James Pethokoukis explains in The Awful, awful, August jobs report. Here’s the take away from Pethokoukis’s report:
While the unemployment rate dropped to 8.1% from 8.3% in July, it was due to a big drop in the labor force participation rate (the share of Americans with a job or looking for one). If fewer Americans hadn’t given up looking for work, the unemployment rate would have risen.
Remember, if everyone who is unemployed simply gave up looking for work the unemployment rate would be zero.
Read the whole thing.