SEATTLE — CNBC’s latest America’s Top States for Business ranking placed Washington 11th in the nation, up three spots from last year when it ranked 14th. The improvement reflects strengths in the state’s economy, workforce and quality of life, but the report also points to areas where Washington is losing ground.
CNBC evaluated states using 138 metrics, including workforce, infrastructure, economy, innovation, and business friendliness. Washington scored highly for its economy and quality of life but received lower marks for the cost of doing business and overall business friendliness.
For Trevor Boone, owner of Emerald City Guitars in Seattle’s Pioneer Square neighborhood, Washington remains a place where businesses can thrive.
“We specialize in primarily vintage guitars of all levels, but definitely the most legendary instruments you’ll ever see,” Boone said.
His shop has operated for three decades, serving everyone from first-time guitar players to internationally known musicians such as Chris Stapleton and John Mayer.
“I think Washington has a really amazing spirit as far as the people involved,” Boone said. “Look around you, the water, the beautiful trees. We travel a lot for the shop around the world and around the U.S.”
Still, Washington’s position in CNBC’s rankings has fluctuated over time. The state ranked No. 2 just four years ago and held the top spot in 2017.
Jon Scholes, president and CEO of the Downtown Seattle Association, said the mixed results reflect both Washington’s advantages and its challenges.
“We have a lot of strengths and so let’s not squander those strengths and assets that have been built up over decades,” Scholes said. “When you think of our research institutions, our infrastructure, the quality of life and the natural beauty that we’ve protected and preserved.”
Scholes said Washington continues to benefit from a highly skilled workforce and the presence of major technology companies, including Amazon and Microsoft. However, he said many employers are increasingly concerned about rising costs and a lack of predictability.
“What I hear a lot is it’s not just the cost, it’s the unpredictability,” Scholes said. “The last five years or so, there’s been new taxes at the state level, at the local level here in Seattle on employers, on companies, new sales tax, new payroll tax, a new B&O tax.”
According to Scholes, businesses making long-term investments want clearer expectations about future costs.
“Predictability is everything in business,” he said. “It’s everything if you’re making a big capital investment, if you’re signing a 10-year lease as a restaurant or an employer downtown, or if you’re coming in to develop a new project, new housing, a new retail building. I think that’s one of our weak spots, and it is one of the areas we need to be much stronger.”
Scholes said those concerns come as some sectors are still recovering from the effects of the pandemic. While hotel occupancy has largely returned to pre-pandemic levels, operating expenses have increased significantly.
“Their costs are 30 or 40% more than they were pre- pandemic. So those margins and the profits and the value of those businesses is much different than it was in 2019. So, on the surface, things can look good. But if you look underneath, there’s still many sectors, many businesses, many arts and cultural organizations and nonprofits that are in a fragile place. And they’re dealing with more regulation and more cost from the city and state than they ever have,” Scholes said.
Boone said adapting to Seattle’s growth has been essential to keeping his business successful.
“The growth of Seattle has been a big trial for us,” Boone said. “We’ve seen the streetcar projects, Bertha, the viaduct, and obviously we’re in a historic district, so some of these restorations on buildings can completely shut down a block.”
Despite those challenges, Boone credits community support and organizations such as the Alliance for Pioneer Square for helping businesses endure.
“It takes a village,” Boone said. “I always tell people to extend to your neighbors and the elements around you.”
Business leaders say Washington’s economic strengths remain significant, but maintaining a competitive environment will require balancing growth, investment and the costs faced by employers across the state.