Artificial intelligence has led us to speculate about the economic possibilities after productivity increases tremendously. We know people are much better off economically than our ancestors were 100 years ago. John Maynard Keynes predicted this—sort of—a century ago in an essay “Economic Possibilities for our Grandchildren.” He forecast continued growth of output per worker, which would generate higher wages. The higher wages would enable a worker to support a family with only 15 hours of labor a week! Keynes got the productivity forecast right, and the wage right, but the great economist was way off on the workweek. How he got that wrong may help us understand our future with AI.
Alexandria Ocasio-Cortez made headlines a few years ago by noting our average workweek is well above 15 hours. She argued that greedy companies must not be passing the benefits of higher labor productivity on to their workers. In a Forbes article, I went through the math and found that if average people were willing to live at the standard of living of Britain in 1930, they could certainly work 15 hours per week, and even have extra money to spare. But few people today want to live in small dwellings without central heat, without a car and no vacations. They work more so they can have luxuries that were only dreamed of 100 years ago.
AI may lead us to increase our leisure time, Alex Tabarrok recently wrote. Productivity has not only shortened the average workweek, it has also delayed the age of starting one’s first job and lowered the age of retirement. People are working a lower percentage of their lifespans. And we are enjoying even more leisure than Alex Tabarrok describes.
We have more free time because technology and economic prosperity have reduced the burden of ordinary household chores. Food preparation is a huge example. Our predecessors started a fire, burning coal or wood or peat, and then continued stoking the fire through the day. Then raw ingredients were prepared—no mac-and-cheese from a box. Without refrigerators, leftovers were dangerous and shopping was a daily occurrence. And it wasn’t single-stop shopping at Safeway or Walmart. Separate visits were made to the greengrocer, butcher and baker. It sounds quaint to walk down the street of an English village going from shop to shop, but the charm wears off when it’s a daily chore, regardless of the weather.
Modern home heating requires little effort today. That’s better than firing up the furnace with coal, stoking it and then disposing of the ashes—every day. And without a fire burning in the house, everything is cleaner. We run a vacuum cleaner rather than carry rugs outside to hit them with carpet beaters. A majority of homes today include a dishwasher, saving more time. And many people are eating take-out or delivered meals and don’t even have dishes to wash.
Let’s not forget online banking and bill pay rather than going to a bank. And bills were often paid, a hundred years ago, by walking up to an office with cash. Online shopping has reduced our trips to stores. When we do visit a store, we mostly arrive by car, saving substantial time. And don’t forget the convenience of putting bulky items in the trunk rather than lugging them by hand.
The modern washing machine offers a surprising look at how we use our leisure time. It takes much less time to wash and dry a load of laundry than it did 100 years ago. But we spend almost as much time doing it today. That’s because we choose to wear cleaner clothes. That’s a choice we (at least most of us) have made, not to wear moderately dirty apparel. We economists use the term “revealed preference” to explain that what people actually do reflects the value they put on things. They obviously prefer clean clothes to the additional leisure they could have if they did their laundry less often.
Artificial intelligence is just starting to boost worker productivity. Computer programmers use it extensively, with other occupations either using the chatbots (ChatGPT, Claude, etc.) or specialized apps that rely on AI services. The potential is clear, and utilization is progressing, so we should expect a lot more production of goods and services per hour of labor in the coming years. Both economic history and theory predict rising purchasing power per hour of work as productivity increases. Yet how we split this abundance between more consumption and more leisure is a matter of some debate.
A little of both will be the most common choice. People like stuff, using the term broadly to include both a new phone and a vacation. More generally, they like physical things and experiences. And sometimes they buy physical things in order to have great experiences. Boats are a good example. People also like free time, so they can take more vacation, spend time with family and just relax. In addition to the middle-of-the-roaders, we’ll have some who choose to work a lot, either because they want more stuff or they just love their work. There are also those who will work the minimum number of hours needed to support a very basic lifestyle. The rest of their time will be taken up with poetry, fishing or not much of anything at all.
Business leaders making work requirements must consider what people will want. It will be possible to keep the old standard—40 hour workweek—but that will limit the supply of job applicants, requiring higher pay or some other benefit. Expect the most common workweek to decline. Another likely path is to more vacation. It’s still too early to describe how the money-leisure tradeoff will evolve, but flexibility will clearly benefit companies.
Prosperity enables wider choices. AI will help us generate prosperity. We should presume that people do what makes them more satisfied with their lives. Sometimes they guess wrong and put their time and money into sinkholes that don’t make them happier. But most people know better than any expert what will provide them with life satisfaction, in their own particular case. Sometimes people feel that they are in a rat race. We now have the option to go minimalist. In the past, there was no choice: We were all minimalists. Now we have a great range of choice about how we spend our time. And that’s progress.
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