Remote Jobs Linked to Wider Unemployment Gap for Young Workers: New York Fed

There has been a rise of both remote work and youth unemployment since the COVID-19 pandemic—and new research suggests that the two trends are connected, according to the Federal Reserve Bank of New York.

In an analysis published on June 1, New York Fed economists found that the unemployment rate for college graduates younger than 29 increased to 3.7 percent in 2022–2024 from 3.1 percent in 2017–2019. Over the same period, unemployment among more experienced college graduates aged 29 and older edged down to 1.8 percent from 1.9 percent.

At the center of this divergence is what researchers called “remotable” jobs, such as software engineering, financial analysis, and other desk-based work that can be performed off-site, versus “non-remotable” ones that demand physical presence, such as nursing, mechanical engineering, and many hands-on technical fields.

According to the findings, the age gap spiked briefly in 2020, then normalized in non-remote jobs, but it did not in remote fields. The researchers estimate that remote work could account for as much as 64 percent of the overall rise in youth unemployment since the pandemic.

The analysis also challenges the popular narrative that artificial intelligence is the primary driver of sluggish entry-level hiring. Researchers emphasized that the rise in youth unemployment “predates the rapid diffusion of AI.”

“Even when we hold occupations’ exposure to AI constant, we find that the differences between younger and older workers persist in both remotable and non-remotable jobs,” authors Natalia Emanuel, Emma Harrington, and Amanda Pallais wrote in the New York Fed’s “Liberty Street Economics” blog.

Younger Workers at a Disadvantage

An explanation to this dynamic, the authors suggested, is that early-career employees tend to benefit from day-to-day mentorship, informal coaching, and frequent feedback—the kind of support that is easier to provide when teams are physically together than when they are distributed.

“When people work next to their colleagues, they receive more feedback on their output and more mentorship,” they wrote.

To illustrate the point, the authors pointed to hiring patterns at an undisclosed Fortune 500 company. While its offices were closed during the pandemic, the firm hired more experienced workers and fewer entry-level employees, reasoning that junior staff would not get enough mentorship and feedback to develop.

After the company implemented a return-to-office policy, hiring of younger workers picked back up—yet the authors noticed a “twist:” The company’s more distributed teams continued to skew toward experienced hires even after reopening.

“Overall, the firm’s hiring patterns suggest that it is willing to teach junior workers when proximity is feasible but shies away from employing inexperienced workers if distance creates barriers to training and development,” they said.

Other research points to a similar pattern. A paper by economists at the London School of Economics and the University of Warwick, published last month, examined hundreds of millions of hiring records and job postings in the United States, the UK, Canada, and Australia between 2017 and 2025.

It found that entry-level hiring fell sharply by 14 percent to 29 percent, depending on the country, while senior hiring rose by 5 percent to 21 percent.

A Toll on Mental Health

In a separate study published on June 4 in the journal Science, the same New York Fed team found that remote work is associated with greater social isolation and worsening mental health indicators compared with in-person work.

Based on national surveys conducted among nearly 590,000 people between 2011 and 2024, the researchers found that workers in remote jobs spent more time alone during the workday after the pandemic and were more likely to report emotional distress. Those workers also recorded more visits to mental health care providers and higher use of prescription psychiatric medications.

Specifically, workers in remote jobs experienced a 58 percent increase in hours spent alone compared with peers in non-remote jobs and a 72 percent increase in the likelihood of spending an entire day with no human contact, the study found.

The effects were strongest among remote workers who live alone, who saw the largest increase—83 percent—in the likelihood of spending a full day without social contact.

Remote Work Remains Widespread

Those findings land as remote and hybrid work remain deeply embedded in the labor market for remote-eligible roles. Gallup’s national employment tracking shows that among jobs that can be done remotely, 78 percent of work arrangements are now either hybrid (26 percent) or fully remote (52 percent), up from 40 percent in 2019.

Younger workers have signaled that they may be more willing than before to return to the office if it helps secure a role.

A May 2025 report from London-based career platform Flexa found that, by March 2025, fewer job seekers ages 16 to 28 listed “location flexibility” as a top priority than earlier in the year, suggesting that some are willing to trade remote work for opportunity as the entry-level market tightens.