The rise in remote work since the pandemic has played a major role in increasing unemployment among young college graduates, according to new research from the Federal Reserve Bank of New York. While concerns often focus on artificial intelligence, the study found remote work accounts for 64% of the increase in unemployment in this group.
What happened
The Federal Reserve research, led by economist Natalia Emanual, highlights that remote or work-from-home arrangements have made it more difficult for employers to train and mentor less-experienced workers. This challenge has led some companies to hesitate in hiring recent graduates who typically require more guidance early in their careers.
Between 2017 and 2019, the unemployment rate for college graduates under 29 averaged 3.1%. From 2022 to 2025, however, it rose to 3.7%. The Fed study attributes most of this increase to the widespread adoption of remote work rather than to artificial intelligence.
Although AI-related layoffs have occurred, especially in the technology sector, and account for approximately 17% of job cuts in 2026, their overall impact on unemployment remains limited. Goldman Sachs estimates AI contributed to only a 0.1 percentage point rise in the national unemployment rate, with effects concentrated among less experienced workers.
Why it matters
This shift in work arrangements affects labor market entry for new graduates, reducing opportunities for crucial in-person training and mentorship that help develop employee skills. The reluctance of companies to hire fresh graduates remotely could have lasting consequences on the career trajectories and income potential of this cohort.
The findings challenge the common narrative that artificial intelligence is the primary driver of youth unemployment, highlighting instead the significant structural impact of remote work on early-career employment.
Background
Remote work became prevalent during the COVID-19 pandemic as companies adapted to social distancing and health guidelines. Initially regarded as a temporary benefit, many organizations have since retained hybrid or fully remote work models. However, these changes have introduced new complexities in onboarding and developing young employees who lack workplace experience.
Concerns about AI and automation have dominated discussions about future job prospects, but economists agree that current labor market disruptions for young workers are more closely tied to altered work practices than to technology displacement.
Sources
This article is based on reporting and publicly available information from the following source:
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