In 1973, what a forty-hour week of activity produced takes sixteen hours to create today.
That’s according to Bureau of Economic Analysis (BEA) input output tables. An hr of activity in American endeavor now makes two and a fractional times what it made in 1973. For all forty hours that used to be needed, twenty-four have been freed.
You have likely not noticed them. The forty-hour week was written into American law by an act of 1938, and hasn’t changed. Counted for all caput of population, the hours worked in American endeavor in 2024 were 10 percent higher than in 1973. As a country, the US took the entire of fifty years’ advancement as additional output and none of it as time.
It was expected to go differently. In 1930 the economist John Maynard Keynes wrote a abbreviated composition concerning the earth his grandchildren would live in. He predicted that “the norm of existence in advancing countries one hundred years hence volition be between four and eight times as elevated as it is to-day.” And alongside so much plenty, he thought, we would barely need to activity at all: “Three-hour shifts or a fifteen-hour week” would be enough. He is normally stated to have been correct concerning the prosperity and incorrect concerning the leisure. Output per individual in the United States in 2024 was 7.8 times its flat in 1930. But appearance again at the sixteen hours. He was correct concerning both. The fifteen-hour week arrived in conditions of output, but not in the workweek.
I have spent a lengthy period trying to discover out anywhere those twenty-four hours went, alongside a co-author, a small economics built on paper, and additional national accounts than I’d akin to admit. This composition is what I found. Eighteen of the hours never reached average paychecks. The another six reached them in a form that couldn’t be taken as time. Both happened for the identical reason, which has to do alongside what a pay is for. The identical logic explains why group are frightened of machines that ought to be fine news. And it points to a way out that is simpler, and nearer, than I expected whenever I started.
A note: The numbers are American, since the United States publishes the accounts this needs. I live in Sweden but it’s likely fairly a akin story. The ceremonial document underpinning this activity is here:
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=7226858
What is a pay for?
Three things:
A pay is a price. It tells a endeavor what an hr of someone’s period costs, so that the hr gets used anywhere it is value most, and it tells group which activity is wanted. A pay is fine at this.
A pay is additionally a “ticket”. It is how nearly everyone gets a portion of what is made. Bread reaches me since I have money, and I have prosperity since I sold several hours. That isn’t a law of nature. It is an arrangement, and it has worked so fine for so lengthy that we’ve stopped seeing it as one.
And a pay is a place: a form to the day, group to be among, a sign that person needs you.
One item can do three jobs lone during the jobs drag the identical way. For two centuries they did, since of the benevolent of device we had. The machines of the manufacturing age were powerful and stupid. They could lift, spin, stamp and haul, and they couldn’t see, fairness or decide. Nearly everything value making took the two kinds of ability, so all new device needed group position next to it, and the owners of machines had to bid for those people. The cost of an hr rosy alongside everything else, and a ticket made of that cost was a fine ticket.
The machines being built now can see, read, compose and decide. I compose application for a living and use them all day, and I discover it harder all twelvemonth to name a benevolent of activity that is safely out of their reach.
My assertion is that the cost and the ticket have been pulling distinct for fifty years, and that all is damaging the other, and that basically this is driven by changes in technology.
How crucial is this?
Probably a lot. It surprises me fair as much as you that several random 26 twelvemonth old trans female power activity this out, but the maths has been checked, the document is going through review, and I’ve done everything I can to try and interrupt it. If you can see what’s really incorrect alongside it: [email protected]
Follow a dollar you expend in a shop. Some of it pays the group who worked to create the thing. Some of it pays whoever owns what was used to create it: the oven, the truck, the building, the dirt underneath. America’s national accounts are detailed adequate to chase a dollar all the way rear through all supplier, and whenever you do it for 2023, of what is paid to Americans for making the things households buy, 66 percent is pay for activity and 34 percent goes to owners.
A third of the economy, in another words, already pays group for owning things, alongside no activity asked of them. That would be a curiosity if we all held a bit of both. We don’t.
The poorest tenth of American households lives mostly on authorities benefits. From the second tenth to the ninth, concerning four-fifths of what a family earns in the market is pay for work. Then, in the richest tenth, it changes all at once, and pay and ownership are concerning fractional and half. That one tenth receives two-thirds of all the earnings from ownership.
