Business in the Northwest 2023
Since 2018, WSU’s Carson College of Business has surveyed Pacific Northwest (PNW) business leaders and employees to gain insights and a deeper understanding of perceptions surrounding the business climate within the region. Last year, the business community combatted inflation, supply chain, and labor issues, while employees prioritized a desire for higher salaries and better work-life balance. Despite these new and amplified challenges, our report found both business leaders and employees are cautiously optimistic as they look toward the next three years, though less so compared to pre-COVID levels.
The Carson College of Business’ sixth annual Business in the Northwest report—based on a survey of 1,260 respondents in the PNW (Washington, Oregon, and Idaho), including business leaders, employees and Gen Z employees—provides a deeper look at how business leaders and employees’ priorities and perceptions have changed as predictions of a looming recession impact the PNW economy as much, if not more so, than the COVID-19 pandemic. Through our research, we discovered the following key insights:
- BUSINESS HEALTH AND OUTLOOK: Amidst predictions of a recession—combined with the amplified challenges of inflation, supply chain, and labor issues—optimism around the business climate has yet to return to pre-COVID levels. Compared to 2019, nearly five times as many employees and four times as many business leaders feel the PNW business climate has weakened in the last three years. Looking ahead, however, both groups are largely optimistic about the region’s economic future.
- WORKFORCE TURNOVER: Despite a tight labor market, a majority of business leaders feel their current turnover rate is improving or staying the same as pre-pandemic levels while employees report turnover rates at their companies are worsening.
- LESS TIME AT WORK: When it comes to desired benefits, employees and business leaders alike want less time in a traditional work setting, placing four-day or shorter work weeks at the top of their list.
- BENEFITS AND COMPENSATION: As hiring has slowed, there is a disconnect between business leaders and employees on the balance between benefits and compensation. While employees are more likely to see salary increases as the most motivating incentive companies can provide, business leaders—on-trend with pre-COVID results— see other benefits, such as flexible work schedules, as more compelling.
- GEN-Z PERSPECTIVE: Gen Z employees are skeptical about employers’ willingness to invest in their career development over the long term.
This survey was commissioned by WSU’s Carson College of Business and conducted by Edelman Data & Intelligence, a full-service consumer research firm. Fielded between 11/15/2022-12/07/2022, the online questionnaire surveyed 1,260 respondents in the PNW including N=500 PNW business leaders, N=500 PNW employees, and N=203 PNW Gen Z employees with an additional oversample of respondents from eastern and western Washington.
This is the sixth wave of this survey, with previous waves released in 2017, 2018, 2019 (conducted in December 2019, pre-pandemic), 2020 (conducted in June 2020, as a special COVID-19 wave), 2021, and 2022. Note the survey is modified each year, so not all questions are asked in all survey waves.
For expanded findings, we have included interactive, data visualization dashboards that can be broken out by age, gender, state and region. If you still can’t find what you’re looking for, please reach out to Eric Hollenbeck, communications manager for research, as additional data is readily available.
Key Finding 1: BUSINESS HEALTH AND OUTLOOK
Amidst predictions of a recession—combined with the amplified challenges of inflation, supply chain, and labor issues—optimism around the business climate has yet to return to pre-COVID levels. Compared to 2019, nearly five times as many employees and four times as many business leaders feel the PNW business climate has weakened in the last three years. Looking ahead, however, both groups are largely optimistic about the region’s economic future.
As we navigate a post-pandemic world and economic instability, PNW business leaders are becoming increasingly concerned the regional economy isn’t improving, with 29% reporting it has declined or weakened steadily (21 percentage points (pp) increase since 2019). Similar sentiments can be found among employees (44%) and Gen Z respondents (39%)—a 35pp and 34pp increase, respectively.
Thinking about the business climate in the PNW in the past three years, do you feel it has…
|Plateaued or stayed the same||31%||40%||-||33%||31%||50%|
|Declined or weakened steadily||29%||14%||-||8%||8%||7%|
|Plateaued or stayed the same||35%||35%||-||45%||45%||-|
|Declined or weakened steadily||44%||27%||-||9%||7%||-|
|PNW Gen Z Employees||2023||2022||2021*||2019||2018||2017|
|Plateaued or stayed the same||39%||39%||-||51%||-||-|
|Declined or weakened steadily||39%||30%||-||5%||-||-|
*In 2021, respondents were asked about the business climate “over the past three years, prior to the first COVID-19 case and after the first COVID-19 case in the US/PNW.” With the adjusted wording of the question, we do not recommend directly comparing to previous waves.
Three-quarters of business leaders and just over half of employees remain optimistic about the PNW business climate in the next three years. However, that rate has been decreasing gradually since 2019 (down 6pp for both employees and business leaders).
Employees who feel the PNW business climate has been strengthening attribute it mostly to increased efficiency and technological advancements, while those who see the business climate as weakening point largely to inflation (57% of business leaders and 62% of employees) and supply chain disruptions (43% of business leaders and 53% of employees) as the main contributors.
|Perceived causes of the declining/weakening business climate||PNW Business Leaders||PNW |
|PNW Gen Z Employee|
|Supply chain disruptions||43%||53%||34%|
Key Finding 2: WORKFORCE TURNOVER
Despite a tight labor market, a majority of business leaders feel their current turnover rate is improving or staying the same as pre-pandemic levels while employees report turnover rates at their companies are worsening.
