"Just because you've been out of work for a while does not mean that you are not a hard worker," the president told chief executive officers from some of the nation's largest companies who joined him and long-term unemployed workers at the White House.
"[It] Just means you had bad luck or you were in the wrong industry or you lived in a region of the country that's catching up a little slower than others in the recovery," he said.
The White House said some 300 businesses, including industry leaders Morgan Stanley, Boeing, Bank of America, Apple, McDonald's, Walgreen, General Motors, Ford and Walmart, agreed to revise their hiring policies to give long-term unemployed workers a chance at jobs.
At least 21 of the nation's 50 largest companies have signed on.
Saying the federal government should lead, the president issued a memorandum to government departments and agencies to "take a job applicants' employment history and other factors into account when making hiring decisions." The memo directed the Labor Department to spend $150 million more on Ready to Work Partnership programs to retrain workers in needed skills.
An estimated 4 million U.S. workers are characterized as long-term unemployed by the Labor Department.
A study by Northeastern University found computer-generated resumes from job applicants who had been out of work for longer than six months rarely got a response from an employer, the New York Times reported.
"Folks who've been unemployed the longest often have the toughest time getting back to work," Obama said. "It's a cruel catch-22 -- the longer you're unemployed, the more unemployable you may seem. Now this is an illusion, but it's one that, unfortunately, we know statistically is happening out there."
In an interview with CNN in Wisconsin Thursday, Obama insisted he hasn't changed his agenda but recognized the realities of divided government with his State of the Union promise to use executive orders when appropriate.
"In no way are my expectations diminished or my ambitions diminished. But what is obviously true is we've got a divided government right now," Obama said.
"The House Republicans, in particular, have had difficulty rallying around any agenda, much less mine. And in that kind of environment, what I don't want is the American people to think that the only way for us to make big change is through legislation."
"We've all got to work together to continue to provide an opportunity for the next generation," he said.