Just because Donald Trump and Republicans in Congress have no grasp of economics doesn’t mean the rest of us shouldn’t.
“We don’t need to run around like chickens with our heads cut off” if AI leads to higher productivity, writes Baker. “Because productivity growth is in fact a very very old phenomenon. We have long known how to deal with it; we shorten work hours.”
(Photo: Getty Images)
Dean Baker
May 07, 2026
Beat the Press
Productivity growth is an old concept; we’ve been seeing it at a substantial pace for more than 200 years. Nonetheless, many elite intellectual types like to claim they know nothing about it when they talk about AI.
It’s far from clear how much of a productivity boom we will see with AI. For people who are lost with my reference to productivity growth, the story that AI will take all the jobs is a story of a massive productivity boom. If that happens, it will mean that the people who are still working will be hugely more productive, since we will be producing the same or more goods and services as we do at present, with many fewer people working.
Productivity growth is an old concept; we’ve been seeing it at a substantial pace for more than 200 years. Nonetheless, many elite intellectual types like to claim they know nothing about it when they talk about AI.
It’s far from clear how much of a productivity boom we will see with AI. For people who are lost with my reference to productivity growth, the story that AI will take all the jobs is a story of a massive productivity boom. If that happens, it will mean that the people who are still working will be hugely more productive, since we will be producing the same or more goods and services as we do at present, with many fewer people working.
FWIW, virtually no major forecaster or forecasting agency is projecting anything like this productivity boom. For example, the Congressional Budget Office (CBO) projects that productivity growth will average 1.5 percent over the next decade.
That’s a healthy rate of productivity growth, but nothing extraordinary. It’s a bit better than the 1.3 percent rate from 2005 to 2025, but less than the 2.0 percent rate we saw in the 1990s and much less than the 2.4 percent pace the country had from 1947 to 1973. There is no story of AI creating mass unemployment here.
CBO is not God, but they are pretty much in the center of professional forecasters by design. They try to make sure that their forecasts do not vary hugely from what other public and private sector forecasters are projecting.
It is also worth noting that if CBO is seriously wrong on the low side, then some other things logically follow. Most importantly, if productivity growth proves to be far more rapid than what they have projected, GDP growth will also be far more rapid than projected. This would mean, among other things, that the debt-to-GDP ratios will be much lower in the future than is currently projected.
In other words, the people yelling about unsustainable debts and deficits need to STFU. You can’t both be expecting a massive AI productivity boom and think the US has a huge debt problem. That is not a matter of opinion; it is a matter of logic.
But let’s assume for a moment that we do get a huge productivity boom from AI. We don’t need to run around like chickens with our heads cut off when we ask what to do about it. Because productivity growth is in fact a very very old phenomenon. We have long known how to deal with it; we shorten work hours.
Workers in Germany, France, and other wealthy countries work on average 20-25 percent fewer hours a year than Americans.
That is why we got the 40-hour work week with the Fair Labor Standards Act (FLSA) in 1937. The Act doesn’t actually prohibit employers from having longer work weeks; it simply requires them to pay a 50 percent premium for overtime hours. This was supposed to encourage them to hire more workers instead of working their existing workforce more hours. (Contrary to the way it is discussed in the media, the decision to put in overtime is almost always the employer’s, not the worker’s. Unless a union contract specifies otherwise, an employer has the option to fire a worker who refuses overtime.)
This is why it was truly incredible that Trump eliminated the income tax on the overtime premium. This is effectively encouraging employers to have longer workweeks, 180 degrees opposite of the intention of the FLSA.
But just because Donald Trump and Republicans in Congress have no grasp of economics doesn’t mean the rest of us shouldn’t. If we really are seeing an AI-driven productivity boom, the most obvious way to deal with it is to shorten the workweek and work year. The United States is an outlier here. While we were originally a leader in implementing a 40-hour workweek, we have done little to reduce work time in the 90 years since then.
