Graduates and other new entrants to the workforce have faced a challenging few years. While the labor market has cooled for everyone, it has been particularly icy for the youngest workers, with hiring of junior employees lagging behind more experienced hires across many countries.
The Early-Career Hiring Pullback
The pullback in early-career hiring has been especially pronounced in white-collar roles, particularly in software and technology. Many observers have pointed to the rise of artificial intelligence as the obvious culprit, arguing that AI tools can perform much of the work typically done by juniors but are less able to replace the accumulated knowledge of seasoned professionals.
However, a paper published last week offers a fascinating counter-proposal: the take-off of remote work may be to blame. The authors, Peter John Lambert and Yannick Schindler, suggest that the particular woes of young knowledge workers may not be due to AI, or at least not as much as assumed.
The Theory Behind Remote Work
The theory is persuasive. Early-career workers require more supervision than experienced hires and build important skills, knowledge, and social capital by observing and working alongside senior colleagues. Working from home adds friction to these processes, making entry-level workers more costly to bring on board in terms of time and resources and slowing their prospects for promotion. As such, the rise of remote work has worsened the trade-off for hiring entry-level workers while leaving the calculus for senior hires unchanged.
Evidence Supporting the Theory
The evidence fits the theory. Lambert and Schindler analyzed hundreds of millions of new hires and job postings and found that although both occupational exposure to AI and remote working rates line up with the outsized pullback in junior hiring, the link with AI evaporates once you account for whether a role is remote. In other words, it only looks like AI is behind the hiring crunch for junior software developers because coding jobs are also disproportionately done remotely.
- Jobs less exposed to AI but amenable to remote work, such as lawyers, have also seen weak junior hiring.
- Roles with high AI exposure but an emphasis on in-person work, such as receptionists, have held up better.
Indirect Effects and Future Implications
None of this rules out AI as a threat to younger workers. Remote work may even be a risk factor for AI displacement, since managers who mainly interact with reports over Slack may view their work as more automatable. The process may also be indirect: companies struggling to train and manage remote juniors may set a higher bar when hiring for these roles, with unfilled posts compounding into the trend we see in the data.
But whatever the mechanism, Lambert and Schindler's results are the latest evidence that for all the attention paid to the impact of AI, the take-off of remote work has been a hugely consequential and often under-discussed shift, with significant and unexpected impacts on the economy and society.
Positive Surprises from Remote Work
Many of these impacts have been pleasant surprises. One study earlier this year found that United States fathers in remote-friendly occupations used the extra time at home to take on more childcare, and their wives' earnings and employment rate rose. Another found remote work boosts birth rates.
In conclusion, while AI remains a potential threat to younger workers, the evidence suggests that remote work is a more immediate factor behind weak junior hiring. Companies may need to reconsider their remote work policies to better support early-career development.
