Remote work may be locking younger workers out of labor force: NY Fed

The New York Federal Reserve Bank linked rising youth unemployment to the surge in remote work post-pandemic, according to a report released Monday. Unemployment among college graduates under 29 increased by 20 percent, from an average of 3.1 percent in 2017-19 to 3.7 percent in 2022-25, with rates spiking to 3.67 percent in 2020 during COVID-19 lockdowns. The Fed’s analysis highlighted that employers may hesitate to hire young workers for remote teams, citing difficulties in skill development from afar. Four major industries—scientific and technical services, information, finance and insurance, and management of companies—had over 39 percent of their workforce working remotely in 2021, up from under 17 percent in 2017, according to Bureau of Labor Statistics data. The report noted that while AI may influence future employment trends, remote work has already contributed significantly to challenges faced by young college graduates. Despite growing pressure for workers to return to offices, 61 percent of fully remote employees—particularly those under 50—said they would likely leave their jobs if forced back to in-person work, per a 2025 Pew Research survey. The Fed’s findings suggest that while AI could play a role in shaping youth employment, remote work remains a key factor in current labor market disparities. The report also addressed concerns about AI’s impact on young workers, clarifying that the rise in unemployment predates the rapid adoption of generative AI. Economists emphasized that remote work trends have already had a measurable effect on hiring patterns for younger graduates.