One of the key things I emphasize in discussing the
unemployment rate is that that statistic cannot be understood without
context. The context is what is
happening with the labor force.
Unemployment is measured by the answer to a specific question about job
search. Many people who are not “actively”
seeking work are still unemployed – they just fall into the category “not in
the labor force” because they did not engage in the specific job-seeking
activity in the relevant period.
This article by Annie Lowrey makes that point and others: http://www.nytimes.com/2014/01/22/business/states-cutting-weeks-of-aid-to-the-jobless.html?ref=annielowrey&_r=0.
