Evan Ramstad: The Great Wrecking of Minnesota still underway, 10 months later
Published in Business News
Ten months after The Great Wrecking of Minnesota, the state remains battered by a brutal federal police action and frenetic reactions to fraud against government.
What unfolded during those bitter, icy days of winter 2025-26 still reverberates in every community in Minnesota. I’m sure I’m one of many Minnesotans who will think of nothing else in the voting booth next week.
When I expressed my anger in early February about what was transpiring here, with the state’s disintegration into political extremism and the Trump administration’s ruthlessness, I wrote everything about it was folly and futility. I speculated about harms to employers and workers.
“Evan, we’re way, way beyond economic impact at this point,” one reader admonished me in the online comments. “We’re talking about the very fabric of what America is and stands for on the world stage.”
Two people were killed needlessly and unjustly by agents of the federal government. Minnesotans with disabilities who rely on publicly funded programs had their lives thrown into chaos.
President Donald Trump’s power withered. Gov. Tim Walz’s political career ended.
And in an inspiring display of courage and humanity, thousands of Minnesotans rose up and protected relatives, friends and neighbors faster than any of their institutions could.
And while economic effects pale against those other dimensions of what happened here, the Great Wrecking hit Minnesotans in their wallets in multiple ways.
Most significantly, it drove people out of a state that was barely growing.
The people who left, who largely were Hispanic immigrants, also contributed most to the little population growth Minnesota has experienced in recent years. Their exit has shrunk the labor force, the consumer base and number of people who pay taxes and generate economic growth.
We won’t see population data for 2026 until late next spring, but the effects of the exodus are already visible in Minnesota’s employment data, which comes out every month.
In September, Minnesota had 64,000 fewer people working than it did in November last year, according to the Bureau of Labor Statistics. That’s a 2.1% drop in a workforce of 3 million.
And we know those people didn’t just become unemployed because the same data shows the size of Minnesota’s workforce declined by almost 58,000 in that period, a 1.8% drop.
Iowa, North Dakota and South Dakota have also seen drops in workforce over the past year. Minnesota has lost more than all of them combined in absolute numbers, and it beats all of them in percentage loss. Wisconsin’s workforce has grown over the past year.
Minnesota has fewer people working and trying to find work today than it did in January 2020.
That means the Trump administration worsened the most vexing traits of Minnesota’s economy — that population growth was low and the labor force extremely tight.
The state is being forced to confront whether it can stay rich without growth even sooner than I thought possible — and I have been warning about the possibility since 2023.
But there’s a problem for fussy pants like me: Minnesota in the second quarter (April, May and June) recorded its highest economic growth since 2021.
Manufacturing rebounded sharply from a year ago, and it was the leading sector as the state produced 3.4% growth. Only New York, Delaware and South Carolina did better.
That’s a big contrast to 2025, when Minnesota’s growth was 0.7%, and to the first three months of the year, when the state and Midwest economies looked horrible.
In recent weeks, I’ve heard political candidates cite the second-quarter growth figure as a sign Minnesota is in great shape. Several readers have emailed me to ask when I was going to acknowledge the economy is fine.
I’m happy for the rebound, but it’s just one quarter and the comparative base is low. We’ll talk about this again next March or April when we get full-year data.
The Bureau for Economic Analysis, which produces that data, also in September revised output numbers going back a decade or so and, in almost all periods, Minnesota’s went down.
Bottom line: I believe the future of Minnesota’s economy still faces a huge challenge because population growth, one of the three key contributors to economic growth, can’t be counted on. The state instead will need greater productivity or more resource development to create wealth.
Meanwhile, the other pressing economic effect from The Great Wrecking of Minnesota is tied to anger about fraud against government services. And it is likely to make headlines in coming months.
The Trump administration has so far withheld about $550 million in funds for Medicaid services in Minnesota. If that continues through next spring, Minnesota legislators and the next governor will face a choice: use state funds to cover the cost of the services or cut back on the services.
The Trump administration gave Minnesota five months to revalidate 5,600 providers in 13 Medicaid categories or lose more federal funds. Minnesota’s Department of Human Services (DHS) got the work done by the deadline, including on-site visits to all, and found about 900 didn’t qualify to continue.
That’s a large number, though it doesn’t mean all were engaged in fraud. Hundreds have appealed, a DHS spokeswoman told me.
But it’s a high-enough number to underscore the suspicions about fraud in those 13 services. Before the review, Minnesota outright canceled a 14th program, called Housing Stabilization, because of fraud.
Twice last week, Dr. Mehmet Oz, the administrator for the U.S. Centers for Medicare and Medicaid Services, said that “a little more than one-third” of Minnesota’s providers couldn’t be revalidated. “That’s a bad starting point in an audit,” Oz said last Thursday.
I asked an agency spokesman to explain how Oz reached that “one-third” characterization, but he declined comment.
That’s a bad starting point, too.
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