Unemployed? Blame Remote Work
Could remote work be a bigger factor than AI behind the severe employment issues recent grads are facing?
You’ve heard the news: Some recent grads are unemployed, and nearly half are underemployed. The culprit is gen AI, because firms are now using bots to do entry-level work like finance analysis and administrivia, and are no longer hiring recent graduates. But that may be only part of the story.
A new report from the Federal Reserve Bank of New York concludes that unemployment among recent grads is mostly due to the prevalence of remote work—and not to the advent of gen AI. The data suggests that a whopping 64% of said unemployment is the result of the fourfold rise in remote work since the pandemic. With so many more remote jobs, managers seem to have stopped hiring recent grads for entry-level 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, and it’s currently hovering at 5.6%, up from 3.9% in October 2022, according to Federal Reserve Bank of New York data. Meanwhile, underemployment for this group is at 41.5%, with many grads forced to take jobs that don’t requires a college degree. Researchers found that the upswing in unemployment precedes the widespread use of gen AI, meaning that AI cannot possibly be the culprit—though they do 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—prevalent enough to cause the bulk of the unemployment bump among recent grads. And this kind of work comes with a notable lack of 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 incorporating time for development into the workday.
Firms are recognizing that the primary benefits of working from home are efficiency and productivity. But the innovation and brainstorming that come when multiple people are together in the same room cannot be replicated remotely. Remote work makes sense chiefly 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 can occur more effectively in the office. For companies requiring workers coming into the office four to five days per week, it’s “not just a mandate—they’re building corporate culture around it,” she says.
Still, experts say firms may want to consider hiring at least some recent grads for remote work, if only to keep of pool of workers ready for future developments. “It’s not impossible by any stretch,” says Fogel. He argues that while it’s convenient to sit down a new hire and instruct them to watch and learn, setting up a Zoom call and sharing insights can be effective too. “It’s the same training load in any medium,” he says.
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