Minnesota recorded the steepest monthly decline in construction employment in the nation late last year, shedding nearly 10,000 jobs in December amid a mix of project delays, funding uncertainty and potential workforce disruptions.
According to a new analysis from the Associated General Contractors of America (AGC), Minnesota lost 9,900 construction jobs from November to December — a 6.6% drop that ranked first nationally both in total losses and percentage decline. The downturn was significantly larger than losses reported in other major construction markets, including California, which lost 5,000 jobs, and Texas, which lost 4,500.
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Despite the sharp monthly contraction, construction employment trends remain more favorable when viewed over a longer timeframe. Between December 2024 and December 2025, Minnesota was among 34 states that posted year-over-year gains in construction employment.
Ken Simonson, chief economist for AGC-America, said the magnitude of Minnesota’s December losses was unexpected, particularly following a prolonged period of strong job growth in the state.
“I’m puzzled and shocked” by the reported decline, Simonson said, noting it followed “a period of strong job growth.”
“In short, I don’t have an explanation. It is a startlingly bad figure, and we’ll just have to see if it is sustained” when the next Bureau of Labor Statistics report comes out, he said.
In a separate press release, Simonson pointed to broader national challenges affecting construction activity. He said “too many projects have been postponed or canceled due to lack of funding, financing costs, or policy uncertainty about tariffs and immigration enforcement.”
The December employment drop coincided with the arrival of thousands of U.S. Immigration and Customs Enforcement agents in Minnesota as part of Operation Metro Surge, which began earlier that month.
Union officials and industry stakeholders have told Finance & Commerce that growing numbers of migrant construction workers — including some with valid work permits — have been hesitant to report to job sites due to fears of detention.
Asked whether immigration enforcement could be influencing construction employment figures, Simonson cautioned against drawing firm conclusions but acknowledged the possibility.
“Speculate is the right word. The most I can say is, that’s a very plausible piece of the explanation,” he said.
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Simonson also emphasized that Minnesota’s longer-term construction growth remains aligned with national trends despite the December decline.
“Despite the plunge in December, the state’s cumulative growth since February 2020 still matched that of the U.S. In short, it’s too early to say if the December decline is a one-off, a measurement error, or the start of longer decline,” he said.
Adam Hanson, chapter president of the Associated Builders and Contractors of Minnesota and North Dakota, said immigration policy could be contributing to the employment downturn.
“While state-level employment data can be volatile and is often subject to large revisions, this is the second largest one-month decline in construction employment the state has ever experienced, trailing only April 2020,” Hanson said.
“Lawmakers in St. Paul and in Washington, D.C., should be prioritizing legislation that promote job creation and regulatory certainty for Minnesota contractors and the projects they build,” he added.
Angelina Nguyen, labor market information director for the Minnesota Department of Employment and Economic Development, said Minnesota’s construction “super-sector” still added 1,689 jobs year over year — a 1.3% increase — outperforming the national growth rate of 0.1%.
“We typically see a drop in construction at the end of the warm season. This year, it happens to be between November and December that many construction projects wrapped up,” Nguyen said.
She noted that labor shortages and rising material costs continue to challenge contractors statewide.
“Labor shortage has been a challenge for the construction industry for years. Cost of material is also a big challenge. It’s hard to parse out how much impact the immigration shutdown has on labor availability versus the impact of high material costs,” Nguyen said.
Nguyen added that she is “not worried about the health” of Minnesota’s construction industry, pointing to continued growth in building construction and specialty trade contractors. However, employment in heavy and civil engineering declined, reflecting what she described as a “tapering of public dollars spent on construction” after a long period of infrastructure investment.
Originally reported by Brian Johnson in Finance - Commerce.
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