This is the main reason some college grads are struggling to find work — and it’s not AI

Remote work, once seen largely as a pandemic-era perk, is hurting young workers’ employment prospects, economists say. 

Work-from-home arrangements account for 64% of the jump in unemployment among young college graduates since the pandemic, according to new research from the Federal Reserve Bank of New York. It’s harder for managers to train and mentor young workers when they aren’t physically in the same space, the study found.

“Accordingly, companies may be reluctant to hire less-experienced workers in distributed work arrangements,” Fed research economist Natalia Emanual wrote in a blog post. 

“Employers may not want to hire fresh graduates onto distributed teams because it is more difficult to teach them the requisite skills from afar,” she added.

From 2017 to 2019, the average unemployment rate for college grads under 29 years old was 3.1%. By contrast, from 2022 to 2025, joblessness for the group rose to 3.7%.

Emanual said that the growth of remote work explains “the bulk of the rise in youth unemployment,” noting that the recent rise in the jobless rate for recent college grads predates widespread adoption of AI. 

“[T]he evidence to date suggests that the rise of remote work has meaningfully contributed to the recent challenges facing young college graduates,” she said.

Many economists say that AI hasn’t yet had much impact on the overall U.S. labor market, although it appears to be pushing up layoffs in the technology industry. Companies have announced nearly 50,000 job cuts this year linked to AI, according to research from outplacement firm Challenger, Gray & Christmas. Those layoffs account for roughly 17% of the roughly 300,000 total job cuts announced so far in 2026, the firm’s figures show. 

Goldman Sachs analysts estimate that AI has increased the nation’s unemployment rate, now at 4.3%, by 0.1 percentage points, noting that the increase mostly affects less experienced workers.