Weak hiring, housing costs challenge Wenatchee Valley’s economic growth

WENATCHEE — Chelan and Douglas counties increasingly depend on attracting new residents to sustain population growth, but expensive housing and a weak job market could complicate that task, Avista chief economist Grant Forsyth told community leaders Oct. 28.

Speaking at the Chelan Douglas Regional Port Authority’s fall Partners in Economic Development event, Forsyth described an economy in which output continues to grow while hiring struggles.

He introduced his role with a warning.

“People ask, you know, what do you do for Avista? We don’t have a lot of time, so I’ll give you the short answer: I make people sad,” he said.

Forsyth estimated that total nonfarm employment in the Chelan-Douglas metropolitan area would decline 1.4% in 2026, following declines in 2024 and 2025. Manufacturing and construction-related employment were particularly weak.

Private education and health services remained a relative bright spot, with estimated growth of 1.6%, though slower than the previous two years. Health care drives most of that category locally, he said.

An aging population increases demand for care, but providers face tariffs on supplies, immigration restrictions affecting staffing and Medicaid funding cuts.

Forsyth cautioned against equating weak hiring with a recession. Businesses can increase production without adding workers, creating a disconnect between economic output and job opportunities.

“It’s just an incredibly weak labor market,” he said.

Births and deaths in Chelan and Douglas counties are now roughly balanced, Forsyth said, leaving migration responsible for nearly all population growth. New residents can expand the workforce, bring customers to businesses and broaden the tax base supporting public services.

Forsyth’s analysis of IRS tax-return movements from 2022 to 2023 showed that 70% of incoming returns in Chelan County and 83% in Douglas County came from elsewhere in Washington. He identified Puget Sound as the primary source, challenging perceptions that newcomers predominantly arrive from California.

But attracting people requires housing they can afford. Forsyth showed local median home listing prices between $600,000 and $700,000, noting that actual sale prices were lower. More listings have not produced a comparable decline in asking prices.

He argued that public-private partnerships will be important for workforce housing because development costs often push private builders toward higher-priced homes.

During the Q&A, Forsyth said attracting remote workers requires reliable health care, quality K-12 schools, high-speed internet and transportation connections. Schools also influence business relocations because employees consider what a move means for their children.

That gives school investment an economic development dimension. Bond measures on the Nov. 3 ballot in the Wenatchee and Eastmont school districts put high school investments before voters, affecting campuses that serve existing families and help shape prospective residents’ impressions.

Federal budget decisions also carry local consequences. Forsyth said transfer payments, including Social Security, Medicare, Medicaid and veterans’ benefits, account for roughly a quarter of personal income across Chelan and Douglas counties.

Substantial reductions would hit rural communities and smaller metropolitan areas harder than places with younger populations and more income from employment, he said.

Audience questions turned to whether artificial intelligence could further weaken hiring. Forsyth said early evidence suggests AI is reducing some entry-level opportunities for college graduates, a concern he raised with Gov. Bob Ferguson.

AI could deliver needed productivity gains, but its consequences for workers remain uncertain.

“The problem will be whether or not AI is labor-enhancing, so most of the effect is to increase output, right, or is it labor-replacing?” he said.

Asked about data centers, Forsyth drew on his service reviewing state tax preferences. Earlier projects his commission examined delivered lasting local tax revenue, he said, while employment gains were concentrated during construction.

Nearby Quincy illustrates that impact. A preliminary Washington Data Center Workgroup report found that added taxable value helped the community improve infrastructure while reducing other taxpayers’ property tax burden.

Quincy’s city levy rate fell about 70% between 2006 and 2025, from roughly $3.12 to 88 cents per $1,000 of assessed value. The report identified investments including wastewater improvements, public safety facilities and a high school financed through a voter-approved bond.

Forsyth also questioned the pace of Washington’s energy transition. As an economist for a utility providing electricity and natural gas, he warned that electrifying heating and transportation while adding data centers requires sufficient generation capacity. Natural gas remains important while storage technology develops, he said.

He urged lawmakers to let businesses adjust to state taxes and regulations alongside federal tariffs and immigration changes.

“Just hit the pause on any big policy initiatives so everybody else in the state has time to catch up and figure out how to navigate all of this,” he said.

The audience’s questions brought those pressures back to local decisions: what to build, which services to support and how to make room for another generation.

For someone considering the valley, those become practical questions. Is there a home they can afford? A school where their children can thrive? Care when they need it, and a way to reach work?

Forsyth’s presentation suggested that the region’s economic future increasingly depends on those answers: people choosing to come here, finding a foothold and being able to stay.

Andrew Simpson: 509-433-7626 or andrew@ward.media