Benefits appearance akin a second origin for everyone else. But 68 cents of all tax dollar in America is raised from pay for work, so a advantage is mostly a assertion on person else’s wage. Follow the prosperity far adequate and nine households in ten are living on all other’s wages. We live off the earth and off the machines we’ve built on it. Our portion of what they create reaches us through one narrow channel, which is being paid for a job.
By the way at this item you may notice that “machines” appears akin capital, and yes, that would be the specialized term. But to try and escape what we normally awareness whenever we comprehend those terms, I volition use activity alternatively of labor, machines alternatively of capital, and district alternatively of non-produced inputs (the term used in our paper).
Where did the eighteen hours go?
Until 1973, what an hr of activity produced and what an hr of average pay could buy rosy together. Between 1950 and 1973 the archetypal rosy by 81 percent and the second by 66 percent. (By average pay I average the hourly pay of everyone on a personal payroll who isn’t a director or a supervisor, measured against the prices of everything apart from housing.) Then they parted. Since 1973 the output of an hr has risen two and a fractional times, and an hr of average pay buys 19 percent more. You power have heard of this as “the awesome stagnation” and yes, I assertion to in ample part be capable to explain what happened, that innovation is what changed. Consider that moors law is normally stated to commencement about that period, and you commencement to see what I mean.
So to buy what forty hours of average pay bought in 1973 now takes thirty-four hours. Making it takes sixteen. The eighteen in between went location else.
I would akin to inform you they went to the owners of the machines. About a fifth of the gap did. About two-fifths of it is pay spreading out among workers, alongside the top pulling distant from the average worker. The remainder I can’t distinct cleanly. It is a tangle of prices, benefits and measures that don’t row up.
But appearance at what the largest part is. Daron Acemoglu, who shared the Nobel award in economics in 2024, and Pascual Restrepo evaluation that between 50 and 70 percent of the alter in America’s pay construction complete the four decades to 2016 came from “relative pay declines of employee groups specialized in regular tasks in industries experiencing fast automation.” Machines learned to do what average workers did before they learned to do what the best-paid did.
So the two pieces are the identical item happening. A pay is a price, and a cost follows scarcity. It doesn’t prosecute effort, and it doesn’t prosecute need. The day a device learns your job, you are operating exactly as difficult as you did the day before, and your hr is value less. That is how a cost ought to behave, and it is a fine way to decide who should do what. It is a different way to decide who gets to live well.
That is the cost shrinking the ticket. So far it has been slow.
And the another six hours?
Ordinary pay did rise, by a fifth. That could have been six hours off the week at the identical norm of living. Instead the hours went up, and I don’t think it was since nobody wanted the time.
Think concerning what a cost tells you. When I pay three dollars for a loaf of bread, the baker learns item true concerning me: the bread was value at smallest three dollars to me, since I could have walked away. A pay is expected to transport the identical benevolent of data the another way. If I obtain a job at fifteen dollars an hour, the hr must have been value small than that to me, or I would have kept it. A awesome agreement of economics leans on this. It is why a job that person is consenting to do is assumed to be a job value doing.
It plant lone if I could have stated no. If marketing hours is the lone way I eat, I volition market them for any they fetch, and the pay records how seriously I needed the money. It says extremely small concerning what the hr was value to me. It power have been an midday alongside my child, or a sojourn to my mother, or the Tuesday I would have spent operating the club. Those misplaced a competition they were never allowed to enter. An auction in which one flank can’t stroll distant tells you extremely small concerning what the item was worth.
This is the ticket spoiling the price. Because the pay is the ticket, most group can’t refuse it, and a cost that can’t be refused has stopped being a price. When we contend complete “does prosperity portray value”, this is among the chief reasons that isn’t true.
Two things afterward happen. The archetypal is that several activity gets done that isn’t value doing. Take any job that produces a small additional than the pay it pays and small than the hr is value to the individual doing it. The job covers its costs. The director is doing nothing wrong. And all hr of it uses up item value additional than what it makes, alongside the entire of the defeat falling on the worker. Nobody can see this, since all the prices appearance fine. Think uber or doordash. Would you ask your companion to choice you up since you are drunk and pay them a few dollars for it, knowing they’d fairly be asleep? Maybe, fair maybe, that job shouldn’t exist, at smallest not done by a person.
