If I may be forgiven for wool-gathering for a moment:

Many positions have quite limited returns on the right tail, that are easily reached by people of no special intelligence. If you're a Mickey D worker, it doesn't matter how smart you are. If you're a clerical worker, again, doesn't matter much. Almost anything that falls under admin, doesn't matter very much. Sales? Well, there's a certain charisma required but certainly working in most of sales doesn't require much intelligence - I know, I've done sales myself before and written procedures for it. Once computer speech is reliable I expect a lot of sales people to become unemployed outside of B2B.

Being a manager? Well, if you're in a technical firm there's a fair amount of person experience required there, but it's not hugely challenging - it's more a matter of decency and common sense. (And honestly, my faith in companies being able to reliably select for managers is 'HAHAHAHA, no.')

And the dreadful thing here is that the better you are at a skill, the harder it is for people who don't share that skill to recognise it. So unless the company's hiring procedure is geared towards finding it, i.e. they live to find the right tail, that will likely go unrecognised. The search costs increase the more skilled you become. Hence why so many crap programming jobs are advertised as 'X years experience' ; the person doing the hiring is an HR girl who doesn't know how to recognise the real deal and probably doesn't really have the time anyway.

If you're doing most any job that doesn't qualify as intellectually challenging, it doesn't matter much how smart you are to the company, they'll not profit by your intelligence. If you're doing any job where ability is poorly assessed, (which kinda screws you if the person interviewing doesn't know the job themselves,) it doesn't matter how smart you are - they'll not ask the right questions to find out.

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If you want to look at how people end up LTU, I think you have to stop thinking about them as people; with hopes, dreams, and virtues. (Yes, that does make me feel sick.) That's not what they look like when you're looking at their CVs.

Think of them almost like you're picking horses in a race: Someone tells you a horse has been out of racing for a long time. Do you gamble on it?

If it was a truly exceptional horse, maybe you do. But the average unemployed person is going to be average at best. Given you can't expect them to be any better than the employed person, do you gamble on them?

Of course you don't. The horse might have been out of the game for a number of reasons. But how many of those reasons are good - and what's your gain over gambling on a horse that hasn't been out for a while? If you had more information about it than the market then you might - but your expected value of information for most jobs is going to be low due to the lack of recognised ability to leverage their intelligence in most roles.

If you're LTU, without some form of background check, that's indistinguishable from having been in prison, or having a mental breakdown, or getting sacked for a reason. What were they doing for the last six months? You don't know, but there's a higher than average chance of it being something bad.

When you have multiple candidates to choose from, and you can't easily distinguish quality given your initial investment in them, and your EVI is lower than the cost of that information, it makes sense to be risk averse on easily seen indicators. Maybe you're missing great candidates, but for most positions, what's your motivation to care?

When they're competing with people who aren't LTU, and who can do the job about as well, the company's expected return on investing in them - spending the time and money to check these things - seems likely to be negative outside of companies that can leverage exceptional individuals.