The rise of remote work since the pandemic has made businesses more reluctant to hire young, inexperienced workers and is the key driver of higher unemployment rates for recent college graduates, a study released Monday has found.
The study, by the Federal Reserve Bank of New York, compared occupations that can be done remotely – such as software development – with those that are done in person, such as nursing. The study finds that the unemployment rate among young college graduates in "remotable” jobs rose by about 1 percentage point from 2017-2019 to 2022-2024.
Yet for older workers in those fields – those aged 29 and over – the jobless rate declined slightly, leading to a notably higher unemployment rate for younger college graduates in remotable occupations compared with older workers.
Yet in non-remotable jobs, there has been little gap in the unemployment rates between older and younger college grads, the study finds. A similar pattern exists for those without college degrees, the New York Fed said.
The study, led by New York Fed research economist Natalia Emanuel, concludes that businesses are reluctant to hire new college grads into remote work because it is harder to train and mentor them if they work outside of the office. The authors of the study calculate that remote work is responsible for nearly two-thirds of the rise in the unemployment rate for young college graduates since the pandemic.
"Remote work has weakened incentives to hire young workers by impeding on-the-job training,” the study said. "Employers may not want to hire fresh graduates onto distributed teams because it is more difficult to teach them the requisite skills from afar."
The study lands amid widespread concern over the employment prospects of college graduates as artificial intelligence makes inroads into a variety of white-collar jobs, including finance, law, entertainment and media. This spring, college graduates have been booing references to AI during commencement speeches.
But the study notes that the worsening employment picture for young college grads pre-dates the development of artificial intelligence tools such as ChatGPT. And when the authors looked at the exposure different occupations had to AI, it found that AI had little impact on youth unemployment.
The unemployment rate for college grads under 29 rose 20% from before the pandemic to 3.7%, on average, in 2022-2025, the New York Fed said. For college grads aged 22 through 27, unemployment reached 5.8% last year, the highest outside the pandemic since 2012.
The study's findings are consistent with the low-hire, low-fire state of the job market, where layoffs are low and the unemployment rate is mostly stable, but those out of work are struggling to find new jobs.
The New York Fed study also looked at detailed data from an unnamed Fortune 500 tech company and found that its hiring patterns mirrored what they had seen in the broader data.
When the company's offices were closed and staff worked remotely, "the firm hired fewer inexperienced workers and more experienced workers, who might need less mentorship to do their jobs well," the study said.
"Once its offices reopened, the company shifted back to hiring younger workers,” the study said. But even after the reopening, the company favored more experienced workers for teams that included remote work.
