The SF Fed's Rob Valletta is optimistic about the long-run prospects for the long-term unemployed:
Long-term Unemployment: What Do We Know?, by Rob Valletta: U.S. labor market conditions have improved over the past few years. But the average duration of unemployment has remained very high, suggesting that job prospects for the long-term unemployed have stagnated. However, a closer look at the data indicates that the incidence of long-term unemployment has declined over the past few years, and that job prospects for the long-term unemployed are not as downbeat as the average duration data suggest.
U.S. labor market conditions reached a low point in late 2009 and early 2010. Since then, the nation’s economy has added 4¾ million payroll jobs and the unemployment rate has fallen by over two percentage points, from 10.0% in October 2009 to 7.8% in December 2012. At the same time though, the average duration of unemployment rose from about 28 weeks to a peak of nearly 41 weeks in late 2011. Since then, it has dropped only slightly, to 38 weeks. Persistently high unemployment duration in the face of an improving labor market raises the possibility that a significant share of current joblessness is structural, or essentially permanent, in nature.
This Economic Letter examines in detail unemployment duration, the characteristics of the long-term unemployed, and their prospects of finding a job. While unemployment duration remains near historical highs, the characteristics of the long-term unemployed and their recent job-finding rates suggest that a sustained cyclical recovery will largely eliminate long-term joblessness. ...
But we shouldn't take this as a reason to stand by and do nothing. If we can help the process along, or ensure against the chance that this analysis is wrong -- and we can -- we (meaning fiscal policymakers) should do it. Lack of demand + high unemployment + crumbling infrastructure + interest and other costs abnormally low = obvious solution.