Modest labor gains in September show economy chugging along

The U.S. economy added 156,000 jobs in September, and the unemployment rate ticked up to 5 percent.

While job growth slowed in 2016, it has by no means stopped. Over the year, the U.S. economy added an average of 178,000 jobs per month. In 2015, job growth averaged 229,000.

As economist Justin Wolfers reminds us, this is the 72nd month of consecutive job growth.

The unemployment rate increased due to more people entering the workforce. The labor force participation rate, which is historically low, increased one-tenth of a percentage point to 62.9 percent.

Jared Bernstein, former chief economist to Vice President Joe Biden, pointed out that the increase in the unemployment rate was actually quite small — from 4.92 percent to 4.96 percent, which is “statistically indistinguishable from no increase at all.”

The Bureau of Labor Statistics’ measure of underemployment and unemployment, the U-6, remained unchanged at 9.7 percent. Our more inclusive Solman Scale U-7, which, in addition to the officially unemployed, also includes part-time workers for economic reasons and anyone who wants a job, no matter the last time they looked, was also unchanged at 11.9 percent.

Wages continued to increase in September. Following a 2-cent gain in August, average hourly earnings increased 6 cents. This follows the good news in the Census Bureau’s annual poverty report, which showed that median household income rose by 5.2 percent in 2015 — the first annual increase since 2007.

So what’s the bottom line?

“Goldilocks is real: the labor market is not too hot and not too cold,” wrote Douglas Holtz-Eakin of the Republican American Action Forum, pointing to healthy job growth and annual hourly earnings nearing 2 percent.

Justin Wolfers’ takeaway was a bit less enthusiastic:

The recovery continues — now if only it could pick up some steam.