Washington has long been a high-cost state for employers, but new data show the state is increasingly losing its competitive edge in key areas.

Job growth is stalling, the business climate is getting worse, and energy costs are rising. That’s according to the 2026 Competitiveness Redbook, which compares how Washington ranks on key economic measures against other states. It’s produced annually by the Association of Washington Business (AWB), Washington Roundtable, and Washington Research Council.

At the same time, employer surveys show rising concern about taxes and deteriorating confidence in the state economy. Prospects for business growth are stagnant or modest.

As lawmakers debate new taxes and other policies this legislative session, these data points should serve as an important reminder that policy decisions have real-world impacts on employer decisions and the economy.

The Redbook is a fascinating data-driven look at Washington’s economic strengths and weaknesses. As one of the most trade-driven states in the country, Washington ranks among the top states for exports. We have a robust high-tech workforce and rank No. 2 for research and development spending, investments that help fuel new industries and innovation.

Now for the weaker points.

Washington’s tax system is not nearly as competitive as other states. The Tax Foundation places Washington near the bottom for overall tax competitiveness, with some of the worst rankings for both sales and unemployment taxes.

The state’s overall business climate is also on shaky ground – and getting worse. In CNBC’s national ranking of the best states for business, we earn top marks for top for tech and innovation, quality of life, and a skilled and trained workforce. But we rank 48th in the nation for cost of doing business, a position that has sunk over the past decade.

Washington also has some of the nation’s most expensive unemployment insurance and workers’ compensation programs, in addition to the highest statewide minimum wage. All these cost pressures add up.  

Electricity prices are also rising. Washington has long had some of the cheapest electricity in the nation, but that key advantage is eroding. Industrial customers now pay the 7th-lowest electricity rates in the nation, down from No. 5 last year and No. 1 five years ago, Redbook data shows. It’s a similar story for residential customers, which saw rates go from the most affordable in the nation to No. 5 last year.

Stalling job growth is another area of concern. Ten years ago, Washington had the second-highest annual job growth in the nation. In 2025, the state added just 19,800 non-agricultural jobs, a growth rate of 0.5%, 35th in the nation.

Employers also tell us directly they feel increasingly negative about the state economy and outlook for their own businesses. Forty-four percent of business leaders are considering moving their personal residence to another state, according to a recent survey. Lawmakers are currently debating proposals that could accelerate that trend.

And even for those businesses that aren’t considering a move, they are less likely to expand here, meaning new jobs, capital investment and economic growth will flow to other states.

As legislators debate additional tax increases and other policies that will drive up costs for employers, we can’t afford to ignore these warning signs. We know that Washington businesses are resilient and adaptable, and they remain committed to finding solutions. The question is whether policymakers will support – or hinder – their efforts.

Learn more about the 2026 Competitiveness Redbook: awb.org/reports-data/redbook/

Kris Johnson is president of the Association of Washington Business, the state’s chamber of commerce and manufacturers association.