According to the U.S. Labor Department, 400,000 people dropped out of the U.S. labor force between March and July this year. That means that the labor-force participation rate – a far more significant indicator than the lying official unemployment numbers – fell from 62.4% in March to 62.1% in July. It stood at 63.4% before the pandemic, and in 2009 it hit a peak of 65.7% and has been plunging ever since.
The labor-force participation rate counts the percentage of Americans 16 years old and over who are in the labor force, i.e., who are working or have looked for work in the last year. When people get discouraged about ever finding a job, then—poof!—they are no longer part of the labor force and are no longer “unemployed.” The way Fox News spins this matter in their coverage is by reporting that “the number of workers in the U.S. has continued to shrink as businesses struggle to find employees for their openings.” A banker economist at Wells Fargo, Michael Pugliese, took the crazy monetarist analysis one step further: “But if labor supply flatlines or keeps falling, you need to bring demand down even more in order to cool off wage growth.”