As a result, workers in Germany, France, and other wealthy countries work on average 20-25 percent fewer hours a year than Americans. As a crude approximation, if workers put in 20 percent fewer hours on average, it will mean 20 percent more jobs. Things in the real world are never quite that simple, but the basic logic that shorter work years means more jobs does hold.
It’s also not rocket science to get to shorter work years. We can amend the FLSA so that the overtime wage premium kicks in at 34 or 36 hours. Also, instead of removing taxes on the premium (having taxpayers subsidize long workweeks), we can raise the premium from 50 percent to 75 percent, as the Congressional Progressive Caucus recently proposed. We can also mandate 2 weeks or more vacation, along with paid sick days and family leave, as many states have already done. All this is old-fashioned stuff that other wealthy countries have been doing for decades, and we have done in the United States nationally in the distant past and more recently at the state level.
The immediate prompt for this diatribe was a New York Times article that asked how we will deal with a collapse of employment from AI. In fairness, the piece does note that an AI-driven productivity boom is far from certain, but it then suggests that if it does happen, a universal basic income, or a universal high income might be ways to deal with it. The piece notes that Elon Musk is supposedly an advocate of the latter.
While any pro-worker legislation will face an enormous uphill battle in the current political environment, a variation of policies that people have seen for a century might have a better shot than something that seems completely new.
While these proposals are, in principle, fine, they ignore the reality of US politics. Just four years ago, when the Democrats had a trifecta, they could not get a modest increase in the child tax credit approved in the Senate. Get out your yard stick and try to measure the distance between a modest boost to the child tax credit and a universal basic income, much less a universal high-income.
It’s probably also worth mentioning that Elon Musk has done everything he can to keep his workers at Tesla from forming a union, where they would be better able to secure their share of the company’s profits. That may lead reasonable people to question his commitment to workers’ well-being in an era of AI-driven mass unemployment.
While any pro-worker legislation will face an enormous uphill battle in the current political environment, a variation of policies that people have seen for a century might have a better shot than something that seems completely new. It is also worth pointing out that the tools for dealing with a surge in productivity growth are well-known and tested. Whether or not a universal basic income is a better way to go, our toolbox is already far from empty when it comes to dealing with this situation. This is not a new story, and it is wrong to portray it as one.
This work is licensed under a Creative Commons Attribution 4.0 International License
Dean Baker
Dean Baker is the co-founder and the senior economist of the Center for Economic and Policy Research (CEPR). He is the author of several books, including "Getting Back to Full Employment: A Better bargain for Working People," "The End of Loser Liberalism: Making Markets Progressive," "The United States Since 1980," "Social Security: The Phony Crisis" (with Mark Weisbrot), and "The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer." He also has a blog, "Beat the Press," where he discusses the media's coverage of economic issues.
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| Bargaining to Save Our Jobs from Artificial Intelligence There is broad and deep recognition that AI technology will reshape the future of work, and unions have decided to roll up their sleeves (and dust off their picket signs) to bargain how AI will be implemented, to do what, and to what effect.  Writers Guild of America (WGA) East members walk a picket line at the Paramount+ Summit outside the Paramount Building in Times Square on May 17, 2023 in New York City. (Photo by Alexi Rosenfeld/Getty Images) Lowell Peterson May 07, 2026 Common Dreams For many pundits and policymakers, there is little doubt that Artificial Intelligence will devour the jobs of millions of people, including professionals formerly presumed immune to technological replacement. The only question is how many jobs will be lost, how quickly. In fact, there is nothing inevitable about AI—not its development, its deployment, or its impact. Massive job losses are not inherent in the algorithm, preordained by the laws of nature and physics. Rather than remaining struck by awe, we can reassert human agency over this technology. We can not only save jobs, but perhaps even make them better. AI is not an abstract force that operates solely at the macroeconomic level. AI systems and agents are developed and implemented in ways specific to each sector, each workplace, each type of job. Although employers might focus myopically on cutting their wage bill, their employees know firsthand how the work actually gets done. They know what disclosures to request about how the technology would be used. They know how AI might