Why Fewer Working-age Americans Are Working

By PAUL WISEMAN

WASHINGTON (AP) ⿿ The drop in the unemployment rate in August to a 4½-year low was hardly cause for celebration. The rate fell because more people stopped looking for work.

More than 300,000 people stopped working or looking for a job. Their exodus shrank the so-called labor force participation rate â¿¿ the percentage of adult Americans with a job or seeking one â¿¿ to 63.2 percent. It's the lowest participation rate since August 1978.

Once people without a job stop looking for one, the government no longer counts them as unemployed. That's why the unemployment rate dropped to 7.3 percent in August from 7.4 percent in July even though 115,000 fewer people said they had jobs.

If those who left the labor force last month had still been looking for work, the unemployment rate would have risen to 7.5 percent in August.

"Pretty disappointing," said Beth Ann Bovino, U.S. chief economist at Standard & Poor's Ratings Services. "You saw more people leave the job market and fewer people get jobs. Not a good sign."

Back in 2000, the participation rate hit a high of 67.3 percent. At the time, women were pouring into the labor force. But women's participation fell modestly through the mid-2000s â¿¿ then dropped sharply from late 2009 through 2013.

Women's participation rate is now 57 percent. The rate for men is nearly 70 percent.

Another factor in the declining participation is that the oldest baby boomers have reached retirement age.

But Craig Alexander, chief economist at TD Bank Group, says "demographics cannot explain the amount of decline" in labor force participation.

Many Americans without jobs remain so discouraged that they've given up on the job market. Others have retired early. Younger ones have enrolled in school.

Some Americans have suspended their job hunt until the employment landscape brightens. A rising number are collecting disability checks.

If you liked this article you might like

What's Behind the Surge in Energy Stocks

Hillary Clinton Says Prosecuting Individuals is Key to Wall Street Reform