The career ladder's disappearing rung
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Illustration: Sarah Grillo/Axios
Economists are looking for clues that AI is eliminating jobs for young workers. Two new papers suggest a different culprit: remote work.
Why it matters: Young workers' white-collar job woes might stem from the massive, pandemic-era shift in how Americans work. Any AI-related impacts are landing on top of that headwind. The consequences could reverberate for years to come.
- "A persistent contraction of this kind hollows out the pipeline of future experienced workers," economists from the University of Warwick, the London School of Economics and Oxford's Ellison Institute of Technology wrote in a paper.
Driving the news: Remote work has allowed many workers more flexibility over where they live and work.
- But new research suggests that employers may be shying away from inexperienced workers, believing that remote work makes training and development more difficult. That may be leading them to favor experienced hires instead.
- "Employers may not want to hire fresh graduates onto distributed teams because it is more difficult to teach them the requisite skills from afar," economists at the New York Federal Reserve wrote in a new paper.
By the numbers: Unemployment among college graduates under 29 has risen from 3.1% before the COVID-19 pandemic to 3.7% since 2022, even as unemployment among more experienced college graduates has edged down.
- The divergence is concentrated in jobs that can be done from home: Among young college graduates in those fields, unemployment rose nearly 1 percentage point, while the jobless rate for older workers in the same occupations fell.
The economists say the timing of the unemployment jump predates the rapid adoption of AI. They estimate that remote work accounts for roughly 64% of the rise in youth unemployment since the pandemic.
- The finding holds even after accounting for occupations' exposure to AI, the economists say.
Zoom in: The New York Fed points to one example of younger workers benefiting disproportionately from proximity to more experienced colleagues through feedback and mentorship — advantages that became harder to replicate remotely.
Zoom out: Previous studies that suggest AI was putting downward pressure on entry-level jobs might have been picking up the effects of remote work, the U.K.-based researchers find.
- Once remote-work exposure is accounted for, the apparent relationship between AI exposure and weaker junior hiring largely disappears, they show, drawing on hiring data from the U.S. and three other countries.
The other side: The picture looks somewhat different when looking beyond white-collar workers.
- In a note last week, BNP Paribas economists wrote that many younger Americans are employed in industries such as retail, leisure and construction — sectors more sensitive to economic growth than to AI.
- They might be better positioned if the economy remains resilient.
What they're saying: "[G]enerative AI and other factors may play a more primary role in determining the employment patterns of younger workers going forward," the New York Fed economists wrote.
- "Nonetheless, the evidence to date suggests that the rise of remote work has meaningfully contributed to the recent challenges facing young college graduates."
- The flip side, for experienced workers: Their judgment and expertise are harder to replicate or replace with AI.
The bottom line: The researchers argue that the first major labor-market challenge facing young white-collar workers was the pandemic-era shift to remote work. AI may arrive before that challenge is resolved.
- Call it "the broken ladder" — the title of the U.K.-based economists' paper, describing how the entry-level job market for white-collar workers has deteriorated sharply.
