The central Puget Sound region lost nearly 7,000 jobs in 2025 following two years of stagnant growth, marking the first annual regional job loss outside a major recession or pandemic in two decades as business leaders warn the area is losing its competitive edge.
Washington state has seen a notable shift in its economic standing, dropping from first to eleventh in overall business rankings between 2017 and 2025. According to a new business report from Challenge Seattle, an alliance of 23 organizations representing some of the city’s largest employers, the region’s cost-of-doing-business ranking fell further, sliding from thirty-second to forty-seventh place.
The Anatomy of Regional Job Losses and Declining Rankings
The central Puget Sound area—encompassing King, Pierce, Snohomish, and Kitsap counties—shed employment while employment continued to grow nationally. The central Puget Sound unemployment rate settled at 5.2 percent, sitting a little over a percentage point above the national rate. At the same time, the state recorded the lowest five-year business survival rate in the country alongside slower venture capital growth than peer regions.
"We have lost our competitive edge," Challenge Seattle CEO and former Washington Governor Christine Gregoire told KOMO News in an exclusive interview in advance of the Monday release of the report, titled Keeping Puget Sound Strong: A Regional Plan for Jobs and Opportunity. "We have tremendous assets, but the warning signs are very, very clear."
Gregoire acknowledged that current Gov. Bob Ferguson is correct that some indicators remain positive, including Washington’s overall business ranking of eleventh. However, she emphasized that the long-term direction should concern both business and political leaders who can no longer rely on major employers automatically choosing the region when they decide where to add jobs, invest, or expand. Gregoire was governor between 2005 and 2013, a period that included legislation to provide Boeing with significant tax breaks to keep jobs in Washington, which was later extended and enhanced under Gov. Jay Inslee.
Corporate Shifts: Starbucks, Amazon, and WaFd Bank
High-profile corporate movements underscore the changing regional landscape. Starbucks expects to create up to 2,000 support jobs over the next five years at a new $100 million Nashville office, which includes moving some select teams from Seattle. The company has maintained that Seattle will remain its global headquarters and that the Nashville location will complement operations by placing teams closer to suppliers, a growing talent pool, and future store growth in the South and East, though reports indicated some layoffs were connected to employees who refused to make the move. Meanwhile, Amazon plans to vacate an 81,000-square-foot office in South Lake Union when its lease expires in March 2027 as part of a broader effort to reduce leased space in Seattle.
Neither company has stated that Washington taxes or regulations alone drove their decisions, reflecting varied corporate strategies. Yet local financial institutions are also shifting operations. WaFd Bank announced a merger with Jacksonville, Florida-based EverBank, with tens of billions of dollars in assets, and quietly revealed that its holding company will relocate offices from Seattle to Bellevue.
Regulatory Stacking and Rising Compliance Costs
The Challenge Seattle report argues that the region’s struggles stem from the cumulative effect of higher operating expenses, housing and childcare affordability pressures, and unpredictable policies rather than any single tax or rule. State and local business taxes have climbed sharply since 2020 alongside an increase in state rulemaking.
“State agencies adopted approximately 71 percent more regulations last year than in 2015. Washington is now the eighth most regulated state in the country with more than 200,000 state regulations on the books.”
Challenge Seattle, Keeping Puget Sound Strong: A Regional Plan for Jobs and Opportunity
Operating and compliance costs have expanded alongside faster-paced tax changes that make it harder to plan, invest, and make long-term decisions. Employers and residents report that the region has become too difficult to build, too expensive to operate, too unpredictable to plan, and too unaffordable for workers and families.
A Shared Regional Strategy for Economic Recovery
To reverse these trends, the plan outlines several recommendations for local counties and cities, urging each county to work together to have a unified voice and economic vision. Proposals include establishing business concierge services in every city, developing a fairer and more predictable tax strategy, establishing clear permit timelines, working with local colleges to build a stronger talent pipeline, and scaling the Puget Sound commercial space ecosystem.
"It is not a city, county, or state economic plan, but a shared plan for our entire region," Gregoire stated, adding that some recommendations can be launched within weeks or months, and all can begin or make meaningful progress within three years.
The report’s release follows a letter sent less than a week prior by 35 major players in Seattle’s business community—many of whom are part of Challenge Seattle—urging Seattle Mayor Katie Wilson and the Seattle City Council to take action on public safety. Whether local leaders across the four counties can unite around a single economic vision within the three-year window outlined by the alliance remains central to the region’s trajectory.