affect the content and flow of their work, what training would be most helpful, and which implementations would be most likely to devalue their labor versus those most likely to enhance it. Thus, the most effective way to ensure that AI makes work life better and not worse is to empower workers to bargain about it. By “workers” I mean people who rely on their own labor to earn a living—which is to say, most of us, whether we write reports, treat patients, teach kids, manufacture products, or stock warehouses. AI is not something that’s going to happen only to other people; it will affect all of us. Workers need the authority and the power to bargain about the implementation of AI in the workplace, not just the effects. “Effects bargaining” is the traditional approach: After a technology has wiped out jobs, people negotiate a little severance pay to tide them over, and maybe some training for completely different jobs, if any such jobs exist. By contrast, our goal should be to make sure workers can negotiate for technology that makes their jobs better, more productive, more valuable. To avoid the car crash in the first place, if you will, and not just to apportion damages afterward. AI will not destroy or devalue our jobs by itself, unless we let it. One can imagine some objections to this approach. Some people might insist that AI is in irresistible force, that large-scale job destruction is inevitable, and that our task is to figure out other things for people to do to earn a living—or, if that’s not possible, to pay them a small stipend so they don’t starve. This defeatism is a short step away from the more nihilistic vision of the pure doomers, who think it might already be too late to save humanity from machine-led destruction. I love science fiction myself—but it is fiction, not history. Another objection might be that placing restraints of any kind on AI companies in the United States will keep the industry from winning the global race for dominance. This is the Trump administration’s view. This logic is inverted. Nations should be governed for the benefit of their people, not just their Big Tech companies. Both the Republican and Democratic parties proclaim themselves to be the champions of the American worker. If so, the real triumph for the nation would be to ensure that technology enhances work and makes working people’s lives better, not to create havoc and economic devastation across the labor market. Some might object that it is unrealistic to think that working people have the interest or ability to intervene effectively, to exercise their right to bargain about AI technology. But that is exactly what has been happening in the entertainment industry. One of the central issues in the 2023 strike by the Writers Guild of America against the Hollywood studios and producers was the use of AI in writers’ workplaces. The Guild represents the professionals who create scripts for TV and streaming series and for feature films. In late 2022 Open AI revealed that ChatGPT could write—coherently and at some length. Although the union did not conclude that robots had suddenly become capable of crafting award-winning scripts, Guild members recognized that their employers could use AI to do just enough to degrade and devalue their work. During contract talks in 2023 the Guild proposed—and won, after a five-month strike—language that puts meaningful guardrails on the use of AI. These guardrails reflect the process writers and studios actually use to create characters and stories and full-length projects. They ensure that AI cannot be used to deprive writers of the opportunity to do the full range of writing work, and they deprive employers of the economic incentive to replace professional writers with algorithms. Guild members knew how to defend their careers, and they fought for meaningful protections. The Guild members’ willingness to take on the AI issue, rather than passively accept that the technology would hollow out their careers, resonated with working people everywhere. The actors’ union (SAG AFTRA) also struck and won contract protections on AI, and the following year the other entertainment industry unions did the same. The entire labor movement has made workplace AI a top priority. There is broad and deep recognition that AI technology will reshape the future of work, and unions have decided to roll up their sleeves (and dust off their picket signs) to bargain how AI will be implemented, to do what, to what effect. AI systems do not develop themselves; AI companies do. AI does not implement itself in the workplace; employers do. AI will not destroy or devalue our jobs by itself, unless we let it. Working people can and must protect their livelihoods by bargaining over AI implementation. Nothing less than the future of work is at stake. Our work is licensed under Creative Commons (CC BY-NC-ND 3.0). Feel free to republish and share widely. Lowell Peterson Lowell Peterson was the executive director of the Writers Guild of America East from 2008 to 2023. Cornell University Press is publishing his book, Building Power: Organizing for the Future, with Lessons from the Writers’ Strike Against Hollywood, later this year. Full Bio > |
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