The Obama administration is playing with the numbers. How is it that the unemployment rate is falling when there are few new jobs? Simple. People are leaving the workforce. They are applying for disability benefits in ever larger numbers. Am I saying they are not really disabled? No. and Yes. Social Security disability is measured, in part, by physical inability to perform one's regular and customary occupation. In addition the ability to adapt to a new and available occupation is taken into account. What this means is that if, for example, your regular and customary occupation is warehouseman involving lifting heavy boxes and you have a back condition that precludes heavy lifting for the rest of your life, you meet one prong of the disability definition. The second prong is are there jobs that you could, based on your education and abilities, reasonably be expected to do. In a down economy there are few such jobs. So disability benefits become a realistic option for creating a secure income. The down economy even affects worker's compensation. In an expanding economy an employer might be willing to train the warehouseman to become a dispatcher, a desk job not requiring heavy lifting. That decision would save on the payment of worker's compensation benefits in the long run. But in a stalled economy, where expansion looks pretty iffy, an employer might just bite the bullet and pay the worker's compensation, thinking, short run its the insurance company's problem.
The reality is that the labor force participation rate is the lowest it has been since 1981. The labor force participation rate is a measure of the number of people between the ages of 16 and 64 who have a job or who are looking for one. The labor force participation rate is shrinking every month. The economy is stalled. It is, looking at GDP, slightly growing but just barely.