Even by the loose standards of the monetary doves, the Federal Reserve should start raising interest rates this month. The unemployment rate fell to 5.1 percent in August, the lowest since early 2008 and right in the middle of the range the Fed believes is the long-term average.

Some doves have argued that due to the deep recession the Fed should use loose money to temporarily push the jobless rate below the long-term average. But, with the current stance of policy, the unemployment rate is down a full percentage point from a year ago. It takes time for changes in policy to affect the economy, so even if the Fed starts raising rates today, the momentum from loose policy so far means the jobless rate is already set to dive well below the long-term average.

Today’s employment report showed continued improvement in the labor market. At 173,000 jobs added, payroll growth came in a little short of consensus expectations. But the first report for August is usually revised up substantially. Remember August 2011, when the initial report was zero growth in payrolls? Two months later it was revised up to 104,000. This August was the 66th consecutive month with growth in private payrolls, the longest streak since at least the late 1930s. Civilian employment, an alternative measure of jobs that includes small-business start-ups, increased 196,000 this August.

Meanwhile, the total number of hours worked rose 0.4 percent in August and is up 2.7 percent from a year ago. Combined with wages per hour up 2.2 percent from a year ago, workers’ total cash earnings are up 4.9 percent. No wonder auto sales are booming, hitting the highest level since 2005.

Also, notice again the deafening silence from those who used to bemoan the rise in part-time jobs. Part-time employment is down 518,000 in the past year even as total jobs are up.

However, all the good news doesn’t mean everything is right. The participation rate remained at 62.6 percent in August, tying the lowest level since 1977. Three key factors are holding down participation: aging Boomers, easily available disability benefits, and overly generous student aid.

The bottom line is that the economy in general and labor market in particular would be doing better with a better set of policies, like lower tax rates, less government spending, and lighter regulation. That’s why we have a Plow Horse economy rather than a Race Horse economy. It’s not the boom of the 1980s or 1990s — not even close — but it continues to move forward.