Once hailed as a pandemic-era benefit, remote work is now posing challenges for young professionals entering the job market, according to economists.
The shift to work-from-home setups has been identified as a factor contributing to 64% of the increase in unemployment among recent college graduates since the onset of the pandemic. This insight stems from fresh research conducted by the Federal Reserve Bank of New York. The study highlights that it becomes increasingly difficult for managers to provide necessary training and mentorship to young employees when they are not co-located.
Natalia Emanual, a research economist at the Fed, explained in a blog post that companies might hesitate to employ less-experienced workers in remote work settings.
“Employers may be reluctant to integrate recent graduates into remote teams as it poses challenges in imparting essential skills from a distance,” Emanual noted.
Between 2017 and 2019, the unemployment rate for college graduates under the age of 29 averaged 3.1%. In contrast, from 2022 to 2025, this figure rose to 3.7%.
Emanual attributed the significant rise in youth unemployment primarily to the expansion of remote work, emphasizing that this trend preceded the widespread implementation of artificial intelligence technologies.
“[T]he evidence to date suggests that the rise of remote work has meaningfully contributed to the recent challenges facing young college graduates,” she said.
Many economists say that AI hasn’t yet had much impact on the overall U.S. labor market, although it appears to be pushing up layoffs in the technology industry. Companies have announced nearly 50,000 job cuts this year linked to AI, according to research from outplacement firm Challenger, Gray & Christmas. Those layoffs account for roughly 17% of the roughly 300,000 total job cuts announced so far in 2026, the firm’s figures show.
Goldman Sachs analysts estimate that AI has increased the nation’s unemployment rate, now at 4.3%, by 0.1 percentage points, noting that the increase mostly affects less experienced workers.
