The labor-force participation rate dropped to a 38-year low of 62.6 percent in June, and that's a major concern, experts agree.

Indeed, it "looks like a defining problem of our time," writes Washington Post columnist Catherine Rampell.

She notes that the decline has played a major role in pushing the unemployment rate down to a seven-year low of 5.3 percent in July. The unemployment rate includes only people actively looking for work.

"The share of Americans who are either working or looking for work has tumbled for about two decades, with the decline actually accelerating during the current recovery," Rampell says.

"Declining labor force participation rates have been blamed on the aging of the workforce, but demographics don’t tell the whole story."

People aged between 25 and 54 also are dropping out of the workforce, she points out. In June, the labor-force participation rate for this demographic was 80.6 percent, down from 84.6 percent in 2000.

This employment problem may help explain why Gallup's U.S. Economic Confidence Index came in at negative 11 for the week ended July 12, matching the prior week's eight-month low.

The index had risen in the second half of last year as gasoline prices fell, topping out at plus 5 in January, but the gauge has slid since then.

The index represents an average of two inputs: how Americans view the current economy and whether they think it's getting better or worse. The score can range from plus 100 to negative 100.

In the latest week, 25 percent of Americans said the economy is excellent or good, while 31 percent said it's poor. That produced a current conditions score of -6. Meanwhile, the economic outlook score registered negative 16, with 40 percent of Americans viewing the economy as getting better, while 56 percent see it getting worse.

So what gives?

"Much has occurred over the past week to leave Americans' confidence in the economy depressed," writes Gallup's Justin McCarthy. He cited Greece's debt crisis and Wednesday's trading outage on the New York Stock Exchange as examples.

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