Washington employers say business climate is getting worse

Washington employers say business climate is getting worse

By The Chronicle staff

A new survey of Washington employers shows that recent tax increases are hitting more than three quarters of businesses and contributing to a broad decline in confidence from a year ago, according to a news release from the Association of Washington Business.

The quarterly survey by the Association of Washington Business (AWB) shows growing concern about the state’s tax burden. Sixty-five percent of employers now rank taxes as their No. 1 concern, up from 58% this summer. Roughly three in four businesses (76%) say their business has been directly affected by the new sales tax on services or B&O tax increases.

More than half (52%) are passing those costs on to customers, while 42% are absorbing them for now.

“Washington continues to grow more unaffordable for employers and families, and we’re seeing that reflected in these survey results,” AWB President Kris Johnson said. “Local businesses are being squeezed by higher taxes and duplicative regulations coming from Olympia, and unpredictable trade policy at the federal level, both of which are driving up costs for consumers. As we think about the upcoming legislative session, we hope that lawmakers will break the cycle of never-ending tax increases and focus instead on a growth agenda and providing some relief to families and businesses struggling to keep up with spiraling costs.”

Taxes are far from the only challenges employers face. They are simultaneously managing ongoing tariff impacts (52% affected); rising health care costs (the No. 2 challenge behind taxes); regulatory burdens (53% concerned); and renewed inflation (47% concerned).

Looking back a year, conditions have worsened across the board. The share describing the state economy as weak rose from 17% to 28%.

Those experiencing a downturn in their own business climbed from 17% to 27%, and the share planning to expand in Washington dropped from 23% to 14%.

Expectations of a recession are rising again after improving over the summer. The latest survey found that 41% of employers now anticipate a recession within the next year, up from 32% in the previous quarter.

Tariffs continue to weigh heavily on Washington employers as well, despite signs of improvement from last quarter. While the share reporting direct effects declined from 58% to 52%, impacts remain significant. Nearly two-thirds (64%) say tariffs are increasing input costs, and 29% report ongoing supply-chain disruptions.

The Fall 2025 Washington Employers Survey report can be found at https://tinyurl.com/yp5vzk8h. 

AWB conducts the Washington Employers Survey quarterly. The fall 2025 survey is based on 416 responses collected by email from business owners and operators across Washington between Oct. 15 and Oct. 29, according to the release.