One Key Jobs Metric Grows 'More Concerning'

American workers are quietly stepping away from the labor market—and not just because they're retiring. The big headline over last week's jobs report was that employers unexpectedly shed 23,000 jobs in July. But MarketWatch zeroes in on another notable aspect of the Bureau of Labor Statistics data: The US workforce has shrunk by more than 1 million people over the past year, dropping to 169.1 million. Reuters notes that 264,000 people left the labor force in July alone, pushing down a metric known as the labor force participation rate—which measures how much of the available workforce is participating in the economy—to 61.4%, the lowest since the pandemic.

"Declines in the participation rate are becoming more concerning, as it's currently near historic lows," Dominic Pappalardo of Morningstar Wealth tells MarketWatch. Demographics are one clear driver: Boomers keep retiring, birth rates are low, and immigration has been tighter. But mood matters, too. With hiring sluggish and the average job hunt stretching to nearly 25 weeks, more people appear to be pausing their searches. The number of "discouraged workers" rose to 503,000 in July, up from 460,000 a year earlier, raising concerns about the economy's long-term growth engine.