The stubbornly high unemployment rate among recent college graduates isn’t primarily the work of artificial intelligence. It’s the rise of remote work that’s keeping young workers on the sidelines, according to a study released Monday by the Federal Reserve Bank of New York.

The Findings

Researchers led by New York Fed economist Natalia Emanuel compared occupations that can be done remotely — such as software development, financial analysis, and marketing — with those that require in-person work, such as nursing, construction, and food service. The unemployment rate among young college graduates in “remotable” jobs rose by about 1 percentage point from 2017–2019 to 2022–2024. Meanwhile, the jobless rate for workers aged 29 and over in those same fields actually declined slightly, creating a widening gap.

For non-remotable jobs, there was little difference in unemployment rates between older and younger college graduates. The pattern held for workers without college degrees as well. The study calculates that remote work is responsible for nearly two-thirds of the rise in the unemployment rate for young college graduates since the pandemic.

“Remote work has weakened incentives to hire young workers by impeding on-the-job training,” the study concluded. “Employers may not want to hire fresh graduates onto distributed teams because it is more difficult to teach them the requisite skills from afar.”

What It Means for New York

The findings carry particular weight in the New York metro area, home to the nation’s densest concentration of “remotable” white-collar jobs in finance, media, tech, and professional services. For college grads aged 22 through 27, unemployment reached 5.8% last year — the highest outside the pandemic since 2012. Overall, the jobless rate for college grads under 29 rose 20% from pre-pandemic levels, averaging 3.7% in 2022–2025.

The study also examined hiring patterns at an unnamed Fortune 500 tech company and found that they mirrored the broader data. When that firm’s offices closed and staff went remote, it “hired fewer inexperienced workers and more experienced workers, who might need less mentorship to do their jobs well.” After offices reopened, the company shifted back toward hiring younger workers — but still favored experienced hires for teams that included remote work.

A Counter-Narrative on AI

The study lands amid widespread anxiety about AI displacing entry-level white-collar workers — a concern that has rippled through college campuses, where graduates have booed references to AI during commencement speeches this spring. But the data shows the worsening employment picture for young grads pre-dates tools like ChatGPT, and that AI exposure had little measurable impact on youth unemployment. The real culprit, the New York Fed argues, is structural: a distributed-work economy that makes it harder to train the people who need it most. Business of New York will continue tracking the labor market dynamics shaping the city’s next generation of workers.

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