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Remote Work: The Real Reason Gen Z Can’t Get Hired?
Estimated reading time: 6 minutes
In this episode of Wellable Weekly, Nick and Geoff dig into a single story that has implications across HR, workforce strategy, and the future of early-career development. A new paper from the Federal Reserve Bank of New York challenges the dominant narrative that AI is behind the Gen Z hiring crisis, pointing instead to remote work as the primary culprit. The research argues that young workers in remote-eligible fields are being disproportionately shut out of the job market, and that the long-term developmental consequences of starting a career in a remote environment may be more serious than most employers are accounting for.
Short on time? Here are the key takeaways:
- The unemployment rate for recent college graduates aged 22 to 27 was 5.6% in March, well above the general unemployment rate of 4.2% and nearly double the 3.1% rate for more experienced degree holders
- Federal Reserve Bank of New York research finds that 64% of the rise in youth unemployment traces back to remote-eligible fields, directly challenging the AI displacement narrative
- If AI were the primary driver of Gen Z unemployment, you would expect to see unemployment rising across all age groups, but unemployment for workers 29 and older has remained flat or slightly declined over the same period
- A study of software engineers at large US firms found that feedback on coding work increased by 18.3% when employees were in the office, illustrating how much development depends on physical proximity
- Stanford remote work researcher Nick Bloom, when asked what he would advise his own daughter, said he would tell her to find a company that is five days a week in the office, a telling signal from someone who studies both sides of the debate
Episode Summary
The Research That Flips the AI Narrative
The popular story about Gen Z unemployment is that AI is eliminating entry-level roles before young workers can fill them. A new paper from the Federal Reserve Bank of New York complicates that narrative significantly. The research focuses on what it calls “remotable fields,” white-collar knowledge worker jobs in areas like software engineering and financial analysis that can be performed entirely off-site, and finds that 64% of the rise in youth unemployment traces directly back to those categories.
The age gap in the data is the most striking piece of evidence. Over the past nine years, unemployment for college graduates under 29 increased from 3.1% to 3.7%. Over the same period, unemployment for college graduates 29 and older actually declined slightly, from 1.9% to 1.8%. Nick’s point is straightforward: if AI were the real driver, you would not expect to see such a clean split by age. AI capable of replacing a 25-year-old’s job would be equally capable of replacing a 32-year-old’s job. The fact that only younger workers are seeing increased unemployment points to something else, and the research argues that something is remote work and what it does to the conditions companies need to be willing to hire people early in their careers.
Scarring Effects: What Remote Work Does to Early-Career Development
The developmental cost of starting a career remotely is not just intuitive, it is documented. Nick and Geoff reference published National Bureau of Economic Research findings that use the term “scarring effects” to describe the lasting developmental harm that remote work can cause for early-career employees. The term comes from research on software engineers at large US firms, which found that feedback on coding work increased by 18.3% when employees were in the office. That feedback gap compounds over time: less feedback means slower skill development, slower skill development means slower career progression, and slower career progression means lower lifetime earning potential and reduced professional confidence.
Geoff connects this to his own early-career experience in a rotational program, where much of his most valuable development happened informally, sitting near more experienced colleagues, overhearing how problems were solved, asking questions he did not even know were important yet. That kind of ambient learning is almost entirely unavailable in a remote environment and significantly reduced even in a hybrid one.
Why Companies Are Choosing Not to Hire Young Workers
The Federal Reserve research argues that the real mechanism behind Gen Z unemployment is not AI replacing jobs but companies simply choosing not to hire workers who require high levels of feedback and development in an environment where delivering that development is structurally difficult. A company with a largely remote or hybrid workforce has less time and fewer touchpoints with early-career employees, making the investment required to bring them up to speed feel riskier than hiring someone more experienced who can operate independently from day one.
The middle management trend compounds the problem. As companies flatten their structures and reduce manager layers, the people who would traditionally have served as mentors and day-to-day coaches for new hires are disappearing. The result is a double bind for young workers: the conditions that made in-person development possible have eroded at exactly the moment they are entering the workforce.
Nick’s advice for Gen Z workers navigating this environment is pointed. Rather than waiting for employers to change their hybrid arrangements, he suggests actively seeking out companies that require full-time or near full-time in-person work. Those roles receive far fewer applications from a generation that often prioritizes remote flexibility, which means the competition is meaningfully lower. Stanford’s Nick Bloom, perhaps the most prominent researcher on remote work, made the same point when pressed privately: the advice he gives his own daughter is to find a company that is in the office five days a week. That is a meaningful signal from someone who has spent his career studying the tradeoffs.
Geoff closes with a generational equity point. Remote work has genuinely benefited older workers, particularly elder millennials and Gen X professionals who had already built their skills and networks before the shift. The flexibility gains came largely at the expense of younger workers who had no say in the matter and who are now entering a labor market shaped by decisions made by a generation that did not bear the same costs. A hybrid model that skews toward more in-person time could be one solution for the disproportionate effects of remote work.
