A graduating student's cap declares their future intentions during commencement exercises at City College where First lady Michelle Obama delivered the commencement speech after being presented with an honorary doctorate of humane letters at City Col …
Despite persistent fears that artificial intelligence would take away more and more jobs, that may not be the reason a rising number of young college graduates are having trouble finding work. A new report suggests that the higher unemployment rate could come down to another workplace trend that has gained popularity in recent years.
Big picture view:
The problem could be remote work. Employers are simply more hesitant to hire less experienced workers for jobs that do not require the new hires to show up at the office regularly, the report’s authors contend.
What they're saying:
"Employers may not want to hire fresh graduates onto distributed teams because it is more difficult to teach them the requisite skills from afar," they wrote.
By the numbers:
The unemployment rate among college graduates under the age of 29 has risen 20 percent since the pandemic, going from an average of 3.1% between 2017 and 2019 to a 3.7% average between 2022 and 2025, according to the three economists behind the research.
Long-Lasting Effects
In their article, which was published on the Federal Reserve of New York’s website, they pointed out that higher unemployment rates for younger workers can have negative impacts that last throughout their careers. Those hired during weaker labor markets typically make less money and do not advance as rapidly in their careers as those hired in times of high demand.
The researchers based their conclusions on the employment rates for younger workers in jobs determined to be "remotable," and the numbers for those in "non-remotable" positions, then compared them to workers 29 and older. To decide which jobs fell into each category, they referenced an index of how easily certain job types can be done remotely.
The report found that work considered "remotable," such as software engineering, saw a nearly full point rise in the unemployment rate of younger workers. Meanwhile, the rate actually dropped for older workers, increasing the gap between the two groups. In non-remotable positions, there was a small rise after 2020, they found, but it returned to the baseline afterward.
In all, they estimate, remote work could possibly account for nearly two-thirds (64%) of the increase in unemployment for young college graduates.
AI doesn’t make a difference
Researchers noted a common assertion by analysts that generative AI is taking those jobs from younger workers, but claim they found little evidence of that. They pointed out that the upward trend in unemployment among that group started before generative AI was widely used and said the trends they found between younger and older workers held even when their analysis was controlled for an AI factor.
However, they do caution that does not mean that AI may not be a factor going forward.
The Source: Information for this article was taken from the Federal Reserve Bank of New York’s Liberty Street Economics. This story was reported from Orlando.