A study conducted by the Federal Reserve Bank of New York indicates that the rise of remote work since the pandemic is a primary driver of higher unemployment rates among recent college graduates. The researchers, led by New York Fed economist Natalia Emanuel, found that businesses are less inclined to hire new college graduates for remote positions due to the challenges of training and mentoring them from a distance. The study estimates that remote work accounts for approximately 64% of the increase in unemployment for young college graduates since the pandemic.
The research compared unemployment rates in "remotable" occupations, like software development, with those in "non-remotable" jobs, such as nursing. It revealed that the unemployment rate for young college graduates in remotable positions increased by roughly 1 percentage point between 2017-2019 and 2022-2024. In contrast, older workers (aged 29 and over) in these same fields experienced a slight decrease in their jobless rate, significantly widening the unemployment gap between younger and older college graduates in remotable occupations. This pattern of increased youth unemployment coincided with the surge in remote work and has persisted.
The study also explicitly addresses the role of artificial intelligence, stating that the uptick in youth unemployment predates the widespread adoption of AI tools. Even when controlling for occupations' exposure to AI, the disparities between younger and older workers remained. The authors note that many firms' return-to-office mandates often cite the importance of in-person interaction for mentorship and learning, reinforcing the idea that proximity is crucial for developing less-experienced employees. An unnamed Fortune 500 company's hiring patterns were analyzed, showing a preference for experienced workers when teams were distributed, but a shift back to hiring younger workers when in-office work was feasible. The unemployment rate for college graduates under 29 rose by 20% from pre-pandemic levels, reaching an average of 3.7% in 2022-2025. For college graduates aged 22-27, unemployment hit 5.8% last year, the highest outside the pandemic since 2012.
