“Persistent unemployment may be more attributable to a slowdown in the hiring rate than a rise in job destruction and job loss,” Lockhart said today in Atlanta, citing a research paper. “A hiring slowdown can be viewed as consistent with a structural problem, a mismatch problem.”

“This unemployment situation we have, the jobs situation, is really a national crisis,” Bernanke said in response to questions after a speech yesterday in Cleveland. “We’ve had close to 10 percent unemployment now for a number of years and, of the people who are unemployed, about 45 percent have been unemployed for six months or more. This is unheard of.”

Notably, because of ongoing weakness in labor demand over the course of the recovery, nominal wage increases have been roughly offset by productivity gains, leaving the level of unit labor costs close to where it had stood at the onset of the recession. Given the large share of labor costs in the production costs of most firms, subdued unit labor costs should be an important restraining influence on inflation.

I think I'd like to make very clear that I think we have two crises in the economy. One of them is the fiscal set of issues that you're all paying a lot of attention to right now. But I think the job situation is another crisis. What's particularly bad about it, I think, is that so many people have been out of work for so long that it's going to be hard to get them back to anything like the kind of jobs they had when they lost their jobs back in the beginning of the recession, for example. So it's a major problem.

There are millions of Americans stuck in unemployment lines desperate to find a way back into the productive economy.

I expect to see modest declines in the unemployment rate, to about 8½ percent by the end of this year, and then to a range of 7 to 7½ percent by the end of 2012.

Recent indicators suggest some loss of momentum, with last Friday's jobs market report showing an increase in private payrolls of just 83,000 in May. I expect hiring to pick up from last month's pace as growth strengthens in the second half of the year, but, again, the recent data highlight the need to continue monitoring the jobs situation carefully.

I don't view high unemployment as the "new normal," but I also don't see it as a quickly resolvable problem either... I anticipate it could take about five years for unemployment to reach its long-run sustainable rate of 5-1/2 to 6 percent.

On net, I do expect the unemployment rate to normalize at close to 5 percent within the next five years. However, the immediate progress will be slow: I expect that the unemployment rate will still be above 8 percent and is likely to be still close to 8.5 percent by the end of the year.

Not many weeks ago I was ready to say—as regards growth prospects—that I could be pleasantly surprised to the upside. The economy might grow faster than my assumed moderate pace, with unemployment coming down more quickly. I still hold to the view that I could be pleasantly surprised but with a touch more caution... The range of plausible scenarios is widening. A sober assessment of prospects for continued economic progress has to factor in not only the risk of a sustained oil shock but also risks associated with fiscal policies and politics both here and in Europe.

To put it bluntly, with unemployment too high and inflation too low — and both forecasted to stay that way over the next two years — we have missed on both of our policy objectives. There is currently no policy conflict between improving the employment and inflation outcomes. This leads me to conclude that accommodative monetary policy continues to be beneficial for achieving each of these goals.

[W]ith output growth likely to be moderate for a while and with employers reportedly still reluctant to add to their payrolls, it will be several years before the unemployment rate has returned to a more normal level. Until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established.

MR. BERNANKE: A very careful study done by Federal Reserve system economists suggests that the total job impact of all of the QE programs -- including QE1, including the reinvestments, including QE2 -- could be up to 3 million jobs. It could be less; it could be more, but the important to understand is that it is not insignificant. It is an important contribution to growth and to job creation...

REP. VAN HOLLEN: All right. So as I understand, that was a credible study in your view, was it not?

MR. BERNANKE: It is, and there have been other studies as well, which are comparable.

REP. VAN HOLLEN: And as I -- just focusing on QE2, my understanding is that just with respect to that, those monetary decisions, that that created or saved between 600 (thousand) and 700,000 jobs. Is that correct?

MR. BERNANKE: The same study attributes -- again, prospectively -- in part, to the $600 billion QE2 about 700,000 jobs. Again, let me just emphasize that these are simulation studies and -- but they do indicate that the potential impact is significant.

From the Q&A session

Improvement in the labor market has lagged broader economic recovery... I expect the unemployment rate to fall over the coming years, but I think it unlikely that jobs growth this year will be strong enough to generate quick improvement.

The central tendency of the November FOMC forecasts is that unemployment will remain above 9 percent throughout 2011. I would agree with those forecasts. Even more troublingly, I expect too that unemployment is likely to be higher than 8 percent as late as the end of 2012.