Friday’s job figures from the Labor Department provided more good news about the U.S. economy. Employers created another quarter of a million jobs in December, and the unemployment rate fell to 5.6 per cent, the lowest level since June, 2008. On the White House’s Web site, Jason Furman, the head of the Council of Economic Advisers, pointed out that total employment rose by 2.95 million jobs in 2014 and that, for the first time since the late nineteen-nineties, payrolls have expanded by more than two hundred thousand people for eleven months in a row.

These figures are encouraging for Americans who are looking for work, as well as for those who already have a job. Over time, rising demand for labor should give a boost to wages. We saw this process at work during Bill Clinton’s second term, when living standards rose steadily, but so far in this recovery it has been conspicuously lacking. Taking 2014 as a whole, wage increases did outstrip rising prices, but not by very much. (According to Furman’s calculations, inflation-adjusted wages increased by .7 per cent over the year.)

Another aspect of the current situation that doesn’t resemble that of the late nineties is what’s happening to the American workforce. At the start of 1996, sixty-four out of every hundred American civilians aged sixteen to sixty-four were working or looking for work. Economists refer to this figure as the labor-force participation rate, and the precise figure in 1996 was 66.4 per cent. Five years later, at the start of 2001, the rate had risen by almost a percentage point, to 67.2 per cent.

Fast-forward to the current recovery, and things look pretty different. At the start of 2010, when the Great Recession had led to a sharp rise in unemployment, the participation rate was 64.8 per cent, already down quite a bit from the 2001 figure. Despite the subsequent economic recovery, which has now lasted for more than five years, the rate has continued to fall. Last month, it stood at just 62.7 per cent, a tie for the lowest level since 1978 (a time when more women stayed at home and did domestic labor rather than join the official workforce).

Why the participation rate hasn’t picked up as the recovery has strengthened is the biggest economic mystery of our time, and the new job figures only deepen it. Common sense and economic theory both suggest that as the pace of hiring rises people who have dropped out of the labor force during the recession and its aftermath would start looking for work. But that doesn’t appear to be happening, or not on a large scale, anyway.

The Labor Department’s participation-rate figures tell the story, but they don’t really convey what it means in human terms. For that, it’s useful to do a bit of back-of-the-envelope arithmetic and convert them into an estimate of the number of workers who have gone “missing” from the labor force, for whatever reason. Early last year, based on a report from the Congressional Budget Office, I did that exercise and came up with a figure of roughly six million, which isn’t much short of the entire population of the Dallas-Fort Worth metropolitan area.

Based on the latest job figures, six million might even be an underestimate of the number of missing workers. In December, 2007, the participation rate was sixty-six per cent, more than three percentage points above the current figure of 62.7 per cent. If the rate had rebounded to its pre-recession level, there would now be roughly eight million more people in the labor force.

What explains this disturbing phenomenon?

The benign explanation is that much of it reflects demographic trends, particularly the aging and early retirement of baby boomers. In this view, most of the people who left the labor force did so voluntarily. However, even most proponents of this theory concede that it isn’t the full story. Since the Great Recession started, the participation-rate decline, which began around 2001, has accelerated sharply. Evidently, many people who lost their jobs eventually gave up hope of finding a decent one to replace it and dropped out of the labor force. Some of them have probably gone on disability: in recent years, the number of Americans filing for disability insurance has risen sharply. (This explanation is controversial, however. Some analysts attribute most of the rise in insurance claims to demographic factors rather than to economic ones.)

Where you stand in this debate has important policy implications. Most policy-makers, including Janet Yellen, the chair of the Federal Reserve, have been assuming that much of the decline is cyclical and that, as the recovery picks up, more and more discouraged workers will return to the labor force. Indeed, this presumption is an important underpinning of the Fed’s determination to go slow on raising interest rates. Many Fed officials believe that the official unemployment rate now understates the number of workers and potential workers who are out there without a job, so they can afford to keep rates low without worrying too much about the prospect of inflation picking up.

I agree with that argument: indeed, I’ve used it myself. By now, though, we should be seeing signs of the participation rate rebounding. The fact that it isn’t is somewhat alarming. For one, it suggests that the over-all cost of the recession, in terms of human resources that have been permanently wasted, was even larger than has been previously thought. Second, it raises the possibility of Yellen and her colleagues deciding that much of the decline in the participation rate is a permanent one, which, in turn, could prompt them to raise interest rates more rapidly than the markets are expecting. A single month’s employment figures won’t prompt that sort of policy change, but in the next few months the Fed, and everybody on Wall Street, will be looking closely at how the mystery of the missing millions gets resolved.