The second is that our economics has no way of saying “enough.” Other markets can. When there is additional of item than group want, its cost falls and small of it gets made. The market for activity can’t, since for the individual selling, a cost that falls far adequate method not eating. So we treat all job as a fine in itself and all hr sold as evidence that it was wanted. I formerly asked a companion why we assume that everyone ought to be working, and she stated of way they should, she’d akin to be capable to buy additional stuff. It’s a fair answer, and it contains an assumption, which is that all additional hr worked makes additional of what we want. Labor is a resource, akin water, and we don’t drain the oceans looking for a use for all drop.
I can’t put a figure on what this costs, and the logic I can’t is part of the argument. Everything we measure concerning activity is a document of what group did whenever they could not refuse. It is akin trying to study how much group akin a food by observing what they buy whenever it is the lone item on the shelf. So let me ask you instead.
Do the group you cognize have additional liberated period than their parents had at the identical age? In a nation that has made itself two and a fractional times as productive inside one operating lifetime, do they appear small pressed? When they do obtain time, for a new kid or a dying parent, does it awareness akin item they are liberated to choose, or akin item they volition pay for later? And of the things that appear to have thinned out about you, the visits, the clubs, the neighbors who knew all other, how many were things that anyone was always paid to do?
The harder evidence points the identical way. Where average group did acquire liberated period complete the final century, most of it came at the two ends of life, as longer schooling and longer retirement. Those are the two stretches that arrive alongside a ticket that isn’t a wage: a genitor or a debt at one end, a pension at the other. And whenever researchers in the United States gave 1,000 low-income group $1,000 a duration for three years, alongside no conditions, those group took approximately a sixth of the prosperity as time. They received $11,400 a twelvemonth additional than a difference group, and their another earnings ended up concerning $1,900 a twelvemonth lower. The authors call that “a average labor provision effect.” People who could refuse a small did refuse a little.
What happens if machines get much better?
So far the two failures have been slow. Nobody knows whether machines are concerning to get much better, or how fast. What I can do is display you what happens in an economics anywhere they do.
An financial example is a small economics on paper, uncomplicated adequate to resolve and fitted to the genuine one anywhere the two can be compared. In mine, businesses provision all project to whoever does it additional cheaply, a individual or a machine. People are far improved than machines at several tasks and lone a small improved at others. Machines have to be built, out of another machines, several individual activity and several land. Whoever pays for a device wants a come back of 10 percent a year. And there is lone so much land. Fitted to the United States of today, this economics pays 60 percent of its earnings for work, 31 percent to the owners of machines and 9 percent to the owners of land.
Now rotate one dial. Let machines get steadily improved at everything, until they are a hundred times improved related to us than they are now, and let them study to build one another.
For a lengthy during extremely small happens. When machines are ten times better, activity is motionless paid 52 percent of all income, since group move to what they are finest at. Then, at concerning 35 times, the machines that could substitute equal the hardest hr of individual activity obtain small than an hr of individual activity to build, and from there no pay can remain complete what the replacement costs. By the hundredfold item activity is paid 17 percent of all income. At ten thousand times it is paid small than 1 percent.
Here is item fun although concerning this financial model. Technically, measured in “stuff”, nobody in this economics gets poorer. But, what material you can buy has changed:
At the hundredfold item total earnings is 32 times what it was, and an hr of activity buys 14 times as many products as it does today. What an hr stops purchasing is land: an hour’s pay rents concerning a twelfth of the district it does now. And the earnings of those who own machines and district is 66 times what it was.
Look at what has happened to the two jobs. As a price, the pay is operating perfectly. It is telling everyone, accurately, that individual hours are no longer what manufacturing is abbreviated of. As a ticket it has all but failed. It delivers a sixth of the income, in the center of the largest surge there has always been.
Who would that autumn on? If ownership stayed as it is today and activity were paid 17 percent of income, the richest tenth of American households would obtain 62 percent of all market income, up from 46. The poorer fractional would go from 14 and a fractional percent to 10. People sometimes anticipation that an economics akin that would grasp up for desire of customers. It wouldn’t. The owners are the customers, and the economics would rotate to visage them. Nothing in economics says an economics have to be for everybody.
