Anthony Randazzo on the New Normal for Unemployment

With unemployment down to 8.1 percent, it's looking like a real recovery in the U.S.A. Or is it?

Anthony Randazzo shows how the drop in headline unemployment may just mean fewer people are working at all. In April 2012, Randazzo notes, labor force participation was 63.4, the lowest rate since January 1981. This means that while unemployment has fallen from its high mark of 10 percent in October 2009, the percentage of Americans in the job market has also fallen from 64.9 percent that same month down to 63.4 percent 30 months later. Worse still, over the last 20 years, the usual trend is for labor participation to expand as unemployment falls. This is because workers are being added to payrolls, and thus cutting down on unemployment. However, as you can see in this graph below, after the recession ended in the summer of 2009, both participation in the labor market and unemployment numbers have been falling. This suggests that the lower unemployment number is really just because so many people have stopped looking for work.