, among other things, it means making a lot fewer breakfast parfaits.
From his base at the bottom of WaMu Tower, on the opposite corner from the 42-story WaMu Center, he used to watch WaMu workers spill off buses in the mornings and stop in for coffee before crossing the street for work. “Even though they had their own cafeteria,” he said, “a lot of them would come here.”
Now many are gone, and the stories he’s heard have been varied, heartbreaking and all too familiar in a faltering economy. The married couple that found themselves both unemployed. The former WaMu auditor, unwilling or unable to test the local job market, who transferred to a JPMorgan Chase job in Ohio while his wife stayed behind to let their children finish the school year. And the man who was downsized and forced to postpone his wedding.
One young woman told him she was taking her severance and leaving for Australia. Another was headed for Canada.
Said Pak: “It’s a sad thing.”
At Caffe Ladro, Danielle Soncrant is the kind of barista who knows her regulars even before they become regulars. She sees two young guys walk in the front door and has their coffees ready before they reach the register. It’s all the more impressive considering there’s no longer much of a wait.
“Every single one of our customers mentions it,” Soncrant said. “It’s, like, ‘Where’s the line?’ “
On weekday mornings, she’s now alone on a shift that once required three staffers. WaMu no longer represents the bulk of the cafe’s business, and many of those employees who remain have cut discretionary expenses, such as coffee, knowing their days at JPMorgan Chase are numbered.
“We’ll see them once a week instead of twice a day,” Soncrant said. “That’s a big difference. It’s not just a hit. It’s exponential. You’re not just wiping out a customer; you’re wiping out repeat customers.”
WaMu isn’t the only firm to lay off downtown employees, but it’s by far the biggest. The bank once employed more than 4,000 people at WaMu Center and about 6,000 statewide.
With the first round of layoffs, the number of WaMu Center employees plummeted to about 2,000. The total climbed back to nearly 2,600 as staffers transferred in from outlying offices and from WaMu Tower, among several downtown buildings where the bank leased space.
But it’s likely to fall again as cuts continue throughout the year, said spokeswoman Darcy Donahoe-Wilmot.
Seattle economist Dick Conway says that, in the absence of an actual study, he estimates the “multiplier effect” of the WaMu layoffs at about 2.5, meaning the cuts actually could translate to about 8,500 job losses in the greater economy.
That would make WaMu responsible for about one-eighth of the nearly 68,000 jobs projected to be lost in the region by early 2010, according to his publication, The Puget Sound Economic Forecaster.
Inside WaMu Center, past the big revolving doors, one of the largest Starbucks stores in North America is just off the shiny main lobby, a flashy 26-stair climb to second-floor level.
Before the layoffs, one barista said, eight workers staffed the morning shift. Now there are four.
Lines that once extended down to the lobby now tap out at the top of the stairs.
A block east on Third Avenue, business at Epicenter Fitness is fueled by nearby corporate employees working out on their lunch hours.
But after the most recent wave of WaMu layoffs in February, general manager Don Pak (no relation to James) says four to six people each day came in to cancel their memberships.
While the gym has added new clients to make up the difference, the losses have been painful, especially for those who had longtime personal trainers.
“You see a lot of emotional attachment,” Pak said. “It’s like losing a friend.”
Some former clients sent heartbreaking, apologetic e-mails saying they regretted canceling but they now struggled to take care of their families. “For them to say something like that to a total stranger. … It just saddens you,” Pak said.
Meanwhile, the weekday lunch crowd is sometimes half what it used to be at Ipanema Brazilian Grill. Specialty’s Bakery & Cafe on Third Avenue receives fewer and fewer calls for sandwiches and salads at catered business meetings. And local workers say they no longer have to drive to the top of the Macy’s parking garage to find daily parking.
In recent months, departing WaMu staffers have held pink-slip parties at The Triple Door and said their goodbyes to familiar cashiers at nearby places such as Rex’s Cafe and Deli, Caffe Stella or Cherry Street Coffee House.
“That was pretty much half our lunch business,” said Veronica Aristeo, who works the front desk at The Brooklyn Seafood, Steak & Oyster House on Second. “This time of year is always bad, but you throw in the recession and WaMu. We’re still surviving but we’re feeling the heat.”
This is the first time revenue hasn’t met projections in the 18 years James Pak has been in the grocery business, and he attributes much of it to the layoffs. He now spends more time in his Melange Market office, combing through account books and looking for ways to cut costs.
He found he could save $800 per quarter by switching dumbwaiter-maintenance companies. Several employees volunteered to take days off, while his wife, who once worked for the business full time, is clocking only three hours a day. And rather than order goods online like they used to, the Paks are shopping in person at Cash & Carry.
“My business will eventually come back up,” Pak said. “The economy cannot go down forever.”
Marc Ramirez: 206-464-8102 or firstname.lastname@example.org