Young and unemployed? Remote work, not AI, may be the problem, study finds
A Federal Reserve Bank of New York study found remote work, not AI, is the primary reason for higher unemployment among young college graduates, with jobless rates rising by about 1 percentage point in 'remotable' occupations since the pandemic. Employers struggle to train inexperienced workers remotely, leading to a 20% increase in unemployment for college grads under 29, reaching 5.8% for ages 22-27 in 2024.
A study by the Federal Reserve Bank of New York identified remote work, not artificial intelligence, as the main driver behind rising unemployment for young college graduates. The research compared occupations that can be done remotely—such as software development—with in-person roles like nursing. It found that unemployment among young graduates in 'remotable' jobs increased by roughly 1 percentage point from 2017-2019 to 2022-2024, while older workers in the same fields saw slight declines in jobless rates. The study, led by economist Natalia Emanuel, concluded that businesses hesitate to hire inexperienced workers for remote roles due to difficulties in training and mentoring them from a distance. Employers may avoid hiring fresh graduates for distributed teams because on-the-job skill development is harder to facilitate remotely. The Fed calculated that remote work accounts for nearly two-thirds of the rise in youth unemployment since the pandemic. Unemployment for college graduates under 29 surged 20% from pre-pandemic levels, averaging 3.7% in 2022-2025, with rates for 22- to 27-year-olds hitting 5.8% last year—the highest outside the pandemic since 2012. Meanwhile, non-remotable jobs showed little age-based disparity in unemployment. The findings align with the current 'low-hire, low-fire' job market, where layoffs are minimal but hiring remains sluggish for young workers. The study also analyzed hiring data from an unnamed Fortune 500 tech company, revealing similar trends. When offices were closed and staff worked remotely, the firm hired fewer inexperienced workers and more experienced hires who required less mentorship. After reopening, the company resumed hiring younger workers but continued favoring experienced candidates, suggesting lasting shifts in hiring preferences. The research contradicts concerns that AI is the primary culprit behind youth unemployment, noting that the trend predates tools like ChatGPT. When the authors examined AI exposure across occupations, they found minimal impact on youth joblessness. Instead, remote work’s structural barriers—particularly for entry-level roles—remain the key obstacle to employment for young graduates.
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