A new study questions whether remote work could be blamed for the higher unemployment levels among recent college graduates, and the data is worth exploring further. Rising unemployment levels among young workers, particularly those who have recently graduated, present us with a concerning picture with regard to the future of work and the ability to build careers amidst major shifts in the job market. Since the pandemic, remote work has become an increasingly preferred avenue of employment for workers both old and young. Despite the general appeal of this mode of operation, it has also drawn considerable criticism.
A study by the Federal Reserve Bank of New York compared jobs that are “remotable” with those that are not, and found that unemployment rates among young college graduates in jobs that could be performed remotely rose from 2017-2019 to 2022-2024. The same shift wasn’t apparent in jobs that were performed on-site. While this trend of remote work could be blamed for the interruptions to career progression, it’s also important to understand that correlation doesn’t always mean causation, and many of the roles that do offer remote options are also the ones that can be automated with technology.
A study suggests that remote work could be blamed for rising unemployment among young grads, but the problem appears far more complex. (Image: Freepik)
Is Remote Work to Blame for Rising Unemployment Among Young Workers?
Remote work has often been blamed for many workplace issues, like lowered productivity, lack of engagement, rising loneliness, and an overall distancing from the workplace. The study, conducted by Natalia Emanuel, Emma Harrington, and Amanda Pallais for the Federal Reserve Bank of New York, takes this one step further and asks the question, “Could remote work be causing job seekers to lose out on employment opportunities?” To answer the question, researchers took a closer look at employment data and suggested that companies are less likely to hire recent college graduates in occupations where the work can be performed remotely.
The study looked at data on unemployment rates among those under the age of 29 and found that it rose 20% after the pandemic. The unemployment rates among older grads, however, fell by a small degree. This information is concerning on its own, as college graduates facing unemployment are currently struggling to fit themselves into the job market and pay back their education loans while also making a living and saving for the future. Data shows that workers who start looking for work in slower labor markets during periods like recessions can have lower earnings and see slower progressions in their career, facing multiple barriers to sustained growth.
While this information is telling on its own, understanding the cause behind this trend of rising unemployment is essential in order to fix existing problems and reopen the job market for these young workers. This is where the suggested association between remote work and unemployment becomes important.
AI vs Remote Work: Who Takes the Fall for the Rising Unemployment Among Young Workers?
We frequently blame the rise of artificial intelligence for the disappearance of entry-level roles that can be automated by technology. The study, however, suggests that the fourfold rise of remote work since the pandemic could be partially blamed for this shift, as the trends of rising unemployment predate the period where AI grew to be as central to the narrative.
Categorizing jobs as “remotable” and “non-remotable” based on how easily the tasks required for a given job can be done remotely, the study found that in remotable occupations, the unemployment rate among young job seekers rose by almost 1 percentage point between 2017-19 and 2022-24. In comparison, older workers in the same sector saw their unemployment rates marginally decline, showcasing a difference in how younger talent fares in remotable occupations.
In contrast, research also showed that with non-remotable jobs, while the unemployment rates among young graduates went up around 2020, they soon returned to baseline levels. “Since so many young college graduates are in remotable occupations, our back-of-the-envelope calculation indicates that remote work can explain 64 percent of the increase in unemployment for all young college graduates between 2017−19 and 2022−24,” the research explained.
What Does Remote Work Have to Do with Career Progression?
The reason for isolating remote work as the differentiating factor in the study was also made clear. Studying data from a Fortune 500 company, the report showed that isolated work performed at a distance, even a small one, resulted in a decline in communication and feedback from mentors. The tapered feedback was found to have a direct impact on the quality of work produced, showcasing the storied downsides of remote work. Even when all workers performed their jobs remotely, those who had experience working in-person with their colleagues showed better-quality output than those who had largely worked remotely for most of their employment.
This does explain the difference between unemployment among young graduates and older workers, as employers appear to find it much harder to train and connect with the younger, more inexperienced workers when it happens remotely. The study also looked at hiring data from the firm and found that they had intrinsically understood this difference, hiring fewer inexperienced workers and more experienced workers when the offices were closed during the pandemic. This preference stuck even after offices were reopened.
As a result of this association, employers may be more likely to hire older workers for remote roles or reduce their hiring for remote work entirely, as many already believe that the complications surrounding distance employment are not worth the effort. Remote work and hiring are correlated, but we believe that general reservations around hiring and training young graduates are a feature of the modern hiring era, not solely a result of remote work trends.
Addressing Unemployment Among College Graduates Is Non-Negotiable When Preparing for the Future of Work
Considering the link between remote work and unemployment, it would be easy enough for employers to exclusively offer in-person work opportunities to ensure that young graduates receive the training and supervision they need to meet organizational expectations. While a section of job seekers are exclusively on the hunt for remote work, most are likely willing to accept an in-person opportunity if that is the condition of employment available to them.
Hybrid work models offer a great middle ground and allow both employers and employees to benefit from their preferred mode of operations, closing any discussions on which mode works better. The rising composition of older workers in the workforce and the unemployment among younger generations tells us that while the preference for remote work might play a role in this conversation, there are other layers to the difference between “remotable” and “non-remotable” jobs that need to be addressed.
Work that can be performed remotely can also be automated with much greater ease. The rising reliance on AI, coupled with mass layoffs, suggests that hiring is no longer as central a priority for organizations. Additionally, when experienced talent is already available on the market, hiring inexperienced workers who require additional training also ceases to be preferable.
These factors suggest that the unemployment trends may have less to do with young graduates and their preference for remote work and more to do with how white-collar jobs are evolving and reducing their reliance on a healthy circulation of talent.
Do you agree with the link established between remote work and unemployment? Share your opinions with us in the comments. Subscribe to The HR Digest for more insights on workplace trends, layoffs, and what to expect with the advent of AI.