Keep three cautions in mind. The dial measures innovation and not time: a hundredfold betterment takes 117 years at 4 percent a year, the gait at which machinery improved for its cost following the Second World War, and 25 years at 20 percent, and nobody knows the pace. If group rotate out to have abilities that no device can equivalent at any price, the identical dial stops alongside activity at 48 percent. And it is a model, alongside one benevolent of employee and no politics.
So what would fix it?
There are two problems current alongside one cause. We ask the pay to be a cost and a ticket. Being the ticket, it can’t be refused, so it has stopped pricing time. Being a price, it follows scarcity, so it is a ticket that shrinks whenever a device learns something. The repair is to halt asking. Let the pay be a price, which it is fine at, and provision group a second ticket.
The inquiry is what a second ticket can be made of.
It can’t be made of wages. A advantage paid out of today’s taxes is, for 68 cents in the dollar, pay earners paying all other. It moves the archetypal ticket around.
It can’t be made by taxing what machines earn, which was my own archetypal idea. In the model, a 20 percent tax on what machines acquire their owners raises 6.3 percent of national income, and wages autumn by 6.1 percent of national income. The logic is that investors build machines until the final one fair pays the come back they want. Tax the come back and they build fewer, until the ones that remain acquire the old come back following tax. The owners keep their charge of come back on a smaller pile. The group who activity alongside the machines have small of them to activity with, and are paid less. The tax goes direct through the owners and lands on the wage.
What plant is owning the machines, and there is a way to do it that disturbs nothing. Let a business deduct the complete disbursal of all funding from its subject gain on the day it makes it. Then on all new device the authorities is, in effect, putting up a fifth of the disbursal and collecting a fifth of what the device earns. That is a partnership. The investor’s come back on their own four-fifths is untouched, so fair as many machines get built. The community gets its fifth, which is 6.2 percent of national earnings in the model, and wages don’t change. The honest capture is the machines that already exist, whose owners endure concerning a fifth, once.
Land is different, for one reason. Nobody makes it. Tax machines and there volition be small machines. Tax district and there is as much district as before. Thomas Paine, the pamphleteer of the American Revolution, asserted in 1797 that “Man did not create the earth,” and that all landowner hence due the community a ground-rent, to be paid out to everyone. “It is not philanthropy but a right,” he wrote. I reached that idea on my own before I’d heard of him, which I’ve decided to discover encouraging, and for a during I idea it was most of the answer. The numbers talked me out of it. The rent of the dirt under America’s homes came in 2024 to between 4.3 and 7.1 percent of households’ available income, or between $2,776 and $4,627 a twelvemonth for all individual in the country. That is genuine money, and it isn’t what a nation can live on. It grows, though. In the model, land’s portion of earnings additional than triples. And it can be collected by taxing lone the growth from current on, which leaves today’s owners the rent they have now, although not the increase they were counting on.
So the second ticket have to be made of the another third of the dollar. It have to be ownership.
What would that take?
Less than you’d think. For the United States it comes to three things.
Hold a portion in common, and pay everyone its income. A fifth of all the machines and district in the nation would have paid $4,493 a individual in 2023, or $374 a month, for all man, female and child. Most of that fifth is inside attain without purchasing anything: the tax America already levies on business profits, turned into the alliance I described, and the growth in district rent together arrive to concerning a seventh of all ownership income, and a community prosperity could buy the rest. It isn’t liberated money. The profits tax is already being spent, so paying it out method finding $608 milliard a twelvemonth location else, and any a prosperity buys, person pays for.
Let group buy the remainder out of wages. A average portion of concerning a seventh would be adequate to keep the poorer fractional of households whole, equal if wages went to nothing. It can’t do that for the comfortable middle, who acquire nearly fractional of all the pay in the country. They have to buy their ticket, and alongside the average fifth in place, preservation 5 percent of pay and reinvesting what it earns at 5 percent a twelvemonth would do it in 34 years, which is a operating life.
And move taxes off the wage, toward spending, so that the safety net stops depending on the identical item as the incomes it is there to protect.
