The surge in remote work since the pandemic has made businesses less inclined to hire young, inexperienced staff, emerging as the primary factor behind elevated unemployment rates for recent college graduates, a new study has revealed.
Published Monday by the Federal Reserve Bank of New York, the research compared occupations suitable for remote work, such as software development, with those requiring in-person presence, like nursing.
It found that the unemployment rate among young college graduates in “remotable” professions increased by approximately one percentage point between 2017-2019 and 2022-2024.
Older workers aged 29 and above in these same fields experienced a slight decline in joblessness, resulting in a significantly higher unemployment rate for younger graduates in remote-friendly roles compared to their more experienced counterparts.
In contrast, non-remotable jobs showed little disparity in unemployment rates between older and younger college graduates, a pattern also observed among individuals without college degrees, according to the New York Fed.
The study, spearheaded by New York Fed research economist Natalia Emanuel, concludes that companies are hesitant to bring new college graduates into remote roles because training and mentoring them effectively outside a traditional office setting proves more challenging. The authors estimate that remote work is responsible for nearly two-thirds of the increase in unemployment among young college graduates since the pandemic began.
“Remote work has weakened incentives to hire young workers by impeding on-the-job training,” the study stated. “Employers may not want to hire fresh graduates onto distributed teams because it is more difficult to teach them the requisite skills from afar.”
This research comes amid growing concerns about the employment prospects for college graduates, particularly as artificial intelligence increasingly impacts various white-collar sectors, including finance, law, entertainment, and media. This spring, some graduates have booed references to AI during commencement speeches.
However, the study highlights that the deteriorating job outlook for young college graduates predates the widespread development of AI tools like ChatGPT. An analysis of different occupations’ exposure to AI indicated that artificial intelligence had minimal impact on youth unemployment.
The unemployment rate for college graduates under 29 rose 20% from pre-pandemic levels to an average of 3.7% between 2022 and 2025, the New York Fed reported. For those aged 22 through 27, unemployment reached 5.8% last year, marking the highest rate outside the pandemic since 2012.
These findings align with the current “low-hire, low-fire” state of the job market, characterized by low layoff rates and a generally stable unemployment rate, yet persistent difficulties for those out of work to secure new positions.
The New York Fed study also examined detailed data from an unnamed Fortune 500 tech company, discovering that its hiring trends mirrored the broader patterns observed.
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 noted. “Once its offices reopened, the company shifted back to hiring younger workers.”
Nevertheless, even after reopening, the company continued to favor more experienced individuals for teams that incorporated remote work.
