The spread of remote work has had a greater impact on worsening youth unemployment in the United States than artificial intelligence (AI), which has long been blamed as the main culprit, according to a new analysis.
The Federal Reserve Bank of New York said in a study released Monday (local time) that "a significant portion of the rise in youth unemployment since the COVID-19 pandemic is linked to the spread of remote work culture."
According to U.S. business news outlet CNBC, researchers focused on the rise in the unemployment rate for college-educated young workers, which climbed from 3.6% in March 2019 to 5.6% in March this year. The analysis estimated that about 64% of the increase was tied to the expansion of remote work.
The researchers examined changes in the job market by comparing occupations that allow remote work with those that do not. Hiring of new graduates contracted relatively more in fields where remote work is possible, such as software engineers and financial analysts, while the trend was less pronounced in jobs requiring on-site presence, such as nurses and funeral directors.
Companies have also grown more cautious about hiring entry-level workers, the study found. New employees without prior experience require significant on-the-job training and organizational adjustment, and a growing number of companies have concluded that these processes are difficult to carry out effectively in a remote environment.
"In a distributed organizational environment, it takes more cost and time to bring new employees up to speed," the New York Fed researchers said. "As remote work expands, companies tend to favor hiring experienced workers."
In fact, work preferences among young Americans remain skewed toward remote arrangements. According to a survey conducted last year by polling firm Gallup, only 6% of Generation Z workers said they preferred fully in-office work. By contrast, 71% said they preferred a hybrid model combining office and remote work.
However, some counter that it is difficult to conclude remote work is a direct cause of worsening youth employment. The U.S. Department of Labor analyzed last year that industries with a higher share of remote work showed greater productivity gains.
Nicholas Bloom, a Stanford University economics professor and a leading authority on remote work research, also offered a different perspective. "There is no clear evidence yet that remote work shrinks employment," he said. "Rather, by making it easier for workers to participate in the labor market, it can have the effect of increasing overall labor supply."
Experts point out that while AI and automation are indeed affecting the job market, the factors behind the recent youth employment slump are far more complex. In particular, analysts say the bar for first-time job seekers is being raised as companies focus on hiring experienced workers who can perform on the job immediately, in order to reduce the burden of training new hires.
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