College graduates are up against a number of forces as they navigate the current job market—AI being chief among them. As companies cut entry-level jobs and cite AI adoption to justify layoffs, new entrants to the workforce have found themselves in an especially precarious position. By the end of 2025, unemployment among young college graduates had soared to 5.6%.
But there might be another explanation for why the job market has proven so challenging for recent graduates, according to new research from the Federal Reserve Bank of New York.
It turns out the rise of remote work might be working against them, too: In an analysis of federal data on the labor force, researchers found that employers are not as likely to hire young college graduates if a job can be performed remotely.
From 2017 to 2019 and 2022 to 2024, the unemployment rate for young workers increased by nearly one percentage point across sectors where it is relatively easy to do a job remotely—software engineering, as an example. (For older workers in those jobs, unemployment actually declined slightly.)
It just so happens that this shift emerged alongside the pandemic, which also ushered in more remote work opportunities. In industries that are not as remote-friendly, the unemployment rate for young workers inched up during the pandemic but eventually fell again.
In fact, the researchers argue that remote work likely plays a much bigger role in the current employment picture than AI does, when it comes to young workers—and that unemployment among that group was already rising before the widespread adoption of AI. (Overall unemployment among young workers jumped by 20% between 2022 and 2025, reaching 3.7%.) They estimated that remote work was responsible for about 64% of the uptick in unemployment among recent college graduates.
A case study of a Fortune 500 company illustrates why this might be the case, according to the researchers.
Software engineers received less feedback when they were not in close proximity to their colleagues, which had a greater impact on young workers. That distance could also affect the quality of work, the researchers found: Employees who had previously worked together in person produced better work than those who had worked remotely for longer.
This phenomenon also seemed to influence how the company hired: During the pandemic, the company favored more experienced workers. When its offices reopened and people were required to return to the office, the company started hiring more young employees; on distributed teams, however, the company was still more likely to hire people with experience.
The lack of mentorship in remote arrangements is something companies have repeatedly cited over the years, as they have forced employees to return to the office. In surveys, even young employees have expressed a desire to work out of the office, in part for that reason.
Still, despite the push to return to the office, plenty of companies have retained hybrid or remote work arrangements—and they could risk leaving those workers behind if they don’t figure out how to support them in remote jobs.
While there may be some benefits to working out of an office for young college graduates, it is also difficult for them to get the experience they need and gain a foothold in the workforce if companies won’t take a chance on them in the first place.