There are multiple explanations, and I certainly do not pretend to understand them all. But one thing that is going on is this:
Many of the the people who have left the work force are women.
Many of those women are parents, with a working partner/spouse and children at home. During the pandemic, many day care centers closed. And many of those women have come to the conclusion that with the high cost and decreased availability of daycare, that they would just as soon stay at home with their kids and depend on their partner's salary.
One thing that has made this a more favorable decision is that the price of homes is skyrocketing, so a lot of couples are figuring that their retirement situation looks a lot better than it did, when they look at selling their homes in the future. So between that and the cost of daycare, living on one salary looks pretty good to them. Not to mention the emotional rewards of being with the children.
That does not explain everything, of course.
I have also read that younger people have formed a record number of internet-based start-up companies in the past few months, in an effort to be self employed. Not sure how that is going to pan out, though.