Frequently Asked Questions
The unemployment rate for recent college graduates aged 22 to 27 was 5.6% in March, compared to 4.2% for the general population and 3.1% for more experienced degree holders. Federal Reserve Bank of New York research links 64% of that gap to remote-eligible fields, arguing that companies with distributed workforces are less willing to hire early-career workers who require significant feedback and development. The age gap in the data, where unemployment is rising only for workers under 29 and flat or declining for those 29 and older, directly challenges the AI displacement narrative.
The evidence suggests AI is not the primary driver, at least not yet. If AI were displacing entry-level work broadly, you would expect unemployment to rise across age groups, not just for workers under 29. The Federal Reserve research finds the unemployment gap predates mass adoption of AI tools by several years, and multiple research papers have found no hard evidence that AI is displacing the workforce in material numbers today. Remote work and the structural unwillingness of remote-heavy companies to invest in early-career development appears to be a more significant factor.
The term “scarring effects” comes from published National Bureau of Economic Research findings describing lasting developmental harm caused by remote work for early-career employees. A study of software engineers at large US firms found that feedback on coding work increased by 18.3% when employees were in the office. Less feedback leads to slower skill development, slower career progression, and long-term gaps in professional confidence and capability. The concern is not just immediate productivity but the compounding effect of reduced development during the most formative years of a career.
Early-career employees typically require more feedback, mentorship, and hands-on guidance than experienced hires. In a remote or hybrid environment, the time and touchpoints needed to provide that development are reduced significantly. Companies are increasingly choosing to hire more experienced workers who can operate independently, treating early-career hiring as a higher-risk investment when the infrastructure for development is not in place.
Nick’s advice is to actively seek out roles that require full-time or near full-time in-person work. Those positions tend to receive significantly fewer applications from a generation that prioritizes remote flexibility, making them less competitive. More importantly, in-person environments provide the mentorship, feedback, and ambient learning that accelerate early-career development in ways that remote work cannot replicate. Stanford remote work researcher Nick Bloom gives his own daughter the same advice: find a company that is in the office five days a week.
Yes. Research, including Nick Bloom’s work at Stanford, finds that remote work can improve output and quality of life for experienced workers who have already built their professional skills and networks. The concern is not remote work broadly but its impact on workers in the early stages of their careers, who depend on proximity to more experienced colleagues for feedback and development that is difficult to replicate digitally. Geoff frames this as a generational equity issue: the flexibility gains largely accrued to older workers while the developmental costs fell on younger ones.
Full Episode Transcript
Nick: Welcome to the Wellable Weekly Podcast, where we talk about key topics and trends at the intersection of wellbeing, technology, and HR. I’m Nick, along with my good friend and colleague Geoff. Geoff, how are you doing?
Geoff: Happy Friday, Nick. Summer is here, or almost here.
Nick: Happy Friday. It’s 100% summer in Boston. We do a summer Fridays thing, so we’re recording this Friday morning, but between Memorial Day and Labor Day everyone in the company does a half day. Good opportunity to enjoy the summer a little early every week.
So this Wellable Weekly, we’re going to focus the podcast on one article. There’s just so much to talk about that we’ll probably have to work to keep it tight. There’s an article out in Fortune that effectively covers this whole Gen Z hiring nightmare. Recent graduates, largely Gen Z, defined as 22 to 27 years old, are dealing with a higher unemployment rate. For context, the unemployment rate for that group was 5.6% in March, higher than the general unemployment rate of 4.2%, and materially higher than older degree holders, who were around 3.1%. There’s real consternation, and I think you can see it in the commencement speech booing we discussed in a previous episode. People were booing any talk of AI, because the narrative is that AI is driving this challenging job market, especially for young people. But there’s new research from the Federal Reserve Bank of New York that’s effectively countering that argument, saying the real cause of this hiring crisis for Gen Z is remote work.
Geoff: The number that jumped out was 64% of the rise in youth unemployment traces back to remote-eligible fields. That’s a pretty stunning number. The common narrative is that so much of the challenge new grads are facing is tied to AI and limited opportunities in entry-level roles, especially in software and knowledge worker fields. This kind of flips that. It’s not to say we should redirect all our frustration toward remote jobs, but if you follow the logic of this research, there’s a lot to be said for the dramatic change in how we worked from late 2019 into 2020 and beyond, and its impact on job availability and the development of new hires.
Nick: The term they use, which was new to me, is “remotable fields.” If it’s the Federal Reserve Bank of New York, I’m going to say it’s a real word. Software engineering, financial analysis, all the white-collar jobs. And it’s easy to read that list and think this is an AI story. They address that directly. There’s a ton of research saying that despite what companies are attributing to AI, there’s no real evidence that AI today is displacing jobs materially. The unemployment rate for college graduates under 29 increased from 3.1% to 3.7% over the last nine years. Over that same period, the unemployment rate for those 29 and older actually went down from 1.9% to 1.8%. The argument is that AI isn’t sophisticated enough to take a 25-year-old’s job but not a 32-year-old’s. The age gap itself is a signal.
