WASHINGTON — A study by the Federal Reserve Bank of New York released in 2026 found that the expansion of remote work since the pandemic has made businesses more reluctant to hire young, inexperienced workers and is the key driver of higher unemployment rates for recent college graduates.
The unemployment rate for college graduates under 29 rose 20% from pre-pandemic levels to an average of 3.7% between 2022 and 2025. By March 2026, that rate stood at 5.6%, up from 3.6% in March 2019. For those aged 22 through 27, unemployment reached 5.8% in 2025—the highest level outside the pandemic since 2012.
The authors of the study calculate that remote work accounts for nearly two-thirds of the increase in youth unemployment since the pandemic. In occupations that can be performed remotely, such as software development, the unemployment rate for young college graduates rose by about 1 percentage point between the periods 2017–2019 and 2022–2024. In non-remotable jobs like nursing, there has been little gap in the unemployment rates between older and younger college graduates.
For older workers in remotable occupations—those aged 29 and over—the unemployment rate declined slightly from 2017–2019 to 2022–2024. A similar pattern of higher youth unemployment in remotable jobs also appeared among workers without college degrees.
“Remote work has weakened incentives to hire young workers by impeding on-the-job training.”
“Employers may not want to hire fresh graduates onto distributed teams because it is more difficult to teach them the requisite skills from afar.”
The study examined detailed data from an unnamed Fortune 500 tech company. When the company’s offices were closed and staff worked remotely, the firm hired fewer inexperienced workers and more experienced workers, who might need less mentorship to do their jobs well. Once its offices reopened, the company shifted back to hiring younger workers. Even after reopening offices, the company favored more experienced workers for teams that included remote work.
The study also examined the role of artificial intelligence. The rise in unemployment among young college graduates predates the development of AI tools such as ChatGPT. When the authors examined occupational exposure to AI, they found that AI had little impact on youth unemployment. “The high unemployment rates of young college graduates are particularly concerning because early-career experiences can have lasting consequences.”