What Will Labor Force Participation Be After AI?

TL;DR

Labor force participation could fall to about 10 to 15% once AI and robots are better, faster, cheaper, and safer than humans at every task, down from 62% in America today. The remaining jobs come from a statutory core that must legally be human, plus an authenticity premium where people prefer a human, and extra free time could expand demand for experiences and care.

Transcript

Good morning everybody. So what I want to do today is this is a question that I've been mulling over and trying to figure out how to model and uh you know with with the work on my book labor zero the post labor economics framework the idea of calculating or estimating what is the future labor force participation rate. Now, this is a better number t... Read More

Key Insights

• Labor force participation rate is a better future metric than unemployment because unemployment counts only people seeking jobs, while participation measures what share of working age adults actually take part in the economy.
• The core tension in a post-labor economy is infinite production capacity from AI and robotics against finite consumption capacity, which is limited by human time and attention.
• The model rests on three assumptions: supply side work is fully automated, aggregate demand stays stable through mechanisms like UBI or wealth dividends, and labor demand persists only where humanness is the product.
• The statutory core covers jobs legally required to be human, such as corporate officers, judges, physicians, attorneys, and even electricians who sign off on work, totaling 4 to 6 million US jobs, or 1.5 to 2.3% participation.
• The authenticity premium covers roles where people prefer humans, including artisans, athletes, performers, therapists, and coaches, and is estimated to add 6 to 10% labor force participation.
• Human preference for humans persists even when machines are superior, as chess shows: machines beat humans decades ago, yet people still care about human chess champions.
• The low-end estimate puts participation at a bare minimum of about 5.5 to 6.5%, rising to roughly 10 to 12%, compared with 62% of working age Americans working today.
• Attention becomes the new scarcity when work drops to zero hours, and the experience economy, covering travel, dining, and culture, could add about 8 million jobs as people gain free time.

Questions & Answers

Q: What will the labor force participation rate be when AI and robots do most work?

The estimate is about 10 to 15% labor force participation in a world where AI and robots are better, faster, cheaper, and safer than humans at every task. This is far below the current American rate of 62%, and lower than the speaker's earlier gut check of about 20%. The figure comes from adding legally required human jobs to jobs where people prefer humans.

Q: Why is labor force participation rate a better metric than unemployment for a post-labor economy?

Unemployment only counts people who are seeking jobs, want jobs, and are still looking. Labor force participation rate measures the percentage of all working age adults who are actually working. When machines can do most tasks, many people may stop looking entirely, so participation better captures how much of the population still takes part in the economy.

Q: What assumptions does the post-labor economics model make?

The model makes three stipulations. First, supply side automation is complete, meaning machines beat humans at all physical and cognitive tasks, including surgery and frontier research. Second, aggregate demand stays stable because money reaches consumers through UBI, negative income taxes, sovereign wealth funds, or wealth dividends. Third, a human premium exists where authenticity, liability, or care make humanness a product feature.

Q: What is the statutory core of human employment?

The statutory core is the de jure floor of jobs legally required to be performed by humans for accountability reasons. It includes corporate officers, CEOs, chairmen, licensed professionals like physicians, attorneys, and judges, political and regulatory roles, and possibly electricians who sign off that work is safe and carry insurance. It totals roughly 4 to 6 million American jobs, or 1.5 to 2.3% participation.

Q: What is the authenticity premium in a post-labor economy?

The authenticity premium is the de facto layer of jobs that remain because people prefer a human, based on attention, experience, meaning, and authenticity. It includes about 1.8 million artisans if 10% of goods spending shifts to human-made products, 1.5 million athletes and performers, and 5 to 10 million relational and care roles such as therapists, coaches, and luxury hospitality, adding 6 to 10% participation.

Q: Why would people still prefer humans when machines are better?

Humans are social and parasocial animals, so most people prefer watching and interacting with other humans. The chess example illustrates this: machines beat humans at chess decades ago, yet people still care about human chess champions. Some individuals may find machines more interesting, but they are a minority, and human preference sustains demand for performers, athletes, and care providers.

Q: How could more free time create new jobs after automation?

Today people work about 8 hours plus commuting and have roughly 5 hours of leisure, often only 2 or 3 discretionary hours after chores and childcare. If work drops to zero hours, people gain much more time, making attention the new scarcity. The experience economy, including travel, dining, and culture, could add about 8 million jobs, along with demand for more therapy and smaller classes.

Q: Why are retirees a useful model for life in a post-labor economy?

Retirees living in nicer retirement communities offer an empirical model of how people spend time when money is not an issue and they have no job. Their days are packed with activities such as yoga, spin classes, and spiritual pursuits, and many report a very high quality of life. Everyone could potentially live like that, which would raise demand for experience and relational services.

Summary & Key Takeaways

• When AI and robots outperform humans at every task, the expected labor force participation rate in America falls to roughly 10 to 15%, lower than the speaker's earlier gut estimate of 20%. The reason is that production capacity becomes effectively infinite while human consumption remains bounded by time.

• The model assumes full supply side automation, stable aggregate demand supported by UBI, negative income taxes, sovereign wealth funds, or dividends, and a human premium. Remaining work splits into a statutory core of legally human roles, about 4 to 6 million jobs, and an authenticity premium of artisans, performers, and caregivers.

• With over 260 million working age adults in America, these jobs are a small share. However, if people stop working, they gain large amounts of free time, and like retirees in active communities they may fill days with classes, therapy, travel, and dining, adding demand for experience and relational jobs.