This business about the declining jobless rate being connected to more people dropping out of the labor force is simply not true - and for reasons only an economist could love. In other words, it's complicated. But it's worth bringing up because we're starting to hear noises from certain corners of the right - as well as certain know-it-alls from the blogosphere - that the numbers aren't as good as they seem. Except that they really are. From NYT columnist Floyd Norris:
Each January the bureau updates its population estimates, and this update was particularly large because it had a new census to use. The policy is to not revise the earlier unemployment survey numbers, so sometimes there are big apparent changes that are not actually there. That is what happened in January. The government says that the estimate changes reduced the labor force participation rate by 0.3 percentage points. Without the new estimates the number would have been unchanged from December to January. The changes had no effect on the unemployment rate.