Gregoire says the Puget Sound can no longer assume major employers will automatically choose the region when they decide where to add jobs, invest or expand.
Former Washington Gov. Christine Gregoire says the evidence is clear that the region is losing financial advantages, and leaders need to also lose their complacency in order to reverse the trends.
“We have lost our competitive edge,” Gregoire, the CEO of Challenge Seattle, told KOMO News. “We have tremendous assets, but the warning signs are very, very clear.”
In an exclusive interview in advance of the Monday release of a new report, Gregoire says local elected leaders need to come together to advance a strategy to keep existing employers in the four-county region of King, Pierce, Snohomish and Kitsap counties.
Starbucks expects to create up to 2,000 support jobs over the next five years at a new $100 million Nashville office, including by moving some select teams from Seattle. Amazon, meanwhile, plans to leave another South Lake Union office when its lease expires next year. The companies’ decisions reflect different business strategies, and neither has said Washington taxes or regulations alone drove the moves. Starbucks has said Seattle will remain its global headquarters.
But Gregoire says the Puget Sound can no longer assume major employers will automatically choose the region when they decide where to add jobs, invest, or expand.
The new Challenge Seattle report says central Puget Sound lost nearly 7,000 jobs in 2025 while employment continued to grow nationally. The report says the decline followed two years of stagnant job growth and marks the first annual regional job loss outside a major recession or pandemic in at least two decades.
The report, Keeping Puget Sound Strong: A Regional Plan for Jobs and Opportunity, calls for the counties to address what it describes as mounting threats to the region’s competitiveness.
“It’s all about jobs. That’s what we need to be focused on,” Gregoire said in an interview. “And in order to do that, we’ve got to make us more affordable. We’ve got to make us much more competitive than what we currently are.”
The report says Washington’s overall business ranking fell from first to 11th between 2017 and 2025, while its cost of doing business ranking dropped from 32nd to 47th. It also points to Washington’s lowest in the nation five-year business survival rate, slower venture capital growth than peer regions, and a 5.2% unemployment rate in central Puget Sound, which is a little over a percentage point above the national rate.
Gregoire acknowledged that current Gov. Bob Ferguson is correct that some indicators remain positive, including Washington’s overall business ranking of 11th. But she said the long-term direction should concern business and political leaders. Gregoire was governor between 2005 and 2013, and that period included legislation to provide Boeing with significant tax breaks to keep jobs in Washington, which was later extended and enhanced under Gov. Jay Inslee.
“A decade ago, we were number one,” she said. “But the warning signs cannot be denied when the business climate is ranked as it is, when the corporate taxes are what they are, when the regulation stacking is what it is.”
The report argues the problem is not one tax, one rule, or one local policy. Instead, it cites the cumulative effect of higher costs, new regulations, housing and child care affordability pressures, and what it calls a weakening culture of partnership between government and employers.
It says state and local business taxes have risen sharply since 2020, while state rulemaking has increased too. The report claims "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."
Gregoire said businesses need to be able to plan.
“They make decisions based on: can we expect what is going to happen tomorrow in our place where we are right now?” she said. “If we can’t, then they look hard at, should we stay, should we expand here, or go elsewhere?”
Starbucks has said its Nashville location will complement the Seattle headquarters. The company said most support teams will remain in Seattle, but some teams will move as Starbucks seeks to be closer to suppliers, a growing talent pool, and future store growth in the South and East. But reportedly, some of the layoffs were connected to employees who refused to make the move to Nashville.
Amazon is planning to vacate an 81,000-square-foot office when its lease ends in March 2027, part of a broader effort to reduce leased space in Seattle.
