Every month, a new unemployment rate lands, gets a headline, and gets treated like a verdict on the regional economy. For the boards, CEOs, and hiring leaders SkyWater Search Partners works with across Minnesota and the Upper Midwest, that single number is usually the least useful part of the report. Here is what the data actually shows right now, what it is probably hiding, and what it means if you are building a leadership team in this region in the second half of 2026.

Minnesota: growth on the surface, contraction underneath

Minnesota added 13,200 jobs in June, its third straight month of gains, with the private sector responsible for 14,600 of those positions. That is genuinely good news. But the state's unemployment rate held at 4.4 percent, a full two-tenths above the national rate of 4.2 percent, which itself ticked down that month.

DEED's own labor market information director, Angelina Nguyễn, put it plainly: the data continues to paint "a mixed picture." DEED Commissioner Matt Varilek was more specific about the underlying problem, saying the state needs to "continue to address the steady decline in our labor force" if it wants to build on recent job growth.

That labor force decline is the real story. In January 2026, Minnesota's unemployment rate exceeded the national rate for the first time since May 2007. By April, the state had lost more than 10,000 workers and labor force participation had fallen to 67.4 percent, the fourth consecutive month of contraction. State officials pointed to a specific cause: Operation Metro Surge, the winter immigration enforcement operation that shut down businesses and kept workers home, which coincided with Minnesota losing 6,400 jobs between January and March.

The number under the number

This is worth being direct about, because it matters for how you read every jobs report coming out of this region for the next year or two.

Unemployment insurance claims only capture workers who are both out of work and eligible to file. Many of the workers affected by Metro Surge, whether undocumented or simply too afraid to leave home, never show up in that data at all. They do not file for unemployment because they were never eligible for it, or because engaging with a state agency feels risky regardless of their actual status. What you see instead is a labor force that shrinks, hours that disappear, and businesses that quietly go short-staffed, none of which shows up as a clean spike in the jobless rate.

Nguyễn acknowledged this gap directly, noting that it's "not surprising the size of the labor force and the rate of participation have both declined" given the level of enforcement activity in the Twin Cities last winter. The City of Minneapolis estimated the operation's economic impact at more than $203 million in its first month alone, and a later analysis put lost wages from missed work at roughly $189 million. A separate academic review attributed $47 million in monthly wage losses specifically to workers too afraid to leave home for their jobs. The leisure and hospitality sector is estimated to have lost about 4,600 jobs and $71 million in wages over three months.

Jake Schwitzer of North Star Policy Action framed the broader stakes this way: even a modest pullback in economic activity among immigrant workers would mean "a weekly reduction of nearly $80 million for the state's economy."

The takeaway for employers: the official unemployment rate in Minnesota right now is probably understating how tight or how disrupted the frontline labor market actually is, particularly in hospitality, construction, long-term care, and food processing. If you are seeing unexplained turnover, no-shows, or sourcing gaps in those functions, you are not imagining it, and it may not resolve as quickly as the headline job growth suggests.

The rest of the region, state by state

Minnesota is actually the outlier. Every neighboring state is still running well below the national rate.

• Iowa held at 3.2 percent in June, tied for eighth-lowest in the country alongside Alabama and Wyoming, with 600 jobs added. But the composition matters: gains in trade and financial services were offset by continued pullback in manufacturing and professional and business services, the latter down roughly 3,000 jobs over the year. Iowa Workforce Development's Beth Townsend described the pattern as "a continuation of slow-but-stable growth."
• Wisconsin sat at 3.5 percent seasonally adjusted in April, unchanged from March but up from 3.2 percent a year earlier, against a national rate of 4.3 percent that same month.
• North Dakota fell to 2.3 percent in June, the second-lowest rate in the nation.
• South Dakota was the lowest in the country at 2.0 percent in June.

In other words, if you are hiring in Fargo, Sioux Falls, Des Moines, or Milwaukee, you are competing for talent in one of the tightest labor markets in the country. If you are hiring in the Twin Cities, you are navigating something messier: real job growth, a shrinking and harder-to-read labor pool, and enforcement-driven disruption concentrated in specific sectors and geographies.

Why none of this translates cleanly to executive hiring

Here is where it gets important for the audience SkyWater actually serves. State unemployment rates and monthly payroll counts are built from hourly, frontline, and entry-level employment data. They tell you almost nothing about what is happening at the director, VP, and C-suite level, and reading them as a proxy for executive labor supply is a mistake we see companies make regularly.

The better signal at the leadership level is CEO and executive turnover, and that data is telling a different story than the state jobs reports. Through the first half of 2026, public-company CEO departures were down 26 percent year over year, 181 compared with 248 over the same period in 2025. Challenger, Gray & Christmas's Andy Challenger noted that "companies paused CEO decisions" earlier this year, describing a broader wait-and-see posture after two years of rapid churn. Boards are settling into the leaders they have rather than continuing to cycle through them.

That said, nobody is calling this a permanent shift. Russell Reynolds' Laura Mantoura has argued that the pressures behind recent turnover, activist investors, market volatility, ongoing transformation, have not gone away, and that "sustained high levels of CEO turnover should be expected" even if the pace has cooled for now. Notably, first-quarter 2026 also saw a surge in CEO retirements, the highest single-quarter total in recent memory, which points to a succession wave building underneath the calmer headline numbers.

Layer on top of that the fact that the job itself is changing. Search firms are increasingly finding that job descriptions for CEO, CFO, CIO, and CHRO roles no longer match what boards actually need day to day, particularly around AI strategy, cybersecurity risk, and capital planning. And broader white-collar hiring, including in financial services, has genuinely slowed, with hiring plans down sharply from prior years as companies lean on AI and automation for work that used to require headcount.

What this means if you're building a leadership team here

1. Don't read the state unemployment rate as a leadership hiring signal. Minnesota's 4.4 percent tells you almost nothing about the supply of VP-level operations or finance talent. Watch labor force participation, sector-specific data, and CEO turnover reports instead.
2. Expect the frontline disruption to ripple upward. When hospitality, construction, and caregiving employers lose workers to enforcement-driven attrition, the operations and HR leaders responsible for staffing those functions come under real pressure. If you are hiring a VP of Operations or an HR executive in an affected sector, factor workforce stability into the mandate itself.
3. Boards are being deliberate, not passive. Slower CEO turnover doesn't mean less hiring activity, it means more thoughtful searches, more emphasis on defining the mandate correctly the first time, and less tolerance for a mis-hire.
4. The Dakotas and Iowa remain genuinely tight talent markets. If your search extends beyond the Twin Cities into the broader Upper Midwest, plan for longer timelines and stronger competition, especially in skilled trades-adjacent leadership and health care administration.

The numbers coming out of DEED, Iowa Workforce Development, and the neighboring state agencies are accurate as far as they go. They just weren't built to answer the question executive search actually has to answer: who is available, at what level, and why. That's the gap SkyWater exists to close.

Primary sources: Minnesota DEED / Star Tribune · FOX 9 Minneapolis-St. Paul · City of Minneapolis Impact Assessment · Minnesota Reformer · Iowa Workforce Development · WisConomy (Wisconsin DWD) · KSJB / BLS · Challenger, Gray & Christmas CEO Turnover Reports · Fast Company · Cowen Partners