The Seattle-area economy punches above its weight — and that’s a huge strength

Newcomers — and there are many — might think that the Puget Sound region’s economy is so hot because of two Big Tech headquarters, along with the “legacy” power of Boeing.

It’s understandable. Amazon and Microsoft are two of the five giants that make up America’s technology royalty (Apple, Facebook and Google are in the Bay Area). We’re on the cutting edge of software, cloud computing, artificial intelligence and so much more.

Boeing’s operations, especially commercial airliners, anchor one of the world’s top aerospace clusters (the other being Airbus in Toulouse, France). The company is not only the nation’s largest manufacturing exporter, but also, especially with its defense divisions, a strategic asset.

Together, the three employ about 166,000 here in well-paid, high-skilled jobs. Boeing is Washington’s largest private employer, with a workforce of 69,830 as of February.

It’s hard to think of another similar-sized metropolitan area in the United States with anything close.

But this is only a start in explaining why Seattle-Tacoma-Bellevue enjoys one of the strongest economies in the nation. How strong? Per capita gross domestic product, adjusted for inflation, was nearly $81,000 in 2017. That compares with $61,000 in San Diego and $63,000 in Minneapolis-St. Paul. Larger Phoenix lagged in at $45,000.

Median household income in King County was $83,571 in 2017, far above the national average of $57,652.

This makes for more expensive housing, yes. But the same economy provides the taxes and philanthropy for an extremely generous social-safety net by American standards. It ensures wider opportunity and ladders up than in most metros.

Here, briefly, are the other reasons the Seattle-area punches well above its weight:

Bay Area North: Seattle offers the city amenities and nearby natural beauty prized by in-demand tech talent — but at a lower cost than San Francisco or Silicon Valley. That’s why the area has attracted high-end operations with thousands of good jobs from Google, Facebook, Apple, Salesforce and others.

Concentration: South Lake Union is a model of the urban-innovation district, with dozens of tech companies and research operations. The phenomenon has spread into downtown Seattle and, soon with light rail, will expand in Bellevue. These offer “creative friction,” where people can easily share ideas and get inspiration. They’re also much greener and efficient than automobile-dependent office “parks.”

(Other) Fortune 500 headquarters. Don’t forget Alaska Air Group, Costco, Expedia, Expeditors International, Nordstrom, truck-maker Paccar, Starbucks and Weyerhaeuser. And “the other guys” (not all in the 500 or even public) including Cray, Eddie Bauer, F5 Networks, REI, T-Mobile, Zillow and many more.

All these big companies support hundreds of small vendors and professional-services firms.

Health. The University of Washington won $1.3 billion in research grants in 2018, including hundreds of millions from the federal National Institutes of Health. The Fred Hutchinson Cancer Research Center, Seattle Cancer Care Alliance and Allen Institute for Brain Science are also leading research organizations. The big dog in world health activities is the Bill & Melinda Gates Foundation.

Maritime. Seattle and Tacoma boast natural deep-water ports, now united in the Northwest Seaport Alliance. It is the North America’s fourth-largest gateway for container shipping.

The larger maritime sector ranges from the cruise industry and the fishing fleet to ship and boat building and maintenance. This is also a key link in the Alaska-Seattle economic connection.

Military. Seattle’s peacenik reputation notwithstanding, the region has the second-largest military concentration on the West Coast, after San Diego. Naval Base Kitsap includes the Puget Sound Naval Shipyard. With 53,000 service members and civilians, Joint Base Lewis-McChord is Pierce County’s largest employer. More than $15 billion in defense dollars were spent here in fiscal 2017, sixth among the states.

Trade. Washington is the nation’s most trade-dependent state, and most of that funnels through the Seattle metro area. Total merchandise exports were nearly $78 billion last year, with China as our largest trading partner. Trade supports 921,000 jobs. This gives Seattle a valuable outward-looking attitude in a globalized economy.

Transportation and logistics. Seattle and Tacoma are major terminals for the BNSF and Union Pacific Railroads, as well as numerous trucking lines. Large warehouses are ubiquitous in the Kent Valley (too much so now for local officials), but also in Pierce County and other parts of the metro area. They sort, store and move merchandise from the world to the nation (or your doorstep).

Tourism. More than 40 million visitors came to Seattle and King County last year. According to Visit Seattle, the marketing organization, tourism accounted for $7.8 billion in the city and county in 2018, up 5.8% from the previous year. They paid $806 million in state and local taxes last year and supported 78,400 jobs.

Universities. Institutions of higher education are economic engines for talent and research. Chief among them is the University of Washington.

Venture capital and startups. The metro area continues to show strong performance in raising the money to begin and grow companies. It birthed a unicorn last month — a firm with a valuation of $1 billion or more — with Outreach, a Seattle sales-automation startup. These firms benefit from executive talent nurtured by the region’s large tech companies.

You can see how many of these elements feed off each other, making for a remarkably strong, resilient and diverse economy. And I’m sure I missed some things.

Other places I’ve worked had easy shorthand for their economies. Charlotte: banks. Denver: The business center of the West. Phoenix: tourism and housing. Cincinnati: Procter & Gamble. San Diego: tourism, some research and the Navy. Houston: oil.

Seattle is different. It defies easy generalizations, and that’s a remarkable strength. No wonder we lead in the competition for two coveted elements that can go anywhere: talent and capital.

This took generations to build and still can’t be taken for granted. But if you’re new to town and can’t easily get your arms around the place, this is a big reason why.