They a picture is worth a thousand words. This is a picture of the government statistic on the Civilian Labor Participation rate. That rate is now at a 35 year low. The steep decline in the rate is indicative of people giving up hope of ever finding a job, so they stop looking for a job and therefore are no longer considered part of the labor force = (employed and unemployed).
In October the number of people no longer in the labor force decline by over 700,000. As the labor participation rate fall, it puts downward pressure on the calculated unemployment rate (U3). To put it another way, if all these “discouraged workers” were still included in the labor force the unemployment rate would be much higher and rising. 
