Jun 4, 2026
Everyone’s been blaming AI for disappearing entry-level jobs, but new research from economists says the data tells a different story.
In a Liberty Street Economics post (the Federal Reserve Bank of New York’s research blog), economic researchers Natalia Emanuel (New York Fed), Emma Harrington (University of Virginia) and Amanda Pallais (Harvard), trace the post-pandemic rise in youth unemployment to how remote work changed hiring.
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Their back‑of‑the‑envelope estimate is that remote work explains about 64% of the increase in unemployment among young college graduates. The piece builds on a 2023 NBER working paper and fresh labor-market data. As with all Fed-affiliated research, these are the authors’ views, not the Fed’s official position.
Their conclusion is that the flexibility many workers fought to keep may have backfired. It’s made employers less willing or able to train junior staff remotely, leaving younger workers locked out of the white-collar jobs that went remote during the pandemic and stayed remote.
What the numbers show
Unemployment for college graduates under 29 averaged 3.1% right before the pandemic . By 2022–2025, it had climbed to 3.7% — a 20% jump.
What makes this interesting isn’t the number on its own but its contrast. Over the same period, unemployment for more experienced college graduates (ages 29 and older) actually fell, from 1.9% to 1.8%. The labor market got better for experienced degree-holders while worsening for younger ones.
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Why remote work is the answer, not AI
The researchers split jobs into two groups: “remotable” roles (like software engineering, where most of the work can be done from anywhere), and “non-remotable” roles (like mechanical engineering, which require you to be there in person). They used a widely accepted index that measures how easily the tasks in a given job can be done remotely.
The pattern that comes from the comparison is pretty clear. In remotable jobs, unemployment for young graduates jumped by almost 1% between 2017 to 2019 and 2022 to 2024. Over the same period, older workers in those same fields saw their unemployment rate dip slightly.
In non-remotable jobs, young grads’ unemployment spiked briefly in 2020 (the immediate pandemic shock) but bounced back to normal soon after. In remotable jobs, it never did.
About 61% of young college graduates work in remotable occupations, according to the researchers’ calculations, so this divide matters a lot for the group as a whole. As the authors put it: “Since so many young college graduates are in remotable occupations, our back-of-the-envelope calculation indicates that remote work can explain 64 percent of the increase in unemployment for all young college graduates between 2017–19 and 2022–24.”
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Many analysts blame generative AI for young graduates struggling to find jobs. But the researchers say youth unemployment started during the pandemic, before AI took off, and has tracked remote work ever since. Even when they account for how exposed different jobs are to AI, the age gap still shows up in both remotable and non-remotable fields.
They don’t rule out AI becoming the bigger issue later on. They write that “Of course, generative AI and other factors may play a more primary role in determining the employment patterns of younger workers going forward.” For now, though, the evidence points somewhere else.
The mentorship gap at the heart of it
The researchers didn’t solely rely on national labor statistics. They also obtained proprietary data from an unnamed Fortune 500 online retailer that allowed them to see the underlying mechanism directly.
The firm’s software engineers were the main focus of the 2023 working paper. What they found is that being physically close to your teammates makes a huge difference for learning. Workers on co-located teams received 23.9% more feedback on their code than those on split or distributed teams — and that feedback was more substantive, more actionable and more likely to improve their work.
Even a short separation, like a ten-minute walk between buildings on the same campus, caused feedback to drop sharply. The impact was biggest for younger, less experienced workers, who rely more on active guidance to build their skills.
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The firm’s hiring decisions reflected this pattern. When offices closed during the pandemic, it hired more experienced workers who needed less mentorship. When they reopened, it went back to hiring younger workers. But for distributed teams — where people still work remotely — it kept hiring more experienced workers, even after reopening.
According to the authors: “This divergence suggests that the firm’s hiring decisions were influenced by the complications of remote work rather than other macroeconomic trends.” They also concluded that “Overall, the firm’s hiring patterns suggest that it is willing to teach junior workers when proximity is feasible but shies away from employing inexperienced workers if distance creates barriers to training and development.”
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Why this matters — and what it means for young workers
The paper points to a serious long-term worry. As the authors put it, “the high unemployment rates of young college graduates are particularly concerning because early-career experiences can have lasting consequences,” citing research that shows that people who start their careers in a weak job market tend to earn less and move up more slowly than peers who began in better conditions.
For employers and policymakers debating return-to-office rules, this paper backs up an argument that’s mostly been based on gut feeling.
The company in the study had a stricter return-to-office policy than other tech firms, and the data shows it was able to mentor junior workers in person, which let them hire more of them after the pandemic. The researchers note that many firms have said mentorship and working side-by-side are the reason for their return-to-office mandates. This research gives that claim real, measurable support.
For recent grads and those about to enter the workforce, the paper is saying that the trouble is concentrated in white-collar, knowledge-work jobs that went remote after the pandemic and stayed that way. Fields that require being there in person (like healthcare and lab-based science) didn’t see the same age-based unemployment gap.
The point isn’t that young workers are less capable. It’s that remote work has made employers less willing, as a matter of structure, to pay the cost of training them.
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Godwin Oluponmile is a content specialist, SEO strategist and copywriter with seven years of expertise in finance, Web 3.0, B2B SaaS and technology. His work has been featured in publications such as Entrepreneur, HackerNoon, Blocktelegraph and Benzinga.
