the nation<u+2019>s longest uninterrupted stretch of jobs growth on record is finally drawing americans from the sidelines of the employment market, delivering a surge in the labor force that suggests the jobs expansion still has room to grow. employers added 156,000 jobs in september, driven by hiring in health care, retailers and professional services such as consultancies, the labor department said friday. monthly job growth has averaged 192,000 over the past three months, weaker than last year<u+2019>s robust pace of 229,000 but enough to keep up with a growing population. the unemployment rate rose a tenth of a percentage point to 5%, as the number of job seekers grew more quickly than the number of jobs. the report, one of the final snapshots of the economy before the nov. 8 presidential election, offered little to alter the picture of a steady labor market in a slow-growing economy. growth is struggling to return to even 2% after a first half of the year marked by weak business investment and a shaky global outlook. gross domestic product grew above 2% in the third quarter, according to private-sector estimates, but is in danger of falling below that pace for the full year. yet friday<u+2019>s report supported the view that the labor market<u+2014>which had its sixth year of expansion last month<u+2014>remains stable. <u+201c>it<u+2019>s been a slow, steady grind, but nonetheless it<u+2019>s persisted,<u+201d> said richard moody, chief economist at regions financial corp, said of the jobs expansion. <u+201c>there<u+2019>s no reason why this shouldn<u+2019>t continue<u+2014>over the next several quarters anyway.<u+201d> evidence is mounting that the labor market is beginning to benefit a larger share of workers. the labor force<u+2014>the employed plus those actively seeking work<u+2014>grew by 444,000 last month and 3 million over the past year, the biggest 12-month gain since the first tech boom in 2000. the labor-force participation rate, which slid for decades, climbed half a percentage point over the past year to 62.9% last month. while many of the labor-force dropouts in recent years have been retirees who will never return, millions of them are people in their prime working years, such as blue-collar workers sidelined by global competition and new technology. now many of them appear to be coming back to the market. the labor-force participation rate among 25- to 54-year-olds increased nearly a point over the past year to 81.5%, though it is still down from the late 1990s when it hovered between 84% and 85%. <u+201c>it may be that the economy has more slack, more excess capacity, more people with the willingness and ability to work than we previously understood,<u+201d> said justin wolfers, a university of michigan economist. <u+201c>there<u+2019>s a greater degree of hidden unemployment than we normally would expect.<u+201d> that development carries implications for the federal reserve, which raised interest rates only once in the past decade<u+2014>last december. growth in the labor force supports the view that the labor market still hasn<u+2019>t reached full employment, potentially making the fed more reluctant to raise rates. an influx of workers means employers have more job candidates to choose from and thus might not have to raise wages as quickly, which in turn keeps prices in check and easing inflation concerns. the fed<u+2019>s next increase isn<u+2019>t expected until december at the earliest. the latest jobs data provided fodder for both parties<u+2019> presidential candidates. unemployment has dropped by half since 2009, and hillary clinton has campaigned in part on the long stretch in job growth under president barack obama. republican nominee donald trump has pointed to modest wage growth and the plight of less-skilled workers in arguing that the latest expansion has left a large segment of the population behind. there are indeed wide gaps. the unemployment rate for those without a high-school diploma, for example, stood at 8.5% in september versus just 2.5% for those with a bachelor<u+2019>s degree or higher. likewise, the unemployment rate rose to 8.3% among african-americans last month and 6.4% for hispanics, while it held steady at 4.4% for whites. wages have been sluggish throughout the expansion, but have picked up of late. workers<u+2019> hourly earnings rose 2.6% over the past year, up from the overall trend during this expansion of roughly 2% growth. the growth has been choppy, but reports show a generally upward trend as companies have to compete more vigorously with each other for workers to fill slots. higher minimum wages in a number of localities are also pushing up wages on the lower end. avadim technologies inc., a north carolina-based medical manufacturer, this month raised the pay of entry-level employees to $11 from $9. ceo steve woody said the firm has expanded to 106 workers from 40 over the past year and will soon start hiring 70 more to prepare for the opening of a new factory in asheville. but he said competition for workers at the lower end is heating up. higher wages are benefitting other industries. the housing market in arizona has strengthened due to economic growth and wage gains in places like phoenix, tempe and scottsdale. that in turn has led scottsdale-based maracay homes, a brand of tri pointe group, to increase hiring by about 20% over the past 18 months, said president andy warren. while home sales earlier in the recovery were driven by investors, they are now being driven by everyday families, mr. warren said. <u+201c>we<u+2019>ve been in a very healthy and vibrant market where you have a pretty good balance between supply and demand,<u+201d> he said. many of the workers being hired are recent college graduates, who have flooded the job market after a boom in higher-education enrollment during the recession. kourtney pope, 25 years old, graduated from north carolina a&t state university in the spring and started working last month at eloquii, an online startup that sells clothing for plus-size women, as a customer-service agent in the firm<u+2019>s columbus, ohio, office. ms. pope said she initially accepted the job at $35,000 a year, but a week before her start the firm called to say it re-evaluated her r<u+00e9>sum<u+00e9> and determined she was worth a bit more and raised her salary. <u+201c>i heard tons and tons of horrors stories from some of my fellow colleagues and other graduates<u+201d> about not being able to find a job, ms. pope said. but she said she gained an advantage by reaching out to the company two years ago and staying in contact throughout college. write to josh mitchell at joshua.mitchell@wsj.com
modest u.s. jobs growth keeps labor market steady - wsj
josh mitchell