Detroit, Cleveland and Pittsburgh each had their moment in the sun a century ago, Microsoft Vice Chair and President Brad Smith said Monday — and then the warning lights started flashing, and their leaders at the time failed to heed them.

“Well, here we are. It is 2026,” Smith said at a press conference, flanked by dozens of regional leaders, with the Seattle skyline behind them. “And the warning signs are flashing on our economy.”

Smith was speaking at the launch of the Partnership for a Competitive Puget Sound, a Challenge Seattle initiative that brought together roughly 50 elected officials from King, Kitsap, Pierce and Snohomish counties — two county executives, around 20 mayors, port commissioners and about a dozen state legislators — along with labor leaders and business executives, behind a 20-point plan for reversing the region’s slide.

The region lost nearly 7,000 jobs in 2025, according to a report issued by the group, the first time in two decades outside a recession or the pandemic that Seattle-area employment growth has trailed the nation’s. Washington has fallen from 32nd to 47th in CNBC’s ranking of states by cost of doing business since 2017.

An ‘intentional’ regional tech strategy: The report makes a pointed observation about technology: aerospace has a coordinated regional agenda and tech doesn’t, despite tech accounting for nearly one in 10 regional jobs and about 24% of total payroll.

Aerospace knows what it’s working on: the next airplane, the space industry, sustainable fuels, supplier diversification. Technology, “despite being one of Puget Sound’s defining economic anchors, does not yet have an equally intentional regional strategy,” the report says.

Without one, it adds, the region risks losing “jobs, technology investment, headquarters, talent, and company growth” to the Bay Area, New York, Boston and Austin. The goal is “not simply to promote growth, but to protect and strengthen the region’s position as a leading technology center.”

Challenge Seattle says it will write that strategy with the Puget Sound Regional Council, built around two priorities: keeping the big tech companies investing here, and making it easier for startups to scale. Related recommendations target industrial space for AI hardware startups, commercial space, and the region’s fusion cluster.

The report sets no budget or measure of success for the tech strategy, and no deadline beyond its general goal of progress within three years.

A regional wake-up call: Many of the recommendations are changes to how local government operates, not new spending: deadlines for permit decisions, a designated business contact in every city and county, and a strategy for dealing with the way taxes stack across state, county and city.

“This is, for us, a wake-up call,” said former Washington Gov. Chris Gregoire, CEO of Challenge Seattle, launching the initiative during the press conference. “We cannot resort to relying on yesterday’s success while tomorrow’s jobs go somewhere else.”

April Sims, president of the Washington State Labor Council, said businesses need predictability and enough margin to invest, innovate and take risks — but “working people need margins, too.”

King County Executive Girmay Zahilay said his office has hired an economic development team and is beginning an internal permitting audit. “AI is transforming our economy seemingly overnight,” he said, calling the 7,000 lost jobs “quite alarming.”

The group also released a playbook for Puget Sound mayors, drawn from interviews and surveys with local leaders, on building what it calls a culture of partnership with business.

Seattle as a Microsoft litmus test: Asked by GeekWire during the press conference what it would take for Microsoft to return and grow in Seattle proper, where it previously had offices in South Lake Union, Smith first pointed out that he was standing in front of Redmond Mayor Angela Birney.

“We have a great mayor, and every day we get up and we’re excited to go to work in Redmond, Washington,” he said, to laughter from the assembled officials.

Smith also pushed back on the premise: Microsoft moved to the Eastside from Albuquerque in 1979 and never had a large presence in Seattle, so he wouldn’t use the city as the point of comparison.

Then he turned to Seattle’s JumpStart payroll expense tax.

As structured, the payroll tax “is really a tax on tech jobs,” Smith said, “and that’s why you’re seeing more tech jobs move from Seattle to places like Bellevue and the Eastside.” He noted that San Francisco abolished its payroll tax the same year Seattle adopted one, in 2021.

“You should tax things you want to discourage, like cigarettes, not jobs,” he said.

He tied the issue to the larger impact of AI on jobs. “We need people to succeed to some degree in a world of AI,” Smith said. “And you don’t want to make the cost of employing people more expensive, at the same time that AI is increasingly adding its own new form of competition.”

