New findings from the Federal Reserve Bank of New York suggest that remote work, not AI, has impeded the employment of recent college graduates since the pandemic. The study details how remote setups have led to less hiring of young graduates compared to pre-pandemic levels.

Using federal employment data, researchers compared this trend within a Fortune 500 tech company. They found companies hesitant to hire young graduates for remote positions. The reason: insufficient on-the-job learning opportunities from colleagues.

The analysis showed a 20% increase in unemployment among younger college graduates under 29 after the pandemic. Meanwhile, unemployment among older graduates declined slightly. Comparing employment rates from 2017-2019 with 2022-2024, the researchers noted a quadruple rise in remote work that coincided with increased unemployment rates for new graduates.

Reduced Feedback for Remote Workers

The research started by assessing feedback levels among software engineers at the tech company. Emma Harrington, an assistant economics professor at the University of Virginia, noted a 20% higher feedback rate when engineers worked closely with peers, a trend observed even before the pandemic. Feedback decreased further, impacting young workers disproportionately.

As remote work became the norm, the company hired fewer young graduates, shifting towards more experienced individuals. When the firm enacted a return-to-office strategy, new graduate hires resumed.

Broad Economic Implications

Researchers extended their analysis beyond the single tech company to understand the broader economic impact. They used an index categorizing jobs as “remotable” or “non-remotable.” Younger graduates faced higher unemployment rates in “remotable” jobs, nearly one percentage point higher post-pandemic. This shift explained approximately two-thirds of the increase in unemployment for young graduates.

AI’s Influence on Job Markets

The study explored AI’s potential role in this employment shift. By dividing occupations based on AI exposure, the research found no significant link between AI and rising youth unemployment in 2022-2024. Remote work practices emerged as the primary factor.

Particularly noteworthy, the London School of Economics reached similar results. Their findings reinforced that remote work notably influences early-career hires more than AI across multiple countries, including the U.S.

The New York Fed’s report highlights the implications of high unemployment rates among young graduates. Early-career experiences can substantially affect career earnings and progression, especially for those entering weaker job markets.