Forget that the reported unemployment rate has fallen to 5.4 percent. Real indicators of the health of our economy point to a workforce that has hemorrhaged millions of workers who have simply given up looking for work.

Some 40 percent of unemployed workers stopped looking for jobs, according to a new Harris poll – confirming that participation of American workers in our labor force remains stuck in near 37-year lows. Nearly 1 in 5 polled spent no time looking for work in the previous week compared to just 10 percent that said they spent more than 31 hours.

The overwhelming majority of those unemployed polled stopped searching long enough to raise a toddler– indicating the stubbornness of long-term unemployment. Fifty-five percent of those unemployed for more than two years gave up on their job search. While almost one third (32 percent) of those unemployed for 13 to 24 months stopped looking and slightly more than a third (34 percent) who were out of work from seven to 12 months quit looking their job search.

A big factor here is unemployment insurance (UI) benefits. An overwhelming majority of respondents indicated that because they had benefits, they didn’t feel the pressure to look for work. Some 89 percent or 9 out of 10 respondents said they would “search harder and wider” for work if their benefits ran out. Digging deeper, the poll indicated that UI is a comfy cushion to keep workers at home. More than 1 in 3 respondents (36 percent) said unemployment benefits allowed them to actually turn down positions that they didn’t think were right for them.

CNBC reports:

A tight jobs market, the skills gap between what employers want and what prospective employees have to offer, and a benefits program that, while curtailed from its recession level, still remains obliging have combined to keep workers on the sidelines, according to a Harris poll of 1,553 working-age Americans conducted for Express Employment Professionals.

Federal guidelines allow for 26 weeks of unemployment compensation, though extended benefits are available in some circumstances.

Nearly 9 of out 10 respondents (89 percent) said they would "search harder and wider" for work if their benefits ran out. Moreover, in a series of statements about benefits, the one that garnered the most agreement, with 69 percent, was that benefits were "giving me a cushion so that I can take my time in searching for a job," while 59 percent said compensation "has allowed me to take time for myself," 36 percent agreed that it "has allowed me to turn down positions that weren't right for me" and 40 percent agreed "I haven't had to look for work as hard knowing I have some income to rely on."

The decline in labor force participation, in fact, has been a key to the drop of the unemployment rate in the post-recession economy. The jobless rate has slid from a high of 10 percent in October 2009 to its current 5.4 percent, the lowest level since May 2008. However, the participation rate has fallen from 66.1 percent to 62.8 percent during the same period.

The President has gloated about how his “middle class economics” and policies have helped lower the unemployment rate. Yes, the economy has added jobs, but that’s not the primary driver for why the unemployment rate has fallen. A shrinking workforce is the key driver.

The reported unemployment rate undercounts those who have stopped looking for work. The real unemployment rate is actually about 11 percent which includes discouraged workers and those who are working part-time but want to work full-time. Second, and most importantly, millions of workers dropped out of the labor force. That the labor force participation rate now stands at 62 percent, down from 66 percent, is nothing to celebrate. It’s a record the President and his supporters should be ashamed to tout and to run on.

The economy may appear to be improving, but many Americans are suffering and government assistance is helping prolong the suffering by cushioning them against the temporary pain of job hunting.