Labor force participation rate is lower than pre pandemic.

https://www.bls.gov/charts/employment-situation/civilian-lab...

I assume it resumes overall downward trend simply due to aging population.

The people who “drop out” of the labor market (not working and don’t collect unemployment) basically are not counted. They are not considered part of the labor force. I know people who get burned out and live off their savings for long periods of time.

Interestingly, even though the labor participation rate hasn't returned to pre-covid levels, total civilian labor force levels have: https://fred.stlouisfed.org/series/CLF16OV#0

Full employment of a smaller labor force, you need to look at the labor force participation rate [0] to get the whole picture.

Yes unemployment is at near record lows, but the percent of the population in the work force is the lower than its been since the 1970s.

0. https://fred.stlouisfed.org/series/CIVPART

> Full employment of a smaller labor force,

the civilian labor force is higher than ever. as of Sept 2022, 153M non-farm workers [1], 130M private employees [2].

[1] https://fred.stlouisfed.org/series/PAYEMS

[2] https://fred.stlouisfed.org/series/USPRIV

I feel like I shouldn't have to explain the idea of participation rate but what you've posted is the numerator, you need to divide it by total working age population to get the rate.

you said "Full employment of a smaller labor force". its not a smaller labor force. its a larger labor force as the number of employees is at an all-time high.

Not sure what to make it of it, but statistics suggest that our per unit output of labour has dropped substantially. So, good employment rate or not, we’re producing less with our labour either way.

This is the case in the United States and Canada, at least. Not sure about the rest of the world.

Naively, you would expect a bit of a drop in productivity when going to full employment, as the least productive workers are generally hired last.

Total production, notably, is still increasing.

Which is a statement that doesn't gainsay what you commented on in any way. People leaving the labor market is not measured by the unemployment rate, it is measured by the labor participation rate.