I think that's a couple of misunderstandings together.
One is that the only kind of thing to do is work at a job, which is what labor force participation measures. But that's not the case at all, and it's obvious from your second graph. Do you believe that in 1950 ~70% of women were idle, doing nothing? Of course not. They were doing all sort of societally valuable work. It just wasn't in the form of a paid job. And that's my key point here: there is plenty of stuff that needs doing that would make the world better. It's just that a lot of it hasn't been converted into paid jobs that would show up in a graph like this. Just try thinking about all the things wrong with the world and ask whether more people helping with them could make them better.
Secondarily, a decline in the labor force participation rate can have all sorts of causes. The formal definition is "the percentage of the civilian noninstitutional population 16 years and older that is working or actively looking for work." Labor force participation rate for people 16-19 is low. Is that because there's nothing a teen could do? No, it's because they're in school. Labor force participation rate for people over 65 is even lower, ~15%. And over recent decades, we've seen that that segment of the population grow rapidly. So the labor force participation rate has declined significantly because people are living longer and enjoying retirement.
And of course, there's plenty of overlap in the two factors. After my dad retired, he spent a lot of time volunteering at a school. The kids definitely needed the help, but he was unpaid. That's a great example of something for people to do that wasn't counted as part of the labor force. Similarly, my aunts spent a ton of time helping raise their grandkids after they retired. Because of politics and accounting rules, that's not a formal job, but it's absolutely socially valuable labor.
Demographics impact this data, no? People in college, increased ability to retire, and an increase in the number of retire people (due to an aging population) all have an effect.
What does the data look like from 1900-1948? I imagine WWII had an impact too.
I would also consider whether the growth the welfare state is responsible for the drop--rather than just makes up for it.