“There’s nothing that would lead to the decline in jobs in this state faster than a replication of the JumpStart tax,” he said. “And if Seattle wanted to do one thing to increase jobs in Seattle, it ought to revisit whether a payroll tax makes any sense.”

Then he added a caveat: “That’s probably something that would impact other companies more than Microsoft.”

Amazon, which has been reported to be the largest payer of the tax, did not have a speaker at Monday’s event. Individual Amazon execs are listed in the acknowledgments in the Challenge Seattle report, though the report says participation doesn’t imply endorsement.

View from Olympia: During the press conference, Senate Majority Leader Jamie Pedersen, D-Seattle, was asked whether Washington risks becoming an outlier among states on taxes. The Legislature has been correcting course, he said, pointing to two moves from this year’s session.

One was the estate tax. Lawmakers raised the top rate to 35% in 2025, the highest in the country, and reversed themselves this March, returning it to 20% as of July.

The other was the millionaires tax — a 9.9% tax on household income above $1 million, signed by Gov. Bob Ferguson and projected to raise roughly $3 billion a year. It doesn’t take effect until 2028, and Seattle tech leaders warned it would push founders and investors out of the state.

Pedersen cast it as the fix for a different kind of outlier status: Washington’s business and sales taxes are high because it’s one of the few states with no personal income tax at all. The new tax would let Washington “join 41 other states that have a personal income tax,” he said.

Voters get the last word in November. Initiative 645, backed by Let’s Go Washington, qualified for the ballot in July and would repeal the tax. If it survives, Pedersen said, a statewide payroll tax is “vanishingly unlikely” next session.

Seattle’s mayor weighs in: Seattle Mayor Katie Wilson, who was an architect of the JumpStart tax before running for office, was not among the speakers at the press conference. She opened the regional session that followed, and said the region needs to do a better job telling its own story.

“There are some forces and interests that are pushing a narrative that does not want Seattle or our region to succeed,” Wilson said, “and we must counter that with a new commitment to a shared sense of destiny, because Seattle’s success is Bellevue’s success, Pierce County’s success is Snohomish County’s success.”

She called it a fragile moment and said the time to act is now, pointing to the economic actions she announced last week in conjunction with an independent report commissioned by the city and released by Seattle’s Office of Economic Development.

That report, “Seawall: Building a Resilient Seattle Economy,” found Seattle’s tax structure unique among peer cities in the way it “specifically penalizes the hiring of senior, high-compensation workers,” with the burden falling overwhelmingly on large tech employers.

Hiring a software engineer at $650,000 in total compensation costs about $17,000 more a year in Seattle than in Bellevue at JumpStart’s top rate, the researchers found.

The city report, conducted by the economic consulting firm Formation, said Seattle should bet on cleantech, the sector where the city owns the utility, writes the building codes and controls permitting and land use. It’s one place where Seattle has real leverage over its own economy, the researchers argued.

“It’s striking how much agreement we share across labor, businesses, and government,” Wilson said. “This is not a call to ignore our challenges, but to tackle them with a shared sense of possibility.”

She did not address the payroll tax in her remarks.

A roster of top Seattle business leaders and regional CEOs is demanding urgent action from City Hall on public safety, calling on Mayor Katie Wilson and the City Council to roll out a concrete 100-day action plan backed by measurable goals and transparent progress tracking.

In a letter sent Thursday, executives from major area employers — including Microsoft, Starbucks, Costco, F5, Alaska Airlines, Zillow, and others — urged city leaders to protect and expand public safety funding amid growing skepticism that the city currently has an effective strategy to address crime and homelessness.

The push centers on findings from an August joint public-opinion poll of registered Seattle voters, which revealed that while every proposed safety measure drew at least 75% support across all demographics, only 34% of respondents expressed confidence in the city’s current strategy.

Pointing to severe staffing shortages — noting Seattle has just 1.31 sworn officers per 1,000 residents, far below peer cities like Denver, San Francisco, and Boston — the signatories argued that budget decisions must directly align with measurable safety outcomes.

The effort was spearheaded by major regional business leadership organizations, including the Seattle Metropolitan Chamber of Commerce, Challenge Seattle, and the Washington Roundtable. Their leaders — Joe Nguyễn, former Gov. Chris Gregoire, and Rachel Smith — jointly signed the appeal alongside dozens of local chief executives spanning technology, retail, healthcare, and sports franchises.

