Key facts
- New York Fed research indicates remote work is a major barrier for young college graduates.
- The study estimates remote work explains 64% of the recent increase in unemployment among young college graduates.
- The increase in youth unemployment began before the widespread diffusion of generative AI.
- Employers may be hesitant to hire fresh graduates for remote roles due to difficulties in training.
- Unemployment for young college graduates in remote-capable jobs increased by nearly 1 percentage point between 2017-19 and 2022-24.
New research from the Federal Reserve Bank of New York suggests that the rise of remote work, accelerated by the COVID-19 pandemic, is a more significant factor in the struggles of young college graduates in the job market than generative AI. The study, published on the New York Fed's Liberty Street Economics blog, estimates that remote work can explain 64 percent of the recent increase in unemployment among this demographic. Economists Natalia Emanuel, Emma Harrington, and Amanda Pallais argue that employers may be less inclined to hire fresh graduates for remote positions due to the increased difficulty in training them from afar. This trend contributes to a 'Gen Z career squeeze,' where middle managers prioritize experienced hires. The research highlights that the rise in youth unemployment in remote-capable occupations began before the widespread adoption of generative AI, contrasting with popular narratives that blame AI for job market challenges faced by new entrants.