Those who cannot find a job are called “discouraged workers” and they are indeed not counted in the “official” unemployment stats. Remember, you cannot spell Bureau of Labor Staistics (BLS) without BS.
Let’s take a trip over to Shadowstats for more accutrate information.
Alternate Unemployment Charts
The seasonally-adjusted SGS Alternate Unemployment Rate reflects current unemployment reporting methodology adjusted for SGS-estimated long-term discouraged workers, who were defined out of official existence in 1994. That estimate is added to the BLS estimate of U-6 unemployment, which includes short-term discouraged workers.
The U-3 unemployment rate is the monthly headline number. The U-6 unemployment rate is the Bureau of Labor Statistics’ (BLS) broadest unemployment measure, including short-term discouraged and other marginally-attached workers as well as those forced to work part-time because they cannot find full-time employment.
Trust your government (to make themselves look good, and the truth be damned).
Labor force participation Rate:
People not in labor force:
FAQ from the BLS-maybe it will clarify
http://www.bls.gov/cps/faq.htm (BOLD print my edit for clarity)
Who is not in the labor force?
Persons not in the labor force are those who are not classified as employed or unemployed during the survey reference week.
Labor force measures are based on the civilian noninstitutional population 16 years old and over. (Excluded are persons under 16 years of age, all persons confined to institutions such as nursing homes and prisons, and persons on active duty in the Armed Forces.) The labor force is made up of the employed and the unemployed. The remainder—those who have no job and are not looking for one—are counted as “not in the labor force.”Many who are not in the labor force are going to school or are retired. Family responsibilities keep others out of the labor force.
note: It is interesting to look at the entire FAQ though I think it contains lots of double talk. Some people who are working for free are counted as “employed” (such as those working without pay in family businesses).