“Voters are asking for action, on a timeline, with results they can measure,” the coalition wrote in the letter, emphasizing that their recommendations reflect a broad consensus across the city. “This is not a narrow or partisan agenda, it is a shared baseline that Seattle residents and the business community are asking their elected leaders to deliver both now and as a sustained priority.”

The letter outlines a series of immediate and short-term actions the group is asking City Hall to enact, backed by overwhelming support in their poll:

CCTV surveillance: Activate CCTV cameras in Pioneer Square, the Stadium District, and other high-event areas to deter crime and assist law enforcement.

Foot and bike patrols: Establish regular police patrols on foot and bicycle in areas facing persistent public safety problems, specifically citing Little Saigon (90% poll support).

911 response accountability: Recommit to a standard 7-minute priority 911 response time, backed by transparent reporting when targets are missed (90% support). The letter noted data from Nordstrom showing only 29% of 911 calls from its flagship downtown store yielded a police response, compared to 100% at its Bellevue and Southcenter locations.

Drug treatment and diversion: Direct CARE Department specialists to offer treatment and shelter first, but require law enforcement to arrest and prosecute repeat offenders who repeatedly refuse help (82% support).

Open-air drug markets: Require SPD and the City Attorney to establish a clear, prioritized pathway for shutting down open-air drug markets (81% support).

Encampment bans and timelines: Institute a policy banning encampments within 250 feet of parks, playgrounds, or schools, and mandate that the city clear encampments in those zones within 72 hours (79% support).

Among those who signed the letter: Brad Smith, Vice Chair & President of Microsoft; Jeremy Wacksman, CEO of Zillow; François Locoh-Donou, CEO of F5; Matt McIlwain, Managing Director at Madrona Venture Group; Julie Sandler, Co-founder & Venture Partner at PSL Ventures; Matt Oppenheimer, Chairman of Remitly; Erik Nordstrom, CEO & Co-President of Nordstrom; Brian Niccol, Chairman & CEO of Starbucks; Ron Vachris, CEO & President of Costco; Ben Minicucci, CEO & President of Alaska Air Group; Mike Sievert, Vice Chairman of T-Mobile; and Ada Healey, Chief Real Estate Officer at Vulcan Real Estate.

The business community’s coordinated push arrives during a pivotal moment for public safety policy in City Hall, where political tensions over policing and crime response have flared in recent weeks.

While overall violent crime and homicides in Seattle dropped during the first half of 2026 compared to last year, high-profile violent incidents continue to fuel public and commercial anxiety. Downtown, Belltown, and high-foot-traffic corridors have experienced recent spikes in gun violence and fatal altercations — including multiple homicides in Belltown and Westlake Park in early September alone.

At the same time, the Seattle Police Department continues to grapple with acute staffing shortages following years of officer departures exceeding hiring goals. The persistent deficit has left response times stretched thin, prompting deep frustration from major employers and pushing retail hubs to demand a more visible police presence.

Policy friction between the Council and Wilson’s administration has also intensified. Debate has centered on the rollout of public surveillance technologies — where the mayor’s office recently paused CCTV camera expansions pending a data privacy audit — as well as ongoing friction surrounding the leadership of the police department.

Responding to the letter, Wilson told GeekWire that her administration shares the business community’s commitment to public safety, noting that “many of the specific requests they made are well underway.”

Wilson highlighted expanded foot and bicycle patrols in neighborhoods like Little Saigon and Belltown, 3,500 police officer applications currently in the queue, and an upcoming gun violence reduction strategy set to roll out next week. While noting that SPD data shows homicides and shootings at 10-year lows, Wilson acknowledged public impatience.

“We have far too much crime and public disorder and people have a right to be frustrated,” she said. “I, like everyone in Seattle, want to see that progress happen faster and steadier.”

The safety campaign comes on the heels of a 127-page independent economic study commissioned by the city, which warned that while Seattle boasts an “almost peerless” tech workforce and key AI assets, its economy is in a fragile position due to heavy corporate concentration and tax policies that penalize senior hiring.

The study noted that Seattle’s tax base remains vulnerable if major employers opt to relocate or grow outside the city limits, reinforcing the business coalition’s argument that public safety is closely tied to the city’s long-term economic stability.