Washington State Economy: Tech, Trade, and Aerospace

Washington has one of the larger state economies in the United States, usually ranked in the top fifteen by GDP — the dollar value of everything a place makes and sells in a year. The Washington economy is unusually concentrated in two world-leading industries: tech, anchored by Microsoft and Amazon in the Seattle area, and aerospace, anchored by Boeing. Trade through the Pacific ports adds a third major pillar.

This is a plain-English tour. For the national picture, see The State of the U.S. Economy and the Economy hub.

How big is the Washington economy?

For example, recent state GDP for Washington has run around $760 billion, according to the Bureau of Economic Analysis. Population is roughly 7.8 million, per the U.S. Census Bureau. The Seattle-Tacoma-Bellevue metro area accounts for the majority of the state's population and an even larger share of its economic output.

The biggest industries

Washington's economy leans heavily on a small number of very large sectors:

• Tech — Microsoft and Amazon are headquartered in the Seattle area, and dozens of major tech firms have significant operations there.
• Aerospace — Boeing has been the anchor for decades, with massive plants around Everett, Renton, and Auburn supporting a long supply chain.
• Trade and logistics — the ports of Seattle and Tacoma form one of the largest container port complexes in the country, with heavy trade flows to and from Asia.
• Agriculture — Washington is a top producer of apples, cherries, hops, and wheat; the state grows the largest share of U.S. apples.
• Healthcare — major systems like UW Medicine, Providence, and Virginia Mason employ huge numbers of workers across the state.
• Defense — the Puget Sound region hosts large Navy bases and a significant defense industrial base.
• Forestry and wood products — still a major industry in the western and central parts of the state.

Jobs and wages

Washington labor data is published by the Washington State Employment Security Department, with national-level numbers from the Bureau of Labor Statistics. For example, the Washington unemployment rate has typically run close to or a bit below the national average, helped by the strength of the Seattle-area tech sector.

The Washington minimum wage is one of the highest statewide minimums in the country and adjusts each year for inflation. Cities like Seattle and SeaTac set local minimums that go higher.

Taxes in Washington

Washington is one of the small group of states with no state income tax on wages. The state does have a capital-gains tax above a high threshold, which is unusual.

The state sales tax rate is 6.5%, but local additions push the combined rate to roughly 8% to 10.5% in most counties, among the highest in the country. Property taxes are moderate by national standards.

State tax forms and rules live at the Washington State Department of Revenue. You can read more about how sales tax works in our glossary.

Cost of living

Cost of living in Washington runs well above the national average, especially in the Seattle metro area. Seattle, Bellevue, and Redmond have among the highest housing costs in the country outside of California and the Northeast. Eastern Washington — Spokane, the Tri-Cities, and rural counties — is much more affordable.

The federal government tracks region-specific Consumer Price Index data through the BLS West region, and HUD publishes Fair Market Rents for every county at HUD User.

Tech, trade, and aerospace

Washington's economy is unusually concentrated in industries that depend on long-distance flows of either ideas (tech), goods (trade), or capital equipment (aerospace). That concentration has produced a lot of wealth, but it also makes the state more sensitive to global cycles than most. When Asian trade slows, the ports feel it. When a major Boeing program runs into trouble, the supply chain feels it. When tech hiring cools, Seattle-area home prices feel it.

How does the Washington economy fit into the national picture?

Washington is one of the wealthiest states by median household income, especially in the Seattle metro area. Population has been growing faster than the national average, mostly from in-migration to the Seattle region. The state's no-income-tax structure combined with a high sales tax means lower-income households pay a relatively larger share of their income in taxes than higher-income households do.

Eastern Washington's different economy

The eastern half of Washington is a very different economy from the Seattle area. Spokane is a regional services and healthcare hub. The Tri-Cities (Richland, Pasco, Kennewick) are anchored by the federal Hanford site and a growing wine and agricultural-processing sector. The Yakima and Wenatchee valleys lead the country in apple, cherry, and hop production. Cost of living, wages, and housing prices in eastern Washington look much more like the rural Midwest than like Seattle.

A note on the numbers

Numbers in this article change every quarter — always check the latest from BEA, BLS, and the Washington State Department of Revenue for the most current data.