To think that the current level of unemployment is all about aggregate demand, you have to think that there are lots of jobs into which those displaced workers could easily transition. But if you own a house in the Detroit era, or have a spouse who still has a job, this is just clearly not the case.
That's from Megan McArdle.
I've heard the point about owning a home - that is, if you don't have a job but can't sell your home, you can't move out of an area with no jobs to get into an area with jobs.
But the point about the spouse is a really good - and obvious - one that I somehow haven't heard before. What percentage of the long-term unemployed have working spouses? If you couple that with 2 years of unemployment benefits, you could easily imagine anyone in such a situation being reluctant to take a job that's worse - or worse paying - than their old one. It seems like this could be a factor driving the high unemployment rate, but a quick google search revealed nothing interesting to confirm or deny it.