The unemployment rate dropped from 7.6 to 7.4% in July. That is good! Fewer people are applying for unemployment (UI) benefits. The reasons for the drop are not as encouraging. Job creation was less than expected. More people are dropping out of the ranks of those looking for work, or are among the long-term unemployed no longer eligible for UI benefits.
This article  omits this as a reason to no longer be counted. So the “employment rate” remains about the same. Ezra Klein and Evan Soltas share a graph that could be scary.
The Urban Institute found that another reason for the decline in unemployment numbers is the increased number of young people who are just not entering the workforce. Some are returning to school; that’s a good thing. But, what about the others?
“The official unemployment rate only counts people actively looking for work. It’s dropped less because people have found work than because they’ve stopped looking. Ergo, there’s been no recovery — just a hardening of the post-recession labor market.” -Ezra Klein and Evan Soltas