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 — the percentage of adult Americans with a job or seeking one — 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.
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