The government unemployment figure is one of the most mythological statistics the government puts out. It isnt even close to telling the real story. As you stated, it doesnt account for those who stopped looking for work. Nor does it consider the one who would like part time work yet is taking full time just to make some money.

I have a buddy who lost a good paying roofing sales job after the collapse of the housing market but he was never unemployed. He started driving a cab part time and caught on as a bus driver for the local school district. His total pay between two jobs: $20K. But he wasnt unemployed.

The government masks the fact that jobs were lost due to technology and wages suppressed for the same reason. It is only going to get worse yet people are conditioned to believe all is well.