The central Puget Sound region lost nearly 7,000 jobs in 2025, marking the first annual regional job loss outside a major recession or pandemic in at least two decades, according to a report by Challenge Seattle. The alliance of 23 organizations representing some of the city’s largest employers highlighted the decline as part of a broader trend of waning competitiveness, with Washington’s overall business ranking falling from first to 11th since 2017. The report, titled Keeping Puget Sound Strong: A Regional Plan for Jobs and Opportunity, attributes the job loss to rising costs, unpredictable tax policies, and a less welcoming business environment.
Puget Sound Loses Nearly 7,000 Jobs in 2025, Report Warns of Economic Decline
Challenge Seattle CEO Christine Gregoire, a former Washington governor, emphasized the urgency of the situation, stating, The warning signs are clear.
She noted that Puget Sound’s job growth has trailed the nation for the first time in two decades and that the region’s cost-of-doing-business ranking has dropped from 32nd to 47th. Employers and residents, she said, face too difficult to build, too expensive to operate, too unpredictable to plan, and too unaffordable for workers and families.
Factors Driving the Economic Shift
The report identifies several key drivers of the decline, including faster-paced tax changes that hinder long-term planning, rising operating and compliance costs, and the high expense of housing and childcare. Washington also has the lowest five-year business survival rate of any state, according to the analysis. Gregoire cited the cumulative effect of higher costs, new regulations, housing and child care affordability pressures, and a weakening culture of partnership between government and employers.
Washington’s unemployment rate in central Puget Sound stood at 5.2% in 2025, slightly above the national average. The report also pointed to slower venture capital growth compared to peer regions and a decline in the state’s business climate rankings. A decade ago, we were number one,
Gregoire said, referencing her time as governor from 2005 to 2013, when legislation provided Boeing with tax breaks to retain jobs. 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.
Recommendations for Regional Revival
Challenge Seattle outlined a series of goals to reverse the trend, including counties uniting to create a unified economic vision, establishing business concierge services in every city, and developing a fairer tax strategy. The report urged local colleges to strengthen the talent pipeline and scale the Puget Sound commercial space ecosystem. Gregoire emphasized that the plan requires collaboration across cities, counties, and the state, stating, It is not a city, county, or state economic plan, but a shared plan for our entire region.
Some recommendations could begin within weeks, with all initiatives aiming to make meaningful progress within three years. The report also called for clearer permit timelines and stronger partnerships between government and businesses. Success will require leaders across the region to take ownership, sustain the partnership, measure progress, and follow through,
Gregoire said.
Broader Implications and Corporate Moves
The report comes amid shifts in major corporate strategies. Amazon plans to vacate an 81,000-square-foot office in Seattle when its lease ends in March 2027, part of a broader effort to reduce leased space in the city. Meanwhile, WaFd Bank announced it will merge with EverBank, relocating its holding company from Seattle to Bellevue. Starbucks, however, reaffirmed that Seattle will remain its global headquarters.
Thirty-five major Seattle business leaders recently signed a letter urging Mayor Katie Wilson and the Seattle City Council to address public safety concerns, with many affiliated with Challenge Seattle. Gregoire’s report underscores the need for coordinated action to restore the region’s economic trajectory, stating, A plan alone will not change our trajectory.