The U.S. labor market is slowing. Minnesota, for now, is bucking the trend.

The state added jobs in August and also lost fewer jobs in July than first reported.

The Minnesota Star Tribune
September 18, 2025 at 3:37PM
Andrea Lazarich speaks with Joe Hughes from Michael Foods during a 2023 job fair in Minneapolis. (Alex Kormann/The Minnesota Star Tribune)

Minnesota’s labor market defied expectations in August, adding thousands of jobs and outpacing the country as a whole just a month after state officials warned of an economic slowdown.

Employers added 5,900 jobs in August, the state Department of Employment and Economic Development (DEED) reported Thursday. A routine revision to the July numbers showed the state lost just 500 jobs that month, less than the 4,400 first reported.

“August showed strong growth for Minnesota’s workforce, despite a nearly flat trend nationally,” DEED Commissioner Matt Varilek said Thursday. “We continue to monitor for changes in this picture due to the uncertainty coming out of Washington, but we’re pleased with Minnesota’s economic resilience.”

A month ago, state officials sounded the alarm that tariffs, federal funding cuts, mass government layoffs and an immigration crackdown were beginning to strain Minnesota’s economy as well as the country’s at large.

The monthly state jobs report, like the national report, relies on business survey responses and is regularly revised as more come in to DEED.

“Naturally, some months will get revisions that report better numbers; some months’ revisions report worse numbers,” said Angelina Nguyễn, DEED’s labor market information director. “So I would say, with monthly data that’s released, take it with a grain of salt in the sense of, don’t let one month define the whole picture.”

Minnesota added more than 39,000 jobs year-over-year in August, a 1.3% bump that outpaced a nationwide uptick of 0.8%, according to DEED. The state’s diverse headquarters economy typically helps protect it from shocks that hurt other parts of the country, officials said.

Cooling demand for workers nationally prompted the Federal Reserve to cut rates at its meeting this week in an effort to juice the slowing economy.

The U.S. unemployment rate ticked up to 4.3% in August, and employers have added fewer than 30,000 jobs a month for the past three months.

Some of the decline is because the American workforce is shrinking, Fed Chair Jerome Powell said Wednesday, citing declining immigration and lower labor force participation overall.

Put simply, fewer total workers means fewer people who could be unemployed.

Still, he said, employers aren’t hiring enough to keep unemployment from rising, and though wage growth is outpacing inflation, it’s also starting to drag.

“Overall, the marked slowing in both the supply of and demand for workers is unusual,” Powell said. “In this less dynamic and somewhat softer labor market, the downside risks to employment appear to have risen.”

Inflation has recently begun to rise, putting the Fed in a tough spot. When inflation is high, the central bank can raise rates to temper price growth. But that slows the economy and often leads to a rise in unemployment.

U.S. employers have spent much of the year in wait-and-see mode as the ramifications of federal policies, particularly President Donald Trump’s trade war, bear out. They haven’t laid off many workers, but they haven’t hired many, either — so while the unemployment rate has stayed relatively low, the number of people unemployed for six months or more has inched higher.

In Minnesota, 21,300 people were in the “long-term unemployed” category in August, up from 10,700 a year ago, according to DEED.

about the writer

about the writer

Emma Nelson

Editor

Emma Nelson is a reporter and editor at the Minnesota Star Tribune.

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