This isn’t due to welfare.
Most people are creatures of habit.
Once someone gets in the habit of not working, it is a major challenge for them to start again—they will only do it after they have exhausted all other alternatives.
One of those alternatives is under the table gig stuff, and the labor statistics are not going to find those...
In a third world economy all of the economic statistics are totally useless—the cats refuse to be herded or counted.
They assume that .gov is out to &^%$ them over, and of course they are correct.