I'm not sure why this is being reported as new or interesting. "They don't count people who have stopped looking for work" has been reported to death for decades (always, year after year, decade after decade, as if no one had ever pointed this out before... it's one of those strange "perpetually surprising" stories, like "engineers look to nature for inspiration".)

What is new and interesting is that in the past six years the American labour participation rate--the fraction of the working-age-adult population that is either employed or looking for work--has plummeted from 66% to 63%: http://data.bls.gov/timeseries/LNS11300000

To get a sense of what a big deal this is, you can re-run that chart to cover the full range of data from 1948-2014. After being flat at about 59% for two decades, the LPR begins to ramp up in the late 60's as Boomer women entered the workforce. It exhibits a broad flat peak from 1990 to 2008 at about the 66-67% level, and then starts its dramatic decline in sync with the financial crisis, and is now back at a level not seen since 1978.

This is a demographic shift of enormous proportions, and the answer to "Why" is not known: http://www.washingtonpost.com/blogs/wonkblog/wp/2013/09/06/t...

There is a fairly desperate attempt to spin this as "Boomers retiring" but that runs into a problem of simple arithmetic: the population of the United States was 203 million in 1970, when the ramp-up in the LPR began. It is now 320 million, a factor of 1.5 higher. So for every Boomer retiring, there should be 1.5 new workers entering the workforce. Where are they?