A study released by the Federal Reserve Bank of New York has found that the rise of remote work since the pandemic is the primary factor behind higher unemployment rates among recent college graduates, rather than the impact of artificial intelligence (AI) [1]. The study compared occupations that can be performed remotely, such as software development, with those requiring in-person presence, like nursing. It found that the unemployment rate among young college graduates in 'remotable' jobs increased by about 1 percentage point from 2017-2019 to 2022-2024 [1]. In contrast, older workers (aged 29 and over) in these fields saw a slight decline in jobless rates, resulting in a significant gap between younger and older college graduates in remote-capable occupations [1].
For non-remotable jobs, the study observed little difference in unemployment rates between older and younger college graduates, a pattern also seen among those without college degrees [1]. The authors, led by New York Fed research economist Natalia Emanuel, concluded that businesses are less inclined to hire new graduates for remote roles due to the challenges of training and mentoring employees outside the office environment. The study estimates that remote work accounts for nearly two-thirds of the increase in unemployment among young college graduates since the pandemic [1].
The study also addressed concerns about AI's impact on youth employment, noting that the negative employment trend for young college graduates began before the widespread adoption of AI tools like ChatGPT. Analysis of occupational exposure to AI revealed that AI had little effect on youth unemployment rates [1].
Key data points include a 20% rise in the unemployment rate for college graduates under 29, reaching an average of 3.7% in 2022-2025. For college graduates aged 22 through 27, unemployment reached 5.8% last year, the highest level outside the pandemic since 2012 [1]. The findings align with the current job market's 'low-hire, low-fire' state, where layoffs are minimal and the overall unemployment rate remains stable, but job seekers face difficulties securing new positions [1].
CONCLUSION
The New York Fed study identifies remote work, rather than AI, as the main driver of increased unemployment among young college graduates since the pandemic. This trend highlights the challenges businesses face in training new hires remotely and suggests that addressing these barriers could improve employment prospects for recent graduates.