(Adds details from prepared remarks, background)
By Michael Flaherty
LYNCHBURG, Va., June 26 The U.S. jobless rate is
likely giving an accurate read on the amount of slack in the
labor market, with an unusually high level of long-term
unemployment reflecting those who lack skills needed to find
work, a top Federal Reserve official said on Thursday.
Richmond Federal Reserve Bank President Jeffrey Lacker told
a group of local business leaders a drop in labor force
participation and historically high long-term unemployment
largely reflected structural trends that monetary policy cannot
"The unusually large rise in long-term unemployment suggests
that it was caused by an increase in the number of unemployed
workers who were inherently less likely to exit unemployment,"
Lacker said, citing research by a Richmond Fed economist.
Lacker's view contrasts with that of Fed Chair Janet Yellen,
who has stood by her belief that a core group of the long-term
unemployed will return to the job market as the economy
recovers, placing downward pressure on wages.
That pressure is what supports Yellen's view of continuing
to provide an extraordinary amount of accommodative monetary
policy to stoke the economic recovery and to push inflation to
the Fed's 2 percent target.
Lacker, who will be a voting member of the Fed's
policy-making committee next year, is more hawkish, advocating
for a quicker pullback from monetary policy accommodation, and a
faster lift-off of interest rates.
He said evidence from employers in the area covered by the
Richmond Fed show that they were unable to find workers with the
necessary skills, despite a large pool of unemployed workers.
Holding to the view that the long-term unemployed are
unlikely to return to the work force, Lacker focused his remarks
on workforce education and on-the-job training.
(Reporting by Michael Flaherty; Editing by Paul Simao)