Dive Brief:
- Remote work may explain up to 64% of the recent rise in unemployment among recent college graduates, according to an analysis from the Federal Reserve Bank of New York.
- Researchers compared unemployment rates among younger and experienced workers in “remotable” jobs — those that can easily be done remotely — and “non-remotable” jobs, finding that younger workers’ unemployment rate went up one percentage point in remotable jobs, while older workers’ unemployment rate in those jobs slightly declined. Younger workers’ unemployment rate fared better in non-remotable occupations, researchers found.
- The dynamics at play suggest the rise in remote work has hurt younger workers by making training and mentorship more difficult, authors Natalia Emanuel, Emma Harrington and Amanda Pallais wrote in the “Liberty Street Economics” blog.
Dive Insight:
The researchers’ analysis may be unexpected, given both employers and workers pointing toward artificial intelligence as a major driver behind sluggish hiring.
Researchers noted, however, that the rise in youth unemployment “predates the rapid diffusion of AI,” and that “even when we hold occupations’ exposure to AI constant, we find that the differences between younger and older workers persist in both remotable and non-remotable jobs.”
The researchers took one Fortune 500 firm as an example to explain the phenomenon. The company hired more experienced workers and fewer inexperienced workers while its offices were closed during the pandemic, reasoning that those workers would not have access to proper mentorship and colleague feedback to develop. When it instituted a return-to-office protocol, it began hiring younger workers in greater numbers again.
The authors noted “a twist” in that the company’s distributed teams continued to hire more experienced workers even after reopening.
“Overall, the firm’s hiring patterns suggest that it is willing to teach junior workers when proximity is feasible but shies away from employing inexperienced workers if distance creates barriers to training and development,” they wrote.
Younger workers have previously signaled they’re more than willing to work in the office if the option is available; a Flexa report from May 2025 found that Generation Z was the least likely age group to want remote-first roles.