The labor participation rate has declined dramatically since the Great Recession. But after the 2001 recession, it never really recovered.
Thanks to James Pethokoukis for drawing my attention to the chart above. It shows the civilian labor force participation rate from 2000-present. The labor participation rate has been a sort of "third number" when U.S. jobs data comes out each month. The other two are the headline unemployment rate — now at 8.1 percent — and the level of U.S. economic growth, measured as GDP, which came in at only 1.3 percent for the second quarter. That's troublingly low.
And what about labor participation? It's at levels not seen since the early 1980s. A couple of factors are contributing. First, unemployment is high and job creation is weak; this means that workers are out of the labor force, either drawing or having exhausted unemployment benefits. Second, people are retiring as the first wave of the Baby Boom collects its gold watch.