Many people say that AI is stealing entry-level jobs, but recent research from the Federal Reserve Bank of New York points to a different explanation. In its June 1, 2026 analysis, the New York Fed argues that the spread of remote work has played a major role in the rise in unemployment among young college graduates. The bank estimates that remote work can explain about 64 percent of the increase in unemployment for this group since before the pandemic. Its separate college labor market tracker also shows that conditions remained difficult in early 2026, with the unemployment rate for recent college graduates at about 5.7 percent in the first quarter. (libertystreeteconomics.newyorkfed.org)
Why would remote work hurt young workers more than older ones? The researchers say that beginners need training, feedback, and informal mentoring—the kind of help that often happens naturally when people sit near more experienced coworkers. In their data, unemployment rose mainly in “remotable” occupations, such as software-related work, while the gap was much smaller in jobs that must be done in person. Using data from a Fortune 500 company, the authors also found that workers received more feedback when they were physically closer to colleagues, and that firms became less willing to hire inexperienced workers for distributed teams. When offices reopened, hiring of younger workers recovered more in situations where in-person mentoring was possible. (libertystreeteconomics.newyorkfed.org)
This does not mean AI has no effect. In fact, the New York Fed’s May 2026 post on job postings says AI may matter more in the future. But so far, the evidence does not show a clear AI-driven collapse in hiring. The researchers found that hiring in AI-exposed occupations had already been slowing before ChatGPT appeared in late 2022, and they did not find a special drop in junior roles compared with senior ones inside highly AI-exposed jobs. So the current lesson is surprising: for many young graduates, the biggest problem may not be a robot taking their place, but a missing desk near someone who could teach them. (libertystreeteconomics.newyorkfed.org)
