(Photo by Jacquelyn Martin/AP)

The unemployment rate used to be a pretty straightforward economic indicator. It showed the percentage of people who want a job but don't have one -- one of the most basic measures of labor market health.

But the number has been acting in funny ways since the recession, and it just keeps getting weirder. The unemployment rate skyrocketed as millions of people lost their jobs during the darkest days of the financial crisis. That part makes sense. 

What is harder to understand is why the jobless rate has dropped substantially even though many workers do not have jobs. Solving that puzzle requires looking at more esoteric labor market data. Even newly minted Fed chief Janet Yellen said on Capitol Hill today that "we shouldn't focus only on the unemployment rate."

So if the jobless rate doesn't tell us what we need to know about the labor market, what does?

On Tuesday, Yellen pointed to the number of long-term unemployed, which make up more than a third of jobless workers, and the high number of people who are working part-time even though they want full-time jobs. Other telling data include the so-called "quit rate" -- people who voluntarily leave their job -- and the number of job openings.

But the indicator that has garnered perhaps the most attention lately is the labor force participation rate. It now stands at 63 percent, the lowest level in a generation. 

Economists are hotly debating the reasons why. Some, like Yellen, believe it's because lots of people have become so discouraged by the job hunt that they have given up looking. Those people are not considered "unemployed" but could rejoin the workforce as the economy improves.  

Other economists believe the workforce has permanently shrunk. Those discouraged workers may remain labor force dropouts if the recovery takes too long. In addition, there are longer-term demographic changes, such as the aging of baby boomers, that could be skewing the unemployment numbers.

The two viewpoints call for opposite policy responses: If you believe the jobless rate is falling due to discouraged workers, you would likely be inclined to keep stimulating the economy in hopes of bringing them back. If you believe that the decline in the jobless rate is due to demographics or other irreversible factors, there's no point in trying to goose the numbers.

But in both cases, the bottom line is that unemployment in America has become increasingly complex -- and it can no longer be captured in just one number.  

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