SouthernWorldwide.com – The primary factor contributing to the employment struggles of recent college graduates is not artificial intelligence, but rather the prevalence of remote work, according to economists.
Work-from-home arrangements are responsible for 64% of the increase in unemployment observed among young college graduates since the pandemic. This finding comes from new research conducted by the Federal Reserve Bank of New York.
The study indicates that it is more challenging for managers to effectively train and mentor junior employees when they are not physically present in the same office environment. This difficulty can lead to companies being hesitant to hire less experienced individuals for remote positions.
As Fed research economist Natalia Emanual explained, companies might be reluctant to onboard fresh graduates into distributed teams because imparting the necessary skills remotely is significantly more complicated.
Data shows a notable difference in unemployment rates. Between 2017 and 2019, the average unemployment rate for college graduates under the age of 29 stood at 3.1%. In contrast, this rate climbed to 3.7% for the same demographic between 2022 and 2025.
Emanual highlighted that the expansion of remote work adequately explains “the bulk of the rise in youth unemployment.” She further emphasized that the recent uptick in joblessness among recent college graduates predates the widespread integration of AI technologies.
The evidence gathered thus far strongly suggests that the growing trend of remote work has played a substantial role in the recent difficulties encountered by young college graduates in securing employment.
While AI’s impact on the broader U.S. labor market is still considered minimal by many economists, it is reportedly contributing to an increase in layoffs within the technology sector. Companies have announced close to 50,000 job cuts this year that are directly linked to AI, according to research from the outplacement firm Challenger, Gray & Christmas.
These AI-related layoffs constitute approximately 17% of the total job cuts announced so far in 2026, which amounts to roughly 300,000 positions. This data is based on figures provided by the firm.
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Analysts at Goldman Sachs have estimated that AI has contributed to a slight increase in the nation’s unemployment rate, which currently stands at 4.3%. Specifically, they believe AI has raised the unemployment rate by 0.1 percentage points, with the impact primarily affecting less experienced workers.
