For years, Minnesota's unemployment rate has been well below the national average. That's no longer the case.
Minnesota's rate for January was 4.4%, surpassing the national rate of 4.3%.
Commissioner of the State Department of Employment and Economic Development, Matt Varilek, says 12 months of turbulence, erratic tariffs and a radical shift in immigration policy will do that.
"Minnesota has had a concentrated version of some of those federal actions with the presence of ICE, and so it seems very plausible that those actions are finally now filtering into our data in a very notable way," Varilek explains.
He says no state has borne the brunt of those factors more directly than Minnesota. But he also says the state has great underlying strength, resilience and diversity in its economy.
"We just have so many headwinds that to to a large extent are related to federal actions, that if we could just get those out of the way and be free to do our thing, I feel very optimistic that we would be in a much stronger position," Varilek added.
He's optimistic the numbers will improve as those headwinds fade.
More Data:
The private sector lost 900 jobs between December and January on a seasonally adjusted basis, while the Government sector gained 1,000 jobs gained in the same period.
Four supersectors in Minnesota gained jobs on a seasonally adjusted basis over the month, led by Educational and Health Services (5,000 jobs, up 0.8%) and Construction (3,700 jobs, up 2.6%). Six supersectors lost jobs over the month, led by Leisure and Hospitality (4,000 jobs, down 1.5%), Trade, Transportation and Utilities (2,500 jobs, down 0.5%) and Financial Activities (1,800 jobs, down 1.0%).
Over the year, Minnesota gained 13,147 payroll jobs, up 0.4%. The private sector gained 10,060 jobs, up 0.4% over the year. Five supersectors gained jobs, six lost jobs in Minnesota. Nationally, four supersectors gains jobs while seven lost jobs.
"The data are showing signs of a weaker labor market," said Angelina Nguyen, DEED Labor Market Information director. “We see smaller job growth and a higher unemployment rate than we have in years.”
The Minneapolis-Saint Paul Metropolitan Statistical Area saw a loss of almost 2,000 jobs in January 2026 – a decrease of 0.1% compared to a year ago.
Minnesota’s labor force decreased by 4,562 people and the labor force participation rate ticked down one-tenth of a percentage point to 68.2% over the month.
