Eric Hunt / Wikimedia Commons
Why It Matters
Washington State’s economy is sending warning signs that are hard to ignore. Job growth has lagged expectations, unemployment sits above the national average, and businesses are increasingly weighing whether to stay or relocate to more business-friendly states. For everyday Washingtonians, that translates to fewer job opportunities, higher costs, and mounting uncertainty about the state’s financial future.
Washington added more than 10,000 jobs in May, but the unemployment rate held at 5.2% — a figure that underscores a labor market still struggling to find its footing. Against that backdrop, Gov. Bob Ferguson signed an executive order Thursday creating the Governor’s Economic Development Council, the state’s first such body in roughly two decades.
What Happened
Ferguson’s order establishes a 26-member council tasked with advising his office and producing a comprehensive statewide economic development plan by June of next year. The council will meet quarterly, and Ferguson has committed to attending every session — an unusual level of executive involvement for an advisory body.
Among the council’s primary objectives: marketing Washington to out-of-state businesses and identifying where state regulations may be creating unnecessary barriers to growth. Members include senior leaders from Microsoft, Boeing, and Puget Sound Energy, as well as representatives from the Washington State Labor Council and Building and Construction Trades Council. Lt. Gov. Denny Heck is the only other elected official named to the panel.
“Too many Washingtonians are out of work,” Ferguson said in public remarks tied to the announcement. “Our state is unaffordable for too many Washingtonians, and we have areas where those rankings are not so good.”
By the Numbers
- Only 7% of respondents to a recent Association of Washington Business survey rated the state’s economy as strong or very strong.
- Nearly 3 in 4 business respondents cited the state’s tax burden as their top challenge — an 18% increase in that concern since winter 2025.
- Almost half of those surveyed expect a recession within the next year.
- Washington has not convened a comparable economic council in two decades.
- Janicki Industries announced an $800 million expansion — to Montana, not Washington.
The Business Climate Problem
The concerns driving the council’s creation are not abstract. The tech sector, long a pillar of Washington’s economy, has seen mounting layoffs. Starbucks, one of the state’s most iconic companies, chose Nashville over Washington for a recent expansion. More businesses are openly evaluating whether to remain in the state at all.
Mike Katz, a business leader participating in discussions around the council, pointed to regulatory unpredictability as a persistent problem. “That’s been one of the hardest things for us — the unpredictability of the changes on a year-over-year basis for our employees,” he said.
That unpredictability has come at a cost. Back-to-back legislative sessions were forced to rely on a combination of tax hikes and spending cuts to close budget shortfalls, and credit rating agencies have flagged concern over the state’s use of one-time fiscal maneuvers. Another budget gap is expected in 2027.
Zoom Out
Washington isn’t alone in facing fiscal headwinds. State budgets across the country have tightened as post-pandemic revenue surges fade, leaving governors of both parties scrambling for structural solutions. But Washington faces competitive pressure from states actively recruiting its businesses. Montana Gov. Greg Gianforte has publicly marketed his state as an alternative to “high-tax, high-regulation blue states” — a message that apparently resonated with Janicki Industries when it chose Montana for its $800 million expansion.
Ferguson has taken some steps ahead of the council’s formation. He tapped reserve funds to attract quantum computing jobs and signed a permit-streamlining executive order on his first day in office. The new council represents a more structured attempt to address the state’s economic trajectory over the longer term.
What’s Next
The council is expected to begin meeting on a quarterly schedule and must deliver a full economic development plan to the governor by June 2027. Whether the body produces actionable reforms — or becomes another advisory panel whose recommendations gather dust — will likely depend on whether the state’s political environment is willing to address the regulatory and tax concerns businesses have repeatedly raised. With a budget gap looming and neighboring states actively competing for Washington’s employers, the pressure to produce results is real.
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