The unemployment rate fell to 6.7% in December — the first time it’s been below 7% in five years. But the drop was for all the wrong reasons.
The rate fell because many people got fed up, stopped looking for work and dropped out of the labor force altogether. (The jobless have to be actively looking for work in order to be counted as unemployed by the Labor Department.)
In December, 347,000 people dropped out of the workforce. That pushed the participation rate, which is the percentage of the population in the labor force, down to 62.8%. That’s the lowest it’s been since early 1978.
In some ways the participation rate may be even weaker than it was in 1978, since more women work outside the home today. The December participation rate for men alone matched a record low dating back to 1948.
It’s easy to see why it’s tough for so many to find work, since employers added just 74,000 workers in December.