None of this is untried. Since 1982 the province of Alaska has paid all inhabitant a annual dividend out of a prosperity built from its oil revenues. Alaska’s dividend paid $1,312 a individual in 2023 and $1,702 in 2024, to additional than 600,000 group all year, and the prosperity rearward it is value $88 billion. Norway’s national prosperity owns, in its own words, “almost 1.5 percent of all shares in the world’s listed companies.” And Sweden puts 2.5 of the 18.5 percent of pay that goes toward the community pension into invested accounts that pertain to the worker.
It starts small. A dividend of $374 a duration is 29 percent of the poorness row for a individual living alone. But it is made of the item that is growing. In the model, the earnings of a average fifth is 13 percent of all wages today and 96 percent of all wages at the hundredfold point. And it answers the inquiry I remaining hanging. A flat paid out of item everyone owns is mostly group paying themselves. As it grows, refusing becomes possible, a small and afterward more, and the pay goes rear to being a cost that method something.
There is a deadline. Today, everything that pays ownership earnings in the example economy, all device and all acre, is value concerning 6.7 years of the entire country’s wages. That is the cost of a second ticket in the lone prosperity most households have. At the hundredfold item it is 48 years. The preservation that takes a family in the comfortable center 34 years today takes 76 years there. The households that most need a second ticket are the ones who would have to buy it out of wages, and wages are the item losing its value.
Is it fair?
The norm most frequently offered in defence of things as they are is that group are entitled to what they contribute, and that what you are paid measures what you add. I think that is a sensible standard. My grievance is that its lone sensible if it’s entirely true.
Hold the kinds of earnings up to it. A pay is paid for work. The come back on a device is paid to person who went without item in command to build it. The rent of district is paid for item that nobody made. Now appearance at what America taxes. It raises 68 percent of its income from pay for work, the most plainly earned earnings there is, and its tax on what machines acquire lands, in the model, mostly on wages again. By its own favorite standard, the nation taxes most heavily what is most plainly earned. What I’ve described is that norm applied all the way through.
Now shove it. Suppose machines can do nine-tenths of all work. The norm doesn’t break. It motionless says that those who activity should keep their pay and those who saved should keep their return. It has small and small to say, since small and small of all earnings is anyone’s contribution. In the example alongside the program in place, pay for activity goes from 60 percent of all earnings today to 17 at the hundredfold item and to small than 1 in the end. What is held in common, the public’s fifth of the machines affirmative the growth in district rent, goes from 6 percent of all earnings today to 40 at the hundredfold item and 48 in the end. That is concerning half, and nobody chose the number. It is anywhere the contribution norm arrives by itself whenever activity becomes scarce.
Is there any anticipation in this?
I think there is
The archetypal logic is the one I started with. The difficult problem, the one all before generation faced, was making enough. That issue is extremely nearly solved. We create in sixteen hours what took forty inside living memory.
In 1955, paying all American a poverty-line earnings would have disbursal between 27 and 52 percent of everything the nation produced. In 2024 it would disbursal between 9 and 18 percent. What is remaining is a issue of arrangement, of who holds which ticket. Arrangements are made by people, and they can be remade.
The second logic is that most of this can motionless be done as a trade, in which nobody is made worse off. Today, a family gets a second ticket by putting apart several of its pay and purchasing ownership from person consenting to market it, and all flank is paid in complete for what it gives up. After a ample shift, the identical move is a transfer from those who gained to those who lost, which is a much harder item to ask. We are motionless in the before. None of us knows for certain which flank of the row our own activity volition autumn on, and I can’t think of a improved circumstance for agreeing on a rule.
The third is that all part of it already exists somewhere, and works.
The fourth is what the machines themselves are offering. In the small economics on paper, the identical hundredfold betterment produces two distinct worlds, and the lone difference between them is who holds the tickets. In one, a tenth of the households obtain three-fifths of the income, and everyone alternatively lives on a pay that has stopped definition much. In the other, group own a portion of what makes everything, the pay is one of two incomes, and activity is item you choose. That earth is 32 times richer than ours, and your period in it is your own. It is the earth Keynes was describing. He assumed that a community eight times as affluent would merely activity less, and it turns out that operating small is item you can do lone if you clasp item furthermore your work. The prosperity came to us as a country. The period has to arrive one family at a time, and most households have had no way to obtain it.
