Each month, the Minnesota Department of Employment and Economic Development (DEED) releases new data measuring the state of the labor force in Minnesota—and each month since Immigration Customs and Enforcement (ICE) began their federal occupation of the state, the numbers have been quite clear: ICE is bad for business.
The latest data, released May 21, 2026, covered April’s labor market numbers and showed jobs are finally rebounding over the month, with seven supersectors gaining jobs.
This is a major contrast from previous months, when Operation Metro Surge (OMS) was at its peak. In January, Minnesota’s unemployment rate increased to 4.4%, one-tenth of a percentage point higher than the national average of 4.3%, and the highest unemployment rate spike the state had seen since May 2007.
While the national economy has also slowed due to tariff uncertainties and other factors, it is clear that a significant amount of economic damage in the state can be traced back to the surge in federal immigration enforcement efforts. Minnesota Attorney General Keith Ellison and the cities of Minneapolis and St. Paul have claimed a combined business loss of $610 million in their lawsuit against the Department of Homeland Security (DHS).
While DEED Commissioner Matt Varilek says the Minnesota businesses impacted include “lots of businesses of a wide variety of types,” those that are “led or staffed or patronized by people of color” were most affected, “because that is where the focus of the ICE enforcement was. And it appeared to be without respect to legal status, just a focus on people of color.”
How Operation Metro Surge hurt Minnesota
ICE’s federal occupation of Minnesota formally began on December 1, 2025, and continued through February 12, 2026.
The impact of OMS was unimaginable. Renee Good and Alex Pretti shot and killed, and over 3,700 people—disproportinately people of color—were taken into custody, regardless of whether they had criminal histories.
Meanwhile, local businesses suffered. Many businesses lost significant sums of money and some were forced to close. While the full effect of OMS likely won’t be felt by Minnesotans for years to come, we do have a good idea of how OMS affected the state’s employment numbers.
What the numbers show
Based on the data released last week, Minnesota’s unemployment rate stood at 4.5% in April, just outpacing the national unemployment rate of 4.3%. Both numbers match the figures seen in March, and continue a pattern of an elevated unemployment rate that first shot up in January, the same month OMS activity intensified.
Some of the supersectors that experienced the most job losses during OMS have begun to see improvement. Among them are leisure and hospitality, which gained 3,800 jobs, up 1.4%; trade, transportation and utilities, which gained 3,100 jobs, up 0.6%; and construction, which gained 2,100 jobs, up 1.4%.
“There was more vulnerability to grocery stores, restaurants, retail outlets, hotels, trucking, transportation, and manufacturing,” Varilek says of the ICE-impacted supersectors. “We heard the fear that workers felt in showing up and then the fear that shoppers felt showing up.”
While many of these job losses were concentrated in the Twin Cities metro, Varilek notes that ICE raids in more rural areas of the state also had an economic impact, with significant job losses being felt in communities like Duluth-Superior, St. Cloud, Mankato, and Fargo-Moorhead. Varilek says they even learned of OMS activity taking place in rural towns like Little Falls and Worthington.
Varilek says the improvement following four straight months of job losses can be at least partially attributed to “a significantly smaller ICE presence in Minnesota.”
‘Quite a milestone’
Minnesota’s unemployment rate first surged from 4.1% in December to 4.4% a month later, in January.
Angelina Nguyen, the director of DEED’s Labor Information Market, emphasizes this isn’t normal. “Three-tenths of a percentage point between December and January is an unusually big jump for Minnesota’s unemployment rate,” she says, “and it did put us higher than the nation’s unemployment rate, which is quite a milestone.”
Aaron Rosenthal, the executive director of North Star Policy Action, an independent research institute in Minnesota, estimates that the Minneapolis-St. Paul metro area lost at least $106 million in wages in January. The City of Minneapolis estimated a loss of $47 million in wages just for its residents and Nguyen notes that the Twin Cities’ job growth rate fell behind the growth rate of the rest of the state, which is also incredibly unusual since the metro area typically drives so much economic activity.
And even those residents who kept working amid the OMS surge were often working fewer hours, Rosenthal notes. In January, for example, the average private-sector worker logged 31.1 hours of work a week, which was the lowest number since 2007. “People who didn’t lose jobs, but who kept jobs and just worked fewer hours or didn’t show up at all,” Rosenthal says.
Failed legislative support
While larger enterprises are positioned to weather unforeseen downturns like what occurred in the state, small businesses often are not so lucky. To address the issue, Minnesota Democrats in the state Legislature proposed a $100 million forgivable loan program for small businesses who lost revenue during OMS.
Countless small businesses attended committee hearings to testify about their losses and the trauma they endured during the surge. The bill passed the Senate 35-31, with one Republican, Sen. Jim Abler of Anoka, who had publicly criticized the federal government’s handling of OMS, joined Democrats in supporting it. The proposal failed to make it out of the 67-67 deadlocked House, as Republicans blocked the legislation from advancing.
According to Rosenthal, Minnesota Republicans in the House believed that “the program won’t work as intended, or in many cases … maybe the damage was not as serious as people were making it out to be. So, either they think the people who are coming forward and saying they were hurt are lying or they simply don’t believe it reached a scale that merits attention from the state.”
While many Minnesotans have rallied to support these businesses, mutual aid can only go so far for so long. “As attention wanes and the mutual aid winds down, there’s a real question of are they [businesses] able to sustain themselves based on what they brought in during that time?” Rosenthal asks.
As additional challenges have continued to pile up beyond OMS—like rising energy costs and inflation—many businesses are facing the harsh reality that they “might be closed for good” if something doesn’t change soon, Varilek says.
How you can help
More work needs to be done at the state and federal levels to recoup even a fraction of the losses Minnesotans faced during OMS. But in the meantime, the love and support Minnesotans have for their small local businesses is clear, and DEED is working to make it easier for Minnesotans and these businesses to continue to support each other.
Launched earlier this month, Choose Minnesota is a statewide initiative encouraging Minnesotans to keep supporting local businesses. A “long-term” version of the “Shop Local, Stand Together” campaign launched in January, the program is a reminder for Minnesotans to buy from local businesses. “We are using our megaphone as a statewide agency to help focus attention on those small businesses, many of which might still be struggling, perhaps from Metro Surge, but also from those other challenges, so that we are basically encouraging people to act on that impulse that they have and to be reminded,” Varilek says.
The website has two parts, one for business owners, and one for customers.
For businesses, DEED offers a range of resources that are free to use, like financial and business planning assistance, connection to nonprofit partners, workforce development, training, and a graphics package for social media engagement that reminds consumers to “choose local.” Varilek says DEED will also do a series of statewide round tables to highlight the challenges businesses face and future opportunities, while also bringing media attention to the issue.
For shoppers, the site has ideas for how you can find Minnesota-owned businesses that align with what you’re looking to buy, and reminders to share information with your friends and family and attend local events promoting said shops.
“We want businesses to know you are not alone, we support you,” Varilek says.
