NEW YORK — Researchers at the Federal Reserve Bank of New York found that remote work could account for as much as 64% of the rise in youth unemployment since the pandemic. As of March, recent college graduates aged 22 to 27 faced an unemployment rate of 5.6%, compared to the overall U.S. unemployment rate of 4.2%.
The Fed researchers reported that the unemployment rate for college graduates younger than 29 rose from 3.1% to 3.7% over a nine-year period, while unemployment among college graduates older than 29 declined slightly from 1.9% to 1.8% during the same span. The divergence between age groups is concentrated in occupations that can be performed remotely, such as software engineering and financial analysis, rather than in roles requiring physical presence like nursing.
Hiring in physically present roles like nursing has largely normalized and remains strong. In contrast, the shift toward remote and hybrid arrangements has altered entry-level hiring dynamics in fields where mentorship and in-person collaboration were once standard.
Supporting research from the National Bureau of Economic Research found that feedback on coding work increased by 18.3% when software engineers were in the office, leading to higher-quality output. That study also noted that younger workers disproportionately benefited from in-person mentorship and that periods of flexible work had “scarring effects” on early-career development.
Gallup data shows that workplace arrangements have shifted since 2019. By 2026, 78% of U.S. work locations for jobs that can be done remotely operated under remote or hybrid models, up from 40% in 2019. Fully on-site roles declined from 60% of placements in 2019 to 22% in 2026. Despite this trend, a Gallup poll found that Gen Z is the least likely age group to prefer fully remote work, citing a lack of interaction with coworkers.
As of fall 2021, about 90% of full-time remote-capable workers said they wanted to remain remote in some form. Meanwhile, the unemployment rate for all degree-holders stood at 3.1% as of March.