The labor force — those who have a job or are looking for one — is getting smaller, even though the economy is growing and steadily adding jobs. That trend defies the rules of a normal economic recovery. Nobody is sure why it's happening. Economists think some of the missing workers have retired, have entered college or are getting by on government disability checks. Others have probably just given up looking for work.
By the government's definition, if you quit looking, you're no longer counted as unemployed. And you're no longer part of the labor force. The number of Americans counted as unemployed has shrunk by almost 1.3 million [since November]. That means the labor force has dropped by 529,000 workers.
The percentage of adults in the labor force is a figure that economists call the participation rate. It is 64.2 percent, the smallest since 1984
. And that's become a mystery to economists. Normally after a recession, an improving economy lures job seekers back into the labor market. This time, many are staying on the sidelines. Their decision not to seek work means the drop in unemployment from 9.8 percent in November to 9 percent in April isn't as good as it looks.
If the 529,000 missing workers had been out scavenging for a job without success, the unemployment rate would have been 9.3 percent in April
, not the reported rate of 9 percent. And if the participation rate were as high as it was when the recession began, 66 percent, in December 2007, the unemployment rate could have been as high as 11.5 percent
The labor force grew by just 15,000 in April from March — not even enough to keep up with population growth
. Economists say many would-be job seekers remain daunted by the odds against finding work: There were 4.3 unemployed people for each job opening in March, more than double the ratio before the recession
. And job vacancies are running 35 percent below the pre-recession peak.
Some who have left the job market are getting by on government checks, particularly Social Security's program for the disabled. More than 8.3 million Americans were on Social Security disability last month, up 1.2 million, or 17 percent
, from the end of 2007.