Unemployed? Blame Remote Work
With nearly half of recent grads unemployed or underemployed, many are pointing a finger at AI. Could remote work be a bigger factor?
You’ve heard the news: some recent grads are unemployed, and nearly half are underemployed, and the culprit is AI, because firms are now having bots do entry-level work like finance analysis and administrivia, and no longer hiring recent graduates. It’s a good story—but maybe only a part of it.
A new report from the Federal Reserve Bank of New York concludes that most unemployment among recent grads is due to the prevalence of remote work—and not AI. The data suggests that a whooping 64% of unemployment in recent grads is due to the four-fold rise in remote work since the pandemic. With so many more remote jobs, managers, it seems, have stopped hiring recent grads for those roles. “This isn’t an unemployment problem,” says Paul Fogel, sector leader in the software practice at Korn Ferry. “It’s a gap in management. Managers don’t know how to onboard and develop recent grads.”
Unemployment among recent grads has been ticking upward, currently hovering at 5.6%, up from 3.9% in October 2022, according to separate data from the Federal Reserve Bank of New York. The underemployment rate for recent grads is 41.5%, with many snagging jobs that don’t requires a college degree. The researchers found that the upswing in unemployment precedes the widespread use of AI, meaning that AI cannot possibly be the culprit—though the researchers note that “generative AI and other factors may play a more primary role in determining the employment patterns of younger workers going forward.”
The shift toward remote work is not consistent across industries. “In some fields, it’s like remote work never happened,” says Lucy Bosworth, senior client partner at Korn Ferry. Nevertheless, remote work is still much more common than it was pre-pandemic—plenty prevalent to cause the bulk of the bump in unemployment among recent grads. And it comes with a notable decrease in mentorship and development. At one firm that allowed remote options as part of a work-life balance program, leaders discovered that coaching by senior employees decreased markedly. “Senior people felt that they needed to be head-down, and didn’t feel as responsible for coaching,” says Karrin Randle, associate client partner at Korn Ferry, who suggests making time for development part of typical work.
Firms are recognizing that the primary value of working from home is efficiency in repetitive tasks and banging out work. But the innovation and brainstorming that come with multiple people in the same room cannot be replicated remotely. Remote work makes sense when raw productivity is the goal, says Karena Man, senior client partner in the technology and digital practice at Korn Ferry. But when productivity has already been maximized, value creation becomes the aim—and experts say that happens more effectively in-office. For companies banking on four to five days per week in-office, it’s “not just a mandate—they’re building corporate culture around it,” she says.
Still, experts say firms may want to reconsider hiring at least some recent grads for remote work, if only to keep of pool of workers ready be future development. “It’s not impossible by any stretch,” says Fogel. He argues that, sure, it’s more convenient to sit down a new hire and instruct them to watch and learn, but setting up zoom call and sharing can be effective too. “It’s the same training load in any medium,” he says.
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