So why has Washington's job growth slowed so dramatically this decade?
During the 2010s, Washington added roughly 65,000 nonfarm jobs per year on average. From 2020 through 2025, the net increase was closer to 167,000 jobs in total, or roughly 28,000 per year. That is a substantial change in momentum. If Washington had continued adding jobs at approximately the pace of the previous decade, it would have added around 390,000 jobs over six years. Instead, the increase was closer to 167,000. The difference is approximately 220,000 jobs. That number needs to be understood correctly. It does not mean Washington literally lost 220,000 jobs. It represents the gap between actual job growth and what might have happened if the previous decade's pace had continued. It is a measure of missed growth opportunity, not a count of identifiable jobs that disappeared. The state's own labor market reporting reinforces the slowdown. Washington employers shed approximately 6,600 jobs over the year in 2025, while the Employment Security Department described statewide employment growth as having plateaued. The state did add jobs in the fourth quarter, but the broader trend remained weak.
The economy changed. So did the conditions for growth.
It would be a mistake to compare the 2010s and 2020s as if they were identical. They weren't. Much of the 2010s was marked by relatively low interest rates, more stable energy markets, and fewer sustained disruptions to global supply chains. There were serious challenges, including the recovery from the Great Recession and the trade conflict that began in 2018. But for much of the decade, businesses operated in a more predictable economic environment. The 2020s have been different. The pandemic disrupted production and supply chains. Federal spending surged. Inflation climbed. Interest rates rose sharply. Energy markets were shaken by wars and geopolitical disruptions, while tariffs and trade uncertainty became a more persistent part of the business environment. These conditions matter. They affect borrowing costs, construction, investment, hiring, and household spending. Washington did not create all of these pressures, and it cannot control all of them. But understanding the national economic environment does not mean we should overlook Washington's own economic circumstances.
The federal relationship we rarely examine
Most conversations about Washington's finances eventually come back to Olympia. We hear about budget deficits, tax increases, government spending, and whether the state is managing its money responsibly. Those are fair questions. But they don't tell the whole story. Washington's state operating budget for 2025–27 averages approximately $82 billion per year across all funding sources, including state revenue, federal funds, dedicated accounts, and other sources. At the same time, estimates of Washington's net federal fiscal balance show an annual outflow approaching $40 billion in 2024, with preliminary figures indicating an even larger imbalance in 2025. These figures measure different things and should not be treated as an apples-to-apples comparison. But they illustrate the scale of the federal relationship and why it deserves much more attention.We're examining how Olympia manages the money that stays here without fully examining the much larger federal financial relationship affecting our economy.
This isn't an argument that Washington receives no federal funding. It does. Federal spending recorded in Washington increased from roughly $59.6 billion in 2016 to about $89.6 billion in 2025. The question isn't simply whether federal dollars are coming into the state. It's whether Washington is receiving a reasonable return relative to what its residents and businesses contribute.
Federal spending nationally has grown substantially since the 2010s, yet Washington continues to show a significant and growing net federal outflow. As federal spending has expanded, has Washington received a proportionate share of that investment? This matters because federal fiscal flows influence how much money circulates through an economy. When households, businesses, and workers have money to spend, that money moves through local stores, restaurants, contractors, service providers, and employers. When money leaves a region, some of the spending and economic activity associated with it may leave as well.That doesn't mean every dollar sent to Washington, D.C., would otherwise have been spent here, or that every dollar of net outflow translates into a specific number of lost jobs. Federal taxes and spending serve national purposes, and their economic effects vary depending on where the money comes from and how it is spent.
But the larger question deserves serious attention: what does a persistent federal net outflow mean for Washington's long-term economic growth? Are the state's workers, businesses, and communities receiving a reasonable return on what they contribute to the national economy? We cannot attribute Washington's job-growth slowdown to federal fiscal policy alone. But we also cannot fully understand the state's economic position without examining that relationship. The numbers deserve a closer look, across all 39 counties, and as part of the broader conversation about Washington's economic future.
A bigger question than the budget
The slowdown in Washington's job growth cannot be explained by one number or one policy. Interest rates, inflation, federal policy, global trade, technology, housing costs, and decisions made in Olympia all play a role. But the federal relationship deserves a closer look, especially when Washington continues to experience a substantial net outflow while federal spending nationally has grown. The question is not whether Washington should receive special treatment. It is whether the state is receiving a fair and reasonable return on what it contributes. That means looking beyond the headline amount of federal spending. We need to examine where those dollars go, how much reaches Washington's workers and businesses, how federal contracts and grants are distributed, and how the state's net position compares with its economic contribution. It also means being honest about what the numbers can and cannot tell us. A federal fiscal imbalance does not, by itself, prove that it caused the slowdown in job growth. The 220,000-job figure is a comparison against an earlier growth trend, not a direct count of jobs lost because of federal policy. Establishing a causal connection requires more detailed research.
But that is exactly why the issue deserves attention.
Washington's economy is too important to evaluate through a narrow debate about state taxes and spending alone. We need to understand the full flow of money through our economy, including what leaves, what returns, and what opportunities may be missed along the way. Before we keep debating how Washington should divide up the money that remains, we should take a hard look at the money leaving the state and whether we're getting a fair return. That is the bigger economic question. And it is one Washington can no longer afford to ignore.