A change in the labor force does change the unemployment rate. If individuals drop out of the labor force because they become discouraged and do not believe that they can find jobs, the unemployment actually understates the true rate of employment.

In this case, an increase in individuals entering the labor force may imply that individuals are becoming more optimistic about future conditions and if they are accurate may be a sign of better things to come. Thus the increase in the unemployment rate may not be as bad as it seems.