The Federal Reserve Bank of New York has released a study highlighting a significant challenge for young college graduates entering the workforce: the rise of remote work. This shift, accelerated by the pandemic, has made businesses more hesitant to hire inexperienced workers, leading to increased unemployment rates among recent graduates.
Remote Work vs. In-Person Jobs
The study compared occupations that can be performed remotely, such as software development, with those requiring in-person presence, like nursing. It found that the unemployment rate among young college graduates in jobs that can be done remotely rose by about 1 percentage point from 2017-2019 to 2022-2024. In contrast, older workers in these fields saw a slight decline in unemployment rates.
Interestingly, in non-remotable jobs, there was little difference in unemployment rates between older and younger college graduates. This pattern was also observed among those without college degrees, indicating a broader trend across different educational backgrounds.
Training Challenges in Remote Work
The study, led by New York Fed research economist Natalia Emanuel, suggests that the reluctance to hire young graduates for remote positions stems from the difficulty in providing on-the-job training and mentorship. Employers find it challenging to teach new skills from a distance, which weakens the incentives to hire fresh graduates.
According to the study, remote work accounts for nearly two-thirds of the rise in unemployment rates for young college graduates since the pandemic. This finding is consistent with the current job market, characterized by low hiring and firing rates, where those out of work struggle to find new opportunities.
AI’s Limited Impact
While there is widespread concern about artificial intelligence affecting job prospects, the study notes that the worsening employment situation for young graduates predates the development of AI tools like ChatGPT. The authors found that AI had minimal impact on youth unemployment when examining different occupations’ exposure to AI.
Data from a Fortune 500 tech company supported these findings, showing that during remote work periods, the company hired fewer inexperienced workers, preferring those with more experience who required less mentorship. Once offices reopened, the company resumed hiring younger workers but continued to favor experienced candidates for remote teams.
Original reporting: Dallas TX News (HLL/CB) — read the source article.