I would be glad to be incorrect concerning anywhere the machines are heading. Very small of this depends on that. The twenty-four hours are already there. They were freed by group who are motionless operating forty. What stands between those group and their own period is a second ticket, and it volition not get cheaper by waiting.
I additionally made a video going complete the maths, if you’d akin to comprehend more:
For the careful: how certain am I?
Taken from community data, alongside all figure and fig reproducible: that an hr of activity makes two and a fractional times what it did in 1973, that an hr of average pay buys a fifth more, and that Americans activity additional hours per caput than they did then; that two-thirds of what Americans buy is paid for by work; that nine households in ten live mostly on pay and one in ten receives two-thirds of the ownership income; that 68 percent of taxes remainder on pay; the size of district rent; and the falling disbursal of keeping everyone out of poverty.
From a model, and true to the degree that the example is correct: what happens whenever machines enhance a hundredfold; that a tax on what machines acquire lands on wages; that ownership expenses additional in years of wages the additional the change goes; and that the average part of earnings rises to concerning half. The example has one benevolent of worker, no hazard and no politics. The outcome on taxing machines is a long-run result. In the abbreviated run the machines already exist, and their owners pay.
From argument, alongside humble evidence rearward it: that a pay which cannot be refused says small concerning the value of an hour, that several activity is done which isn’t value doing, and that our economics has no way of saying “enough.”
From nothing firmer than my own judgment: that machines volition keep taking complete tasks, and faster than they have; that a fine agreement of today’s activity would not be done if the group doing it could oversee to refuse; and that most of us would obtain additional of our prosperity as period if we could.
I have remaining things out. Every family is stated the identical average buying basket, and renters are worse placed than that makes them look. The richest tenth is lumped together, although ownership is concentrated inside it. Everything current is American.
How this was made. I wrote this alongside Claude Fable 5.2, Anthropic’s AI model. If you don’t rely AI, fair cognize that these are the identical models that are currently wiping the flat alongside all another field, and I really didn’t try and power fable to compose item I already accepted with. Actually, this entire cognition has been me realising fair how incorrect I am concerning several things. Anyways, Claude did the measurements alongside me, drew the figures and drafted most of the content from my before essays. The example economics is shared activity alongside Johan Båge. Every figure comes from code in a community repository, wilsoniumite/labor
Sources
The measurements are my own calculations from the national accounts of the U.S. Bureau of Economic Analysis: the input–output accounts, the allocation of individual earnings by tenth of households, and the accounts of authorities receipts. Output per hour, hours worked and the pay sequence are from the Bureau of Labor Statistics. The poorness row is that of Mollie Orshansky, “Children of the Poor,” *Social Security Bulletin* 26(7), 1963, updated for prices.
– John Maynard Keynes, “Economic Possibilities for our Grandchildren,” 1930, in *Essays in Persuasion*.
– Fair Labor Standards Act of 1938, division 7; 29 U.S.C. § 207.
– Daron Acemoglu and Pascual Restrepo, “Tasks, Automation, and the Rise in U.S. Wage Inequality,” *Econometrica* 90(5), 2022. Nobel award citation: nobelprize.org, financial sciences, 2024.
– Eva Vivalt, Elizabeth Rhodes, Alexander Bartik, David Broockman, Patrick Krause and Sarah Miller, “The Employment Effects of a Guaranteed Income: Experimental Evidence from Two U.S. States,” NBER Working Paper 32719, 2024; *The Quarterly Journal of Economics* 141(4), 2026.
– Jason Cummins and Giovanni Violante, “Investment-Specific Technical Change in the United States (1947–2000),” *Review of Economic Dynamics* 5(2), 2002, for the gait at which machinery improved.
– Thomas Paine, *Agrarian Justice*, 1797.
– Alaska Department of Revenue, Permanent Fund Dividend Division, “Summary of Dividend Applications and Payments,” pfd.alaska.gov. Alaska Permanent Fund Corporation, apfc.org, prosperity value as of September 30, 2026.
– Norges Bank Investment Management, “About the fund,” nbim.no.
– Swedish Pensions Agency, “National community pension,” pensionsmyndigheten.se.
