Researchers found that remote setups weaken incentives to hire inexperienced workers due to the difficulty of providing on-the-job training and feedback from afar

New research from the Federal Reserve Bank of New York has linked remote work to the growing youth unemployment.

According to their findings, unemployment among college graduates under age 29 climbed from 3.1% on average in 2017–2019 to 3.7% in 2022–2025.

The NY Fed analysis found that unemployment increased by nearly one percentage point among younger workers in remote-capable occupations, while it fell among workers aged 29 and older. By contrast, unemployment rates for non-remote jobs showed little difference between the two age groups.

Unemployment among young college graduates climbed from 3.6% in March 2019 to 5.6% in March 2026. The NY Fed estimates that the increase in remote work accounts for nearly two-thirds of the increase.

While artificial intelligence often takes the blame for displacing entry-level roles, researchers found that the expansion of remote work has had a greater impact and that the youth unemployment trend actually predates the widespread industrial adoption of AI.

A May 2025 Gallup survey showed that only 6% of Gen Z workers prefer fully on-site work, while 71% favor a hybrid arrangement.

The NY Fed researchers compared “remotable” jobs, such as software engineers and financial analysts, with “non-remotable” roles, like nursing, using data from a Fortune 500 company.

It was found that remote setups weaken incentives to hire inexperienced workers because it is difficult to provide on-the-job training and feedback from afar.

All these factors leave recent grads struggling to find a footing in a “low-hire, low-fire” economy that generally favors existing workers.

What can new graduates expect?
The Class of 2026 faces a radically transformed job market, reports Semafor. When the graduates started their degrees four years ago, OpenAI hadn’t been launched.

Tech companies alone have slashed 100,000 jobs this year, with Cloudflare axing a fifth of its staff after replacing human tasks with thousands of AI agents.

Senator Mark Warner predicts recent graduates could face a 30% unemployment rate within the next two years.