While the labor market is cooling slightly, nearly 6 in 10 business leaders say their hiring is proceeding normally. However, employees are more likely to feel hiring has slowed, with nearly 5 in 10 employees saying current hiring plans at their companies have been paused.
Compensation is at the center of this struggle. Both business leaders and employees cite salary compensation as the primary influencer of their companies’ employee turnover rate. Two-thirds of business leaders say they want to create more jobs for their companies but can’t offer competitive compensation applicants will accept (64% in 2023 vs. 49% in 2019), underscoring the importance of employee retention.
About 70% of business leaders feel their companies’ turnover rate is improving or staying the same, though this share is down from nearly 90% of business leaders before the pandemic. Since COVID-19, the share of business leaders and employees who say their companies’ turnover rate is worsening has increased by 14pp (2023: 25%; 2019: 11%) and 15pp (2023: 40%; 2022: 25%), respectively.
|Compared to three years ago, how would you describe the current employee turnover rate at your company?|
|PNW Business Leaders||PNW Employee||PNW Gen Z Employee|
|Getting better||35% (2023)|
|Staying the same||37% (2023)|
|Getting worse||25% (2023)|
|Not sure/Don't know||2% (2023)|
For both business leaders and employees, the stability of their companies is cited as one of the main contributors to improving employee turnover rate (32% and 30%), although more employees also rank work-life balance as having a positive impact on turnover (40%).
Key Finding 3: LESS TIME AT WORK
When it comes to desired benefits, employees and business leaders alike want less time in a traditional work setting, placing four-day or shorter work weeks at the top of their list.
While respondents all would like to spend less time in the traditional workplace setting, employees put more paid time off (PTO) mental health days at the top of their list (53%, consistent with 2019), followed by a four-day work week (50%).
Business leaders also rank remote/hybrid work (38%) and better office locations (34%) as highly desirable benefits but still emphasize a four-day work week (39%) as well. Additionally, Gen Z employees saw a 16-percentage point increase among those who desire a four-day work week (2023: 46%; 2019: 30%).
This year, employees are less interested in paid days off for volunteering or community service than they were in 2019, with a 12-percentage point drop since 2019.
Key Finding 4: BENEFITS AND COMPENSATION
As hiring has slowed, there is a disconnect between business leaders and employees on the balance between benefits and compensation. While employees are more likely to see salary increase as the most motivating incentive companies can provide, business leaders—on-trend with pre-COVID results—see other benefits, such as flexible work schedules, as more compelling.
As business leaders struggle to provide competitive compensation, they are placing a greater emphasis on benefits, such as flexible work schedules and paid vacation time. While business leaders think this is what employees want, employees don’t agree—91% say they want a higher salary at their companies while 37% say they want a more flexible work schedule.
Apart from salary increases, employees say their top three most desired benefits are paid health insurance (54%), paid retirement programs (35%), and guaranteed severance package for all levels (16%). This is different from business leaders, who rank non-financial benefits including flexible work arrangements (36%), manageable workload (24%), and professional development stipends (14%), the highest. Among Gen Z, there is also a desire for paid transportation fees and company vehicles, up 7pp since 2019 (20% vs. 13%, respectively).
Key Finding 5: GEN-Z PERSPECTIVE
Gen Z employees are skeptical about the willingness of employers to invest in their career development over the long term.
Gen Z employees believe opportunities provided to employees, or lack thereof, along with flexible working hours and work-life balance, have a large impact on employee turnover.
Looking forward, inflation/recession is cited as the largest barrier to future business success across all audiences. Gen Z employees, in particular, saw a significant increase year-over-year in those who cited labor shortages (2023: 34%; 2022: 23%) and employee attrition/turnover (2023: 26%; 2022: 17%) as the biggest barriers to future success.
|Which of the following do you feel are the biggest barriers to success for your company in the next three years?|
|PNW Business Leaders||PNW Employee||PNW Gen Z Employee|
|Inflation/recession (42%)||Inflation/recession (41%)||Inflation/recession (39%)|
|Supply chain issues (26%)|
|Inability to fill open positions (34%)|
(30% 2022^; 22% 2021^; 31% 2019; 29% 2018)
|Labor shortages (34%)
|Labor shortages (24%)|
|Employee attrition/turnover (31%)|
(29% 2022^; 29% 2021^; 42% 2019; 41% 2018)
|Employee attrition/turnover (26%)
(17% 2022^; 21% 2021^; 27% 2019)
|Employee attrition/turnover (22%)|
(19% 2022^; 19% 2021^; 29% 2019; 32% 2018; 22% 2017)
|Labor shortages (31%)|
|Inability to fill open positions (22%)
(29% 2022^; 19% 2021^; 30% 2019)
|Cost of maintaining the business (20%)|
(19% 2022^; 28% 2021^; 32% 2019; 33% 2018; 24% 2017)
|Supply chain issues (23%)|
|Supply chain issues (22%)
^In 2021 and 2022, the question asked about the “next year” instead of the “next three years.”