Young professionals may be perfectly productive while working from home, says the New York Fed, but the quality of their output isn't so great, so companies don't want to hire them

Fresh college graduates frozen out of the job market shouldn't blame AI for their struggles, says the New York Federal Reserve. Instead, get angry at the rise of remote work.

According to the Fed's analysis, youth unemployment has risen significantly since the coronavirus pandemic, and hasn’t receded in the same way that unemployment numbers for older, more experienced college graduates has in recent years. The analysis notes that the prevalence of remote work has increased since COVID-19, and it believes those two trends have more than just a correlation.

“Our analysis suggests that these trends are related, with remote work making it more difficult for managers to train and mentor new employees,” the Fed said of its data. “Accordingly, companies may be reluctant to hire less-experienced workers in distributed work arrangements.”

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Overall, youth unemployment has risen 20 percent since the pandemic, the Fed says, and the report estimates that 64 percent of that rise is attributable directly to remote work, not AI, though the study admits that could be a factor in the future.

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“The uptick in youth unemployment rates predates the rapid diffusion of AI,” the Fed researchers wrote. “Moreover, even when we hold occupations’ exposure to AI constant, we find that the differences between younger and older workers persist.”

Those findings may stick in the craw of many remote workers, especially young ones whose careers were boosted by pandemic-era remote work. The Register has reported on multiple occasions that remote work had little effect on productivity in the past few years, and that return-to-office mandates are being resisted by employees who don’t want to ditch sweatpants, increased leisure time, and reduced expenses for more face time with the boss and their colleagues.

That’s not at the heart of the Fed’s report, though: Raw productivity numbers from remote workers might look good, but the working paper [PDF] that goes along with Monday’s report found something else entirely: Junior employees working remotely are getting more done, but its quality has decreased.

The paper, by New York Fed economist Natalia Emanuel and economics professors Emma Harrington and Amanda Pallais of the University of Virginia and Harvard, respectively, looked specifically at software developers, making their report particularly relevant to Reg readers.

According to their findings, experienced developers who went from working in the office to remotely showed little change in the quality of the code they produced, which was quantified by code churn and the amount of bugs introduced.

“When people work next to their colleagues, they receive more feedback on their output and more mentorship,” the economists said of their findings. Introducing just a bit of distance (e.g., a junior dev stuck hot-desking in a different part of the office) reduces mentorship and feedback opportunities, they added. “The loss in feedback is more pronounced for younger workers, who miss out on constructive comments that spur their development.”

That’s not just the case among software developers, either: A 2024 paper from Emanuel and Harrington found that sending customer assistance employees to work from home had a similar effect. According to that work, the number of calls to resolve an issue and overall time to resolution both increased, suggesting again that the quality of work being performed remotely was declining.

All of this, the researchers conclude, means that young people applying for remote jobs are not only having their career prospects hobbled due to lack of training and mentorship, but that companies may simply not want to hire them for remote jobs if they can’t give them the proper training needed to succeed.

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“Many firms’ RTO mandates have cited the importance of colocation for mentorship and learning,” Emanuel and her colleagues wrote. “Ironically, when jobs are scarce, it becomes even harder for young workers to secure the training they need.”

If that holds true, it stands to reason that companies ought to be reserving remote jobs for more experienced employees and forcing the new kids to work at the office, at least a few days a week, in an environment where they’re directly interacting with their more experienced colleagues. ®