U.S. employers added a jaw-dropping 528,000 jobs in July, far more than expected, and wages jumped higher than expected—and yet the number of people working or looking for work declined. Where is everyone?
The Department of Labor said on Friday that the size of the labor force fell by 63,000 in July even though the population grew by 177,000. The labor force participation rate—the share of people working or looking for work—fell by one tenth of a percentage point to 62.1 percent.
The mystery of the shrinking labor force and the decline of labor force participation is one of the persistent conundrums of the post-pandemic recovery. The labor market has been very strong—so strong that many think we cannot be in a recession despite two consecutive quarters of negative economic growth—but somehow this has not pulled a larger share of Americans into the labor force.
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