One weakness of the unemployment rate is that if people drop out of the labor force they cannot be counted as an unemployed person and the unemployment rate goes down. They are no longer actively seeking work and it might be because they are discouraged workers. The lower unemployment rate can be misleading in this case. People dropping out of the labor force might indicate a weak labor market.
We could look at the employment to population ratio instead, since that
includes those not in the labor force. But that includes
everyone over 16 and that means that senior citizens are in the group
but many of them have retired. The more that retire, the lower this
ratio would be and that might be misleading. It would not necessarily
mean the labor market is weak.
But we have this ratio for people age 25-54 (which also eliminates college age people who might not be looking for work)
The percentage of 25-54 year olds employed is 79.2% for May. It was
79.2% in April. It is still below the 79.7% in December 2007 when the
recession started (it was 80.3% in January 2007). Click here to see the BLS data.
The unemployment rate was 3.8% in May . Click here to go to that data. The % of those 16 and older employed went from 60.318% in April to
60.389% in May.
Here is a good graph from the St. Louis Fed.
It shows that there are 126,295,000 people in the 25-54 year old
group. So since we are 0.5 percentage points below the 79.7% of December
2007, that is still 631,475 fewer jobs (Hat tip: Vance Ginn of the Texas Public Policy Foundation).
Here is the timeline graph of the percentage of 25-54 year olds employed
Here it is going all the way back to 1948
The annual numbers are important, too. It rose to 78.63% for all of 2017 from 77.925% in 2016. We have had 4
or more straight years of a 0.5 or more gain. The last time that happened was 1984-89. But we are
still below the 79.9% for all of 2007 (the recession started in Dec. 2007).
Again, there were about 125 million people in the 25-54 year old
group in 2017. So since we were 1.26 percentage points below the 79.9% of 2007, that is still 1.58 million fewer jobs.