Last week, WaFd Bank announced it will merge with Jacksonville, Florida-based EverBank, with tens of billions of dollars in assets. Quietly, the longtime Washington company also announced that its holding company will relocate offices from Seattle to Bellevue. “WaFd Bank has opportunities every day to, if we wanted, to move headquarters to another state, like people have done, to Nevada or Idaho or other places that you hear people are moving businesses. Again, Washington State’s been very good to us. It’s been home nearly 110 years. We’re not going to give up on Washington. We are going to open an office in Bellevue for the holding company. Bellevue is booming, Seattle struggling still a bit,” explained WaFd Senior Vice President Brad Goode. He added that customers will not see any immediate impacts, and on-site banking services that have been the company’s strength for decades will stay in place. “We have another team that we’re joining forces with that happens to be based in Florida. I’m sure we’ll be keeping an even stronger, more focused eye on what happens in Olympia, what happens in Seattle, as we should, to run the bank properly.”
Microsoft President Brad Smith stood next to Gregoire during the nearly 45-minute press conference and seemed to draw a line in the sand about new taxes and a new statewide payroll tax. That idea was first floated during the last session.
“If Washington State passed a payroll tax, it would be like waving a flag asking businesses to move jobs out of the state as fast as possible. Yeah, it’s like a tax tailor-made for the 1920s, not the 2020s,” said Smith in an interview. “If there were ever a payroll tax enacted in Washington State, that’s the day that we would have to start looking hard at moving jobs to other places. It would just not make economic sense any longer. Other states are offering tax incentives to move jobs. Why would you stay in a place that increases the tax to keep them here?”
State Sen. Jamie Pedersen, who stood next to Smith during the press conference, was asked about a payroll tax and said if voters upheld the Millionaires Income Tax this year, the issue would likely vanish in Olympia.
Seattle Mayor Katie Wilson was not present for the Gregoire announcement but did give a speech to kick off a forum involving other local mayors. Afterward, she responded to the report, noting, “We are at a really fragile moment. I think we all recognize that.” But when asked if she would float an extension of the JumpStart payroll tax in her proposed budget, Wilson avoided a direct answer. “There are multiple factors that businesses consider when they think about where to locate, and taxes are certainly one of those. That’s certainly a consideration that I’m taking seriously as I put together my budget that we’ll be releasing next week,” she said. “I’m not going to scoop my own budget announcement, but I’ll say that, you know, we are in a very challenging environment where we have a very large budget shortfall, and I am taking very seriously the need to be economically competitive.”
King County Executive Girmay Zahilay was present during the announcement and was asked about it after the presentation. “I’m worried about a lot of stuff. I’m worried about our workforce and the displacement caused by AI. I’m worried about the competitiveness of this region in terms of attracting investment. I’m worried about so many things, and I think the antidote to that worry is strong collaboration,” he said, while noting a payroll tax is not on the table because “King County doesn’t have the authority to do any of those kinds of taxes. We’re often stuck between a rock and a hard place. Do we fund the priorities that we want to fund that are critical, or do we avoid raising property taxes and sales taxes? Unfortunately, we already have, I believe, the highest sales tax in the country.”
The Challenge Seattle plan calls for 20 near-term recommendations, including business concierge services in cities and counties, a simpler and more predictable tax structure, economic impact analyses for major tax and regulatory proposals, regular reviews of existing rules and clearer permitting timelines. It also calls for stronger workforce partnerships involving the University of Washington and regional colleges, along with strategies to support technology, aerospace, defense, maritime industries, clean energy and commercial fusion.
Challenge Seattle and its members say they will invest $1 million in Greater Seattle Partners to help implement the plan and publicly track whether the region is making progress. Gregoire said the partnership is intended to ensure the document does not become another report that sits on a shelf.
“We’re going to transparently tell the public we are or are not making the progress that we need to make to have the kinds of jobs and the kind of future that Puget Sound and its residents deserve,” she said.
Gregoire also tied the economic development effort to public safety, saying Seattle’s challenges affect the entire region.
The report came not long after Challenge Seattle and multiple business leaders pushed Seattle Mayor Katie Wilson to address public safety concerns. It also notes that the police department staffing related to other major American cities is an issue: "Seattle has one of the lowest levels of sworn police staffing among major U.S. cities, with approximately 40% fewer officers per resident than Denver, 43% fewer than San Francisco, and 58% fewer than Boston," the report claims.
“We need to up our game, stop taking everything for granted, and realize we’ve got a real problem,” said Gregoire. “We’ve got to do it now.”
