A shrinking labor force can make the unemployment rate look better than it is
The unemployment rate can drop even when fewer people have jobs because the calculation depends on the size of the labor force rather than just the number of people employed.
The U.S. Bureau of Labor Statistics tracks employment using two different methods that often tell conflicting stories. While business payrolls might show growth, the household survey—which includes self-employed and agricultural workers—can reveal a different reality. In early 2026, for instance, the unemployment rate fell to 4.3 percent despite 64,000 fewer people actually working.
Continue Reading in App
1 more paragraph · plus a 3-question quiz