Fed’s Lacker Says U.S. Unemployment Rate ’Very Elevated’

Federal Reserve Bank of Richmond President Jeffrey Lacker said U.S. unemployment remains “very elevated” because the labor market has become more inefficient in matching jobs with needed worker skills.

Joblessness at 8.1 percent in April “is still a very elevated rate,” Lacker said in an address to students at a community college in Greensboro, North Carolina. Policy makers are working to assess reasons for the “sluggish” job market, he said.

Investing in job training and education may more successfully address the labor market weakness rather than Fed policy, Lacker said in a speech yesterday. Job openings in the U.S. rose in March to the highest level in more than three years, Labor Department figures showed today.

“It is the magnitude of sectoral shifts that is impeding the effectiveness of our ability to find matches for unemployed workers,” Lacker said, as workers losing jobs in one industry must get training to find new opportunities. A comparison of unemployment to vacant positions “is a measure of that inefficiency.”

That suggests the natural rate of unemployment may be rising because it takes time for workers to get trained, Lacker said.

Job openings in the U.S. rose in March to the highest level in more than three years, a sign employers may be looking to take on more staff as the economy grows.

Positions Increased

The number of positions waiting to be filled increased by 172,000 to 3.74 million, the most since July 2008, from a revised 3.57 million the prior month that was larger than previously estimated, the Labor Department said today in a statement posted on its website. Hiring slowed and firings were little changed.

At the same time, the Richmond Fed president said the efforts of students to retrain themselves was a sign of longer- term flexibility rather than a European style “hysteresis.”

“It doesn’t suggest a decay of human capital over time,” he said. People instead “find another industry to develop the skills for, welding, machining” or manufacturing. “This is the kind of thing we have to figure out better ways to encourage.”

The focal point of monetary policy is “keeping inflation low and stable,” Lacker also said today in his visit to Guilford Technical Community College, which was intended to highlight the success of job-training programs.

To contact the reporters on this story: Steve Matthews in Atlanta at smatthews@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz in Washington at cwellisz@bloomberg.net