The reason age matters has to do with remote work and development. Younger employees are more drawn to remote work, many of them started their careers fully remote and have never been asked to come into an office. But the bigger piece is feedback. Younger employees need more feedback and more development.
Geoff: The article uses the term “scarring effects” to describe what flexible or remote work can do to early-career people’s development. That’s a strong term for what is a really formative time. I remember starting in a rotational program, getting to see different parts of a business, learning through shadowing and on-the-job training. You don’t even know what you don’t know at that point. If you’re in a hybrid environment where two or three days of your week you’re by yourself with limited exposure to your manager and more experienced colleagues, that’s significant. It’s formative in terms of building confidence and skill. You’re essentially on your own for a meaningful chunk of your workday during the period when you need the most guidance.
Nick: And to be clear, “scarring effects” isn’t just a media term. It comes from a published National Bureau of Economic Research paper written by the same economist cited in the article. That’s a peer-reviewed research report, which lends it more weight.
That paper looked specifically at software engineers at large US firms. Remote work can boost output for experienced workers, but can actually have a negative impact on young workers. It’s not uniformly positive or negative. It depends on where you are in your career. And one of the stats they pulled out: feedback on coding work increased by 18.3% when workers were in the office. Another way to put it is that you’re getting materially less feedback working remotely, and that feeds directly into performance and career progression. That’s the scarring effect.
Geoff: That number feels plausible across any function. When I’m in the office on Wednesdays and Thursdays, I get approached more, asked more questions, and have more meaningful conversations. The types of conversations on in-office days skew toward guidance, coaching, and mentorship. On remote days, it’s highly tactical. Taking care of business, ripping out projects and tasks. It’s useful, but there’s minimal nuanced feedback.
Nick: Anecdotally, you and I had one formal meeting on the calendar yesterday but actually met three times. We were collaborating on two separate projects asynchronously during the remote days at the start of the week, and in the office we just knocked it out. That wouldn’t have happened remotely.
Coming back to the broader point: if you take the AI narrative at face value, the drop in jobs for Gen Z is a function of AI. You have Zuckerberg, Jack Dorsey at Block, and others saying AI is changing how they work and they’re drastically reducing their workforce. But researchers have actually validated this across multiple papers: there’s no hard evidence that AI is displacing the workforce. To stick with software engineering, there are more open software jobs today looking to be filled than there were 12 months ago, and this age gap in hiring predates the mass diffusion of AI tools by several years.
What it really comes down to is that companies with distributed or largely remote teams are less willing to hire young people. Young people require feedback and development. If you’re going to be fully remote or only one or two days in the office, there’s not enough time or proximity for them to get the mentorship and development they need. Companies are making a rational calculation: we’re trimming middle management, making those managers individual contributors, and we’d rather hire someone more experienced who needs less hand-holding than someone who requires significant development in an environment where we can’t deliver it well.
Geoff: It’s a safer hire. In a period of workforce transformation, early-career folks are bearing the brunt of this. There’s a pretty clear correlation between youth unemployment trends and remote work arrangements. That’s a strong case for more in-person work, or at least more meaningful hybrid work. And there’s a broader societal question: what advice would we give our own children about what to look for in a first job? The experiences we both had early in our careers, having mentors, building skills in person, had a pretty big impact on where we ended up.
Nick: Exactly. And if you’re a Gen Z person who just graduated and is struggling to find a job, you could hope companies change their arrangements, and maybe they will. But I’d also suggest convincing yourself that on-site work is genuinely valuable. If you’re a Gen Z candidate who’s willing and excited about being in the office five days a week, you’re applying to roles that are getting far fewer resumes and are far less competitive than fully remote positions.
Stanford professor Nick Bloom has studied remote work longer than almost anyone. When COVID hit, he became something of a celebrity because he’d been researching this before it was mainstream. I’ve always found him careful to present both sides, pros and cons, which is intellectually honest but sometimes frustrating when you want someone to just take a position. But on a podcast about a year ago, a host tried to get him to pick a side and he turned it back: “Do you have kids? How old are they?” The host had a daughter in college. Bloom’s question was: what advice do you give her? Because the advice you give your own child is usually what you actually believe. His answer was: find a company that’s full-time, on-site, five days a week. And that’s telling. When thinking about what’s actually best for his daughter’s development and success, his answer was in-person.
Geoff: And there are generational differences here. Remote work gave some people, elder millennials and Gen X, a genuinely better quality of life. They had already built their skills and networks. The flexibility gains came without the developmental costs that fall on someone just entering the workforce. Young workers didn’t get a vote on any of that. From an equity standpoint, a hybrid model that over time skews more toward in-person time would deliver more fairness across generations.
Nick: Totally agree.
Geoff: Well, maybe that’s a good place to wrap up. Thanks as always for tuning in. You can catch Wellable Weekly on Apple Podcasts, Spotify, or wherever you get your podcasts. Be sure to subscribe to Wellable Weekly for all of our latest insights. Thank you.
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