Youth employment struggles amid booming startup sector

A ranking compiled by a Silicon Valley entrepreneur has recently gained attention in the IT industry. The list highlights companies that generate the highest revenue with the fewest employees, with the widely used messaging platform Telegram taking first place. The company earns $1 billion annually and serves 1 billion active users, yet its headquarters has only 30 employees, putting revenue per worker at $33.3 million. Other AI-driven startups, including the generative AI image service MidJourney and the data-labeling firm Surge AI, also rank near the top.

In practice, lean operations that minimize workforce and costs have become a prevailing trend on Wall Street. Staff reductions, once quietly implemented, are now publicly touted as achievements. Wells Fargo’s chief executive recently told investors, “We have reduced our headcount for 20 consecutive quarters,” while signaling that further layoffs are likely. In the past, workforce cuts were interpreted as warning signs of corporate risk, but today they are often viewed as indicators of a company’s commitment to operational efficiency. In Silicon Valley, some entrepreneurs are using AI to run entire businesses on their own, bringing the “one-person unicorn” era predicted by OpenAI CEO Sam Altman closer to reality.

Slimming down organizations can boost corporate performance, but it also poses serious challenges for job seekers. In the United States, the term “jobpocalypse” has emerged this year to describe the growing difficulty college graduates face in securing entry-level positions as AI increasingly replaces low-skilled work. Current employees are also affected, with U.S. companies announcing 1.17 million layoffs from January through November, a 54 percent increase from last year. This wave of reductions cuts across sectors, impacting Amazon (14,000 layoffs), UPS (48,000 layoffs), and Target (1,800 layoffs). Expectations that AI-driven job losses will be offset by new job creation are overly optimistic. For instance, AI-powered data centers employ only a few dozen on-site staff, generating minimal employment relative to investment.

The AI-driven wave of layoffs is not confined to the United States. South Korea is already feeling similar effects. Due to rigid labor regulations and strict legal protections against dismissal, many companies manage workforce costs by freezing new hires rather than laying off existing employees. When essential talent is needed, companies favor experienced hires who can contribute immediately rather than training new graduates. As a result, young workers bear the brunt of the impact. According to the Bank of Korea, over the three years since ChatGPT’s launch in 2022, youth employment has declined by 210,000, with 98.6 percent of losses occurring in industries highly exposed to AI. A survey by an economic organization found that young job seekers submitted an average of 13 applications this year but received only 2.6 job offers, leaving many discouraged and abandoning their job search.

The AI revolution and corporate streamlining are irreversible trends. Instead of relying on outdated policies that force companies to hire, policymakers should use this transitional period to implement labor reform. Revising seniority-based pay systems that inflate labor costs and granting companies greater flexibility in employment decisions could reduce hiring burdens and expand overall job creation. Additionally, regulatory reforms could foster new markets and stimulate the growth of innovative technology firms. If technological progress continues while responses remain unchanged, society risks losing the race for employment in the age of automation.