The press realizes that millions of Americans are just giving up and leaving the labor force. Indeed, if the same percentage of the population were working as was working when Obama became president in January 2009, there would be about 7.2 million more Americans working today and over 8 million more Americans in the labor force. But those 8 million Americans have given up and are no longer looking for work. If those people were still in the labor force, instead of an unemployment rate of 7 percent, the rate would be 10.9 percent.
Now some of the lower labor force participation rate is due to the aging population. One way to account for this is to look at just those between the ages 25 to 54. This will also underestimate those who have left the labor force as many of those over age 55 have simply retired and people under age 25 who faced a bleak job market have simply stayed in school longer.
Ideally, it would be nice to look at everyone under age 65, but it would have taken me a little while longer to get that data together. The actual drop in the unemployment rate (or the "non-drop") is something between these two blue lines.