Remote Work’s Impact on Young College Graduates

New research from the Federal Reserve Bank of New York points to remote work as a key factor sidelining young college graduates since the pandemic. The study, which analyzed federal employment data and flexible work arrangements at a Fortune 500 tech company, indicates that companies are less inclined to hire recent grads for positions that can be done remotely.

Declining Opportunities for Young Graduates

The study highlights a 20% rise in unemployment among younger college grads, those under 29, post-pandemic, while older grads saw a slight decline. It compared unemployment rates from 2017-2019 with those from 2022-2024. The increase in remote work, which quadrupled during this period, appears linked to these trends. Researchers suggest that remote work complicates the training and mentorship of new employees.

Feedback and Mentorship Challenges

Emma Harrington, an assistant professor of economics at the University of Virginia, explains that software engineers received 20% more feedback when working close to colleagues compared to working remotely. This feedback gap was evident even before the pandemic but intensified afterward. Young workers, who need feedback most, felt the impact, affecting their professional growth.

As the tech company embraced remote work, it shifted from hiring recent grads to more experienced workers. However, a return-to-office policy led to renewed hiring of new graduates, illustrating the connection between mentorship challenges and hiring decisions.

Broad Economic Implications

The researchers expanded their analysis to the broader economy, categorizing jobs into ‘remotable’ and ‘non-remotable’. They found a more significant gap in unemployment rates between younger and older workers in jobs that can be done remotely. The unemployment rate for young grads in ‘remotable’ jobs increased by almost a full percentage point, while older grads saw a slight decrease. This suggests that remote work explained nearly two-thirds of the rise in unemployment among young grads.

AI’s Lesser Role in Unemployment Trends

Exploring AI’s role, the researchers used another index categorizing jobs by AI exposure. They found that AI exposure didn’t account for the unemployment rate divergence from 2022-2024. Remote work was the more significant factor, though this could change in the future.

Supporting these conclusions, researchers from the London School of Economics found similar trends in a study across the U.S., U.K., Canada, and Australia. Regardless of the cause, the New York Fed report warns that high unemployment among young college grads is concerning. Early-career experiences have lasting impacts, with those entering weaker job markets facing slower career progression and lower earnings.