But much of the drop in the unemployment rate came from 432,000 people leaving the labor force. By giving up looking for work, they are no longer counted by the official unemployment rate. Many of those who gave up on the job market came from the ranks of the long-term unemployed (out of work for six months or more) whose numbers fell by 381,000 in June.

The Labor Force Participation Rate, which measures the percentage of adults who are either working or looking for work, fell to 62.6% in June, the lowest rate since 1977, when more women were starting to join the job market. This number is another sign that the economic expansion is still weak, as a strong expansion would draw more people into the labor force.

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San José, CA – On Oct. 3, the Department of Labor released their report on the job market for September. The report showed that the Labor Force Participation Rate (LFPR), or the percentage of adults either working or looking for work, continued to decline, and hit a low not seen since 1978. Almost 100,000 jobless workers gave up their job search and left the labor market, helping the unemployment rate to go down to 5.9%, the lowest since summer of 2008.

Hardest hit by the drop in labor force participation were young people, 16 to 24 years old, who have seen their LFPR drop by 4.3 percentage points since the recession began in December 2007, much more than the 3.3 percentage point overall fall. Youth also suffer from the highest unemployment rate, at 13.7%, and their unemployment rate has risen the most, 2 whole percentage points, since the recession began.

Another sign of a weak labor market was the small increase in weekly wages, which were up only 2% from a year ago, barely enough to cover rising prices. This low rate of increase in weekly wages shows that workers are still at a disadvantage and are not able to get higher wages, even though the overall economy has been growing for more than five years.

While the labor market was half empty, looking at the weak labor force participation rates and weekly earning, it was also seen as half full, at least by the mainstream media, given the drop in the unemployment rate and the 248,000 new jobs added. The stock market reacted positively with large gains after days of losses. The report was seen as good for corporate profits: the increase in new jobs showed that the economy was still growing, that there was no recession on the horizon, and sales would continue to rise. At the same time, the weak growth in wages means that labor costs won’t be pressuring profit margins and corporate profits.

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San José, CA – On Sept. 6, the Labor Department announced that the official unemployment rate dropped to 7.3% in August, down from 7.4% in July. But even though 110,000 fewer people were working in August than July, 310,000 people gave up looking for work and were no longer counted as unemployed. The Labor Force Participation Rate, or the fraction of the adult population who are either working or looking for work, fell to 63.2%, the lowest since August 1978.

Hardest hit were African Americans. Not only was their official unemployment more than twice that of whites (13.0% vs. 6.4%), but the drop in their Labor Force Participation Rate of 0.6% to only 60.8% was twice that of whites, whose Labor Force Participation Rate fell 0.3% to 63.4%.

Overall, there are still over 2 million fewer people with jobs than when the recession began in December of 2007. Even though the economy has been growing for more than four years since the recession officially ended in June of 2009, it has not been fast enough to bring back all of the lost jobs. In addition, almost half of the new jobs being created are in low-paying industries such as retail and hotel and restaurants.

In 2012 the share of national income going to wages, salaries and benefits was only 50.3%, the lowest since 1950. At the same time the share of income going to profits, interest and rent rose in 2012 to 40.4%, the highest since 1948. Corporate profits are at all time highs, as businesses reap the benefits of fewer workers producing more goods and services, while wages and benefits have not gone up.

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