Young college graduates may be struggling to find jobs because of remote work rather than artificial intelligence, according to new research published Monday by the New York Federal Reserve’s Liberty Street Economics blog.
The researchers found that the rise of remote work since the pandemic has made it more difficult for employers to train and mentor inexperienced workers, making companies less willing to hire recent graduates for distributed teams. They estimate that remote work can explain about 64% of the increase in unemployment among young college graduates since the pandemic.
Unemployment among college graduates under age 29 increased from 3.1% in 2017-2019 to 3.7% in 2022-2025. Over the same period, unemployment among more experienced college graduates declined slightly from 1.9% to 1.8%.
Remote Work Effect
The researchers found the increase in youth unemployment was concentrated in occupations that can be performed remotely, such as software engineering and other office-based professional roles. In contrast, unemployment among young workers in non-remotable occupations returned to pre-pandemic levels after an initial increase in 2020.
According to the study, employers may be reluctant to hire inexperienced workers because remote environments make it harder to provide the feedback, mentorship and skill development that early-career employees typically need.
Using data from a Fortune 500 company, the researchers found that employees working alongside colleagues received more feedback and mentorship and produced higher-quality work than those working at a distance. The company also hired fewer inexperienced workers when offices were closed during the pandemic and shifted back toward younger hires after reopening.
AI Debate Continues
The findings add a new dimension to the debate over whether artificial intelligence is hurting employment opportunities for younger workers.
On Friday, Apollo Global Management‘s (NYSE:APO) Chief Economist Torsten Sløk said there is “zero evidence” that AI is causing job losses across the U.S. economy, arguing that AI investment continues to support hiring and economic activity.
The New York Fed researchers reached a similar conclusion regarding recent labor market challenges facing young graduates. While acknowledging AI could play a larger role in the future, they found the rise in youth unemployment began before generative AI became widespread and persisted even after accounting for occupations’ exposure to AI.
The findings also come as confidence among younger workers continues to weaken. A recent Gallup survey found only 43% of Americans ages 15 to 34 believed it was a good time to find a job locally, marking a sharp decline from recent years. Separately, a New York Fed labor market survey found workers under 45 were among the most likely to pull back from job searching and switching employers amid growing uncertainty.
The researchers concluded that remote work has weakened incentives to hire inexperienced workers by reducing opportunities for on-the-job training, making it harder for young graduates to gain a foothold in the labor market.
Disclaimer: This content was produced with the help of AI tools and was reviewed and published by Benzinga editors.
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