Is it AI or is it remote work that’s spiking youth unemployment?

The crisis around youth unemployment has become alarmingly clear in Canada, with Ottawa throwing funds and programs at the issue to try and boost the job numbers.

As for the reason behind the low job status of younger workers, theories include the surge in AI, their lack of experience or temporary foreign workers taking jobs. But a new working paper from the National Bureau of Economic Research suggests that remote work may be quietly stacking the deck against young workers, not just in terms of career development, but in getting hired at all.

The researchers estimate remote work accounts for roughly 64 per cent of the total increase in unemployment among young college graduates in the U.S.

Feedback and mentorship

The study tracked software engineers at a Fortune 500 online retailer from 2019 to 2024, using COVID-19 office closures and subsequent return-to-office mandates as natural experiments.

The core finding is about feedback and mentorship. When engineers sat alongside their teammates, they received roughly 24 per cent more comments on their work than engineers whose teams were split across buildings — and those comments were disproportionately the substantive ones, rated as helpful, actionable and well-reasoned.

When offices closed, that advantage largely disappeared. Junior engineers lost the most, and the losses carried forward: when offices reopened, engineers on co-located teams saw measurable improvements in code quality, with newer engineers gaining roughly twice as much as the average. Engineers who had accumulated more co-located experience before the closures continued to produce better work even after everyone shifted to remote.

"Remote work has weakened incentives to hire young workers by impeding on-the-job training," the researchers say. "Ironically, when jobs are scarce, it becomes even harder for young workers to secure the training they need."

The researchers —  economists Natalia Emanuel of the Federal Reserve Bank of New York, Emma Harrington of the University of Virginia, and Amanda Pallais of Harvard — found that the pattern held at the national level too: between 2017–2019 and 2022–2024, young college graduates under 29 in “remotable” occupations saw their unemployment rate increase by nearly a full percentage point, while older graduates in the same occupations saw a marginal decline. No comparable divergence appeared in non-remotable jobs.

As for the effect of AI in driving youth unemployment, the researchers are skeptical — for now.

"The uptick in youth unemployment rates predates the rapid diffusion of AI," they say. "The evidence to date suggests that the rise of remote work has meaningfully contributed to the recent challenges facing young college graduates."

‘There can be a lag when it's done remotely'

Jeffrey Orridge, CEO of the King's Trust Canada — an organization that helps young people aged 15 to 24, primarily from under-resourced communities, prepare for employment — says the research resonates with what he sees on the ground every day in encouraging the “adaptability quotient” (AQ) through meta skills, networking and access to experiences.

"When you are actually in a work environment, being able to communicate with other human beings, you're better served because the important thing is to be able to get that feedback from people who are experienced and learn those skills and be able to adjust and adapt and improve whatever it is you're doing.

“And, oftentimes, there can be a lag in that when it's done remotely."

He points to the informal moments that in-person environments generate almost incidentally — the hallway conversation, the desk-side exchange — as something that can't be recreated on a video call.

"Sometimes there are more solutions that are created just from casual conversation," he says. "You stop by somebody's desk or you happen to run into somebody in the hallway and say, ‘I've been thinking about this’ — and they can give you real-time feedback.”

'No substitute' for in-person exchanges

Those kinds of discussions can be important, says Orridge.

“I don't think there's any substitute for the human element of involvement and the energy that's created when you have an in-person exchange with people."

Mentorship, he says, is where much of that value lives.

"It helps young people build confidence by getting that real-time feedback [and to] build networks. It's not just what you know, but it's who you know as well — for discoverability, to find out what is possible in the marketplace."

However, Orridge cites other factors behind youth unemployment.  

"There are fewer entry-level jobs now in various industries as a result of AI," he says. "So, that is a challenge, and it becomes increasingly complex — that transition from education to employment."

The unemployment rate among youth (aged 15 to 24) fell 0.9 percentage points to 13.4% in May, the first decline since January, according to Statistics Canada.

'It's a different type of connection and learning'

At the Workplace Safety and Insurance Board (WSIB) in Ontario, Anna Filice, chief people officer, says the organization’s summer student program provides meaningful projects to help build skills and connections.

"We really see it as an investment in our future workforce," she says, and students who come through the program often return summer after summer. "They've got four summers with us and they've bought into the mission and vision and they're basically trained and ready by the time they graduate."

Filice says it’s really important to have in-person experiences for the summer students, and the WSIB has dedicated in-person days and experiences specifically for younger workers.

"We are very purposeful about bringing them in," she says.

"We do set them up with mentors, but it's very different than being on a Teams call — even for the student to learn how to show up in those situations, to give them that facetime. I think it's just a different type of connection and learning that is built."

In-person vs. remote

One of the less obvious findings in the U.S. study is how fragile proximity turns out to be. A 10-minute walk between two buildings on the same campus reduced feedback as much as being in an entirely different state. A single distant teammate was enough to push the entire team's meetings online — the researchers describe a "one Zoom, all Zoom" norm.

But Orridge is careful not to frame the debate as simply in-person versus remote.

"Different employers will make decisions based on what works best for their organization," he says, adding that what matters is whether young workers have access to opportunities that build skills and confidence — formally or informally

But he's clear about the stakes: "Youth unemployment — that needs to be addressed," he says. "We're at that pivotal point, that inflection point where we really need to focus our resources on a holistic approach."

And that means going beyond the infrastructure and the superstructure, says Orridge, to invest in the resource that’s going to promote those investments.

 “We can build all these things. Who's going to lead them? Who's going to lead these enterprises?”