Remote Work Drives Rising Youth Unemployment, New York Fed Research Shows

Both remote work and youth unemployment have risen since the Covid pandemic, and the two trends are related, according to new research by the Federal Reserve Bank of New York.

The unemployment rate for young college graduates increased to 5.6% in March 2026 from 3.6% in March 2019, the New York Fed economists wrote in a blog post published Monday. They estimate that remote work accounts for 64% of this recent increase.

“Employers may be reluctant to hire fresh graduates onto distributed teams because it is more difficult to teach them the requisite skills from afar,” the authors explained.

While the impact of artificial intelligence on entry‑level jobs has received much attention recently, the expansion of remote work appears to have had a greater impact on youth unemployment, they added.

The New York Fed researchers compared unemployment rates between inexperienced and more experienced employees in “remotable” jobs—such as software engineers and financial analysts—and “non-remotable” jobs—such as funeral home managers and nurses. They also used proprietary data from an undisclosed Fortune 500 company.

A Gallup survey from May 2025 found that only 6% of Gen Z workers prefer fully on‑site work; 71% prefer a hybrid arrangement.

Industries with higher rates of remote work showed larger productivity gains, according to 2024 research by the U.S. Department of Labor.

However, companies may be hesitant to hire inexperienced workers when they can’t be present in the office, the New York Fed researchers wrote.

“Remote work has weakened incentives to hire young workers by impeding on‑the‑job training,” they said.

‘Lasting Consequences’ for College Graduates

Workers separated from colleagues may receive less feedback, which can especially hinder development for those newer to the workforce, the New York Fed authors noted.

Their research also found that one Fortune 500 company hired fewer inexperienced workers during the pandemic because of the challenges of providing education and mentorship from afar—a dynamic they say could be playing out more broadly now with widespread remote work.

“The high unemployment rates of young college graduates are particularly concerning because early‑career experiences can have lasting consequences,” the blog post concluded.

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