Remote work quietly worsens grads’ hiring prospects

New research from the Federal Reserve Bank of New York finds that when jobs can be done remotely, employers are less likely to hire young college graduates. Unemployment for young graduates rose to 5.6% by the end of 2025, with remote work estimated to explain

On the weeks when applications stack up and offers don’t arrive, it’s tempting to blame the loudest headline in the room: AI.

But a new look at the data from the Federal Reserve Bank of New York points to a different force that may be hitting new college graduates just as hard—remote work, and what it changes for early-career hiring.

By the end of 2025, unemployment among young college graduates had soared to 5.6%. Many companies have trimmed entry-level roles and pointed to AI adoption when explaining layoffs, leaving new entrants feeling exposed.

Yet the Fed’s researchers argue that remote work likely matters more for the current employment picture among young workers than AI does. They reached that conclusion after analyzing federal labor force data and tracking what happens when employers can shift a job away from in-person work.

Their findings are stark: employers were not as likely to hire young college graduates in sectors where a job could be performed remotely. From 2017 to 2019 and then from 2022 to 2024. the unemployment rate for young workers increased by nearly one percentage point across sectors that are relatively easy to do remotely. software engineering included. In those same remote-friendly fields, unemployment for older workers actually declined slightly.

The timing matters. The shift toward remote work accelerated alongside the pandemic, which also expanded remote opportunities. In industries that were not as remote-friendly, the unemployment rate for young workers rose during the pandemic but eventually fell again.

The research says unemployment among young workers was already climbing before AI became widely adopted. and that overall unemployment among young workers jumped by 20% between 2022 and 2025. reaching 3.7%. Remote work, the researchers estimated, was responsible for about 64% of the uptick in unemployment among recent college graduates.

A case study from a Fortune 500 company helped explain the mechanism. Software engineers, the researchers found, received less feedback when they were not in close proximity to colleagues. That reduction in feedback had a greater impact on young workers. Over time. the distance could also affect the quality of work: employees who had previously worked together in person produced better work than those who had worked remotely for longer.

Remote work also changed hiring behavior. During the pandemic, the company favored more experienced workers. When its offices reopened and people were required to return to the office, the company began hiring more young employees. On distributed teams, however, it was still more likely to hire people with experience.

That mentorship gap is not a new grievance. The researchers point out that companies have repeatedly cited the lack of mentorship in remote arrangements as they pushed employees to return to the office. Even in surveys, young employees have expressed a desire to work out of the office, in part for that reason.

Yet the world is not rushing back to fully in-person work. Many companies have retained hybrid or remote arrangements, and the researchers warn that doing so without building support for remote jobs could leave young workers behind.

It’s a cycle with real consequences: even if being physically present can help early-career employees gain guidance. companies can still leave young college graduates without the chance to build experience in the first place—especially when remote work reduces feedback. weakens mentorship. and pushes hiring toward people who already have it.

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