Today is one of those days when talk of how the unemployment rate may be falling but the employment-population ratio isn't rising, so I think it's worth looking at just prime age workers.
You see here, I think, a labor market recovery that is perfectly real. It's a weak recovery and in many ways a crummy economy, but we knew that already. What it isn't is some kind of statistical illusion. The interplay between population aging, labor force participation, and the business cycle is very complicated. Older people have always had a lower labor force participation rate than prime-age workers. As older people become a larger share of the population, that pushes particicpation down. But the participation rate for the elderly is actually rising somewhat over the past few years. That's probably a sign of economic weakness (retirement accounts with no money in them) rather than strength, but in the context of an ongoing recovery it's not totally obvious how to interpret it.
So I would say that the old-fashioned U3 unemployment rate—a measurement of the share of the population that's actively seeking work but not finding it—continues to have real value and importance. The employment rate for prime aged workers is a nice sanity check. And in this case they both agree in level and direction—the labor market is improving, but remains below its pre-crisis level. Conventional wisdom vindicated.