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Remote Work Contributes to Young Graduate Unemployment Spike, Per Fed Analysis
A recent analysis suggests that remote work disproportionately affects younger workers, increasing their unemployment rate and hindering career development. The New York Fed's research indicates that artificial intelligence has led to the decline.
Remote Work and Youth Unemployment
A recent analysis indicates that remote work may be marginalizing younger workers, despite many companies and economists attributing the issue to artificial intelligence. Remote work accounts for 64% of the recent rise in unemployment among young college graduates, according to a New York Federal Reserve study. For young people in remote jobs, the unemployment rate increased by nearly 1 percentage point between 2017-19 and 2022-24, the research found.
In non-remote roles, the relative unemployment rate for young graduates increased in 2020 but quickly returned to baseline. However, even when adjusting for AI exposure in occupations, differences between younger and older workers persist in both remote and non-remote roles. Unemployment among those under 29 averaged 3.1% from 2017-19, rising by 20% to 3.7% in 2022-25.
The Changing Job Market Landscape
The US economy has experienced a "low-hire, low-fire" environment, favoring candidates who already have jobs rather than those actively seeking them. This trend has made it difficult for recent college graduates to establish themselves professionally. While AI has made tasks easier for some firms, automating entry-level work, the research suggests the increase in youth unemployment predates widespread AI adoption.
The New York Fed's research compared unemployment rates among individuals in "remotable" jobs versus "non-remotable" roles. To classify jobs, the bank utilized a commonly accepted index that gauges the ease of performing tasks from home.
Impact on Mentorship and Career Development
A significant factor identified for early career workers is mentorship. Using proprietary data from a Fortune 500 company, the research found that when employees work alongside colleagues, they receive more performance feedback and mentorship. This feedback diminishes significantly with even slight physical separation, potentially hindering younger workers' access to constructive feedback essential for career development.
The study also revealed that when the firm's offices closed during the pandemic, it hired fewer inexperienced workers and more seasoned professionals who may require less guidance. Even after offices reopened, the company continued to hire more experienced workers for its distributed teams.
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