Remote work driving youth unemployment, New York Fed study finds

Remote Work and Youth Unemployment

The expansion of remote work may be a primary factor in the recent surge in youth unemployment, according to research released by the Federal Reserve Bank of New York. The study indicates that the rise of remote work since the pandemic has made businesses more reluctant to hire young, inexperienced workers.

Researchers found that this trend is a key driver of higher unemployment rates specifically for recent college graduates. The study compared occupations that can be performed remotely, such as software development, with roles that require in-person presence, such as nursing.

Impact on 'Remotable' Jobs

The data reveals a distinct gap in employment outcomes based on the nature of the work. The unemployment rate among young college graduates in "remotable" jobs rose by approximately 1 percentage point between the 2017-2019 period and the 2022-2024 period.

This shift appears to be fundamentally reshaping white-collar hiring practices. Researchers estimate that by 2025, occupations with high remote-work exposure experienced a 4-to-5 percentage point larger decline in junior hiring compared to occupations that are less remote-friendly.

Remote Work vs. Artificial Intelligence

While artificial intelligence is often cited as a threat to entry-level employment, the New York Fed research suggests that remote work is the more significant problem for young and unemployed workers.

AI continues to reshape entry-level work, but in different ways. Companies are increasingly utilizing tools such as GitHub Copilot and ChatGPT to automate the "grunt work" that was traditionally assigned to junior employees. According to the research, this automation is pushing some young workers into higher-level responsibilities earlier in their careers rather than simply eliminating the roles.