The prevalence of remote work may be largely to blame for the uptick in unemployment among recent college graduates, according to a new analysis from the New York Fed.
Work-from-home arrangements, which have surged fourfold since the pandemic, can explain an estimated 64% of the recent increase in joblessness among young grads, New York Fed researchers said, with some employers perhaps finding it more difficult to train new workers from afar.
“Companies may be more reluctant to hire less-experienced workers in distributed work arrangements,” the researchers wrote.
That trend bucks the prevailing assumption that AI is displacing entry-level workers, and it’s especially concerning since a tough labor market early in a worker’s career can scar their earning potential and career progression. As of March, the unemployment rate for recent college graduates was 5.6%, compared to 4.3% for all workers.
The New York Fed found that unemployment rates in recent years have increased particularly fast among young workers in occupations that can easily be performed remotely, like software engineering. Unemployment among older workers in the same roles, on the other hand, has declined marginally.
“As a result, the age gap in unemployment between younger and older workers significantly increased in remotable occupations,” the researchers wrote.
As Yahoo Finance covers the rising cost of living coupled with a challenging job market, we’re looking to hear from real workers about what they earn — and whether it’s enough. Reach out toemma.ockerman@yahooinc.comto share your story.
For jobs that are considered “unremotable,” meanwhile, unemployment increased briefly in 2020 as COVID tore through the economy, but “returned to baseline soon afterward” as workers returned to the office.
Digging into proprietary data from an unnamed Fortune 500 company, the researchers also found that people who had worked next to their colleagues received more feedback and more mentorship. In a remote work environment, those employees also performed better than those who worked primarily away from their co-workers during their careers.
Perhaps understanding “the pitfalls of distance for worker development,” the company hired fewer less-experienced workers when its offices were closed during the pandemic and consistently opted for more experienced workers when hiring for positions on distributed teams, even after reopening.
“These dynamics suggest that remote work has weakened incentives to hire young workers by impeding on-the-job training,” the researchers wrote. “Ironically, when jobs are scarce, it becomes even harder for young workers to secure the training they need.”
