What will be the effect of artificial intelligence on labor in the United States? The current government’s agenda for labor will undoubtedly have an influence here.
Last year, President Donald Trump praised Elon Musk lavishly for telling his workers that he would fire them if they went on strike. “You’re the greatest,” he said. This is reminiscent of the opening salvo in the unprecedented attack on labor launched by President Ronald Reagan in 1981. He fired 11,000 air traffic controllers who had gone on strike.
This assault jump-started a steady and accelerated erosion of the rights of workers to organize, form unions and bargain collectively under the law.
Trump is aiming to finish the job. Amazingly, on Aug. 19, a Republican-appointed Court of Appeals for the 5th Circuit decided that the structure of the National Labor Relations Board was likely unconstitutional. In doing this, the court decided in favor of Elon Musk’s SpaceX and two other companies.
The board of the NLRB has been rendered powerless because Trump fired the board chair, Gwynne Wilcox, illegally, leaving it with two members, less than a quorum.
In another unprecedented attack on organized labor, Trump canceled union contracts for 400,000 federal workers in August.
This is the environment in which the owners of AI propose to work its magic, which is based on increasing productivity. AI will raise productivity, and already has in some applications, although there is much uncertainty and disagreement about how much and how soon. Productivity — measured as output per hour of labor — is the basis of rising living standards. Productivity advances in construction and manufacturing are what brought Americans homes with electricity, plumbing and heating.
However, modern economic history shows that it doesn’t always work that way. From 1948 to 1979, productivity rose by 122%. Labor compensation for the typical worker mostly followed, increasing by 95%.
Then the new era began. From 1979 to 2025, productivity grew by 86%. However, the typical worker got far less than half of those gains, with hourly pay rising by 32%.
That we are facing a regime that is so much more anti-labor than those before is not a good sign for the distribution of gains from AI productivity going forward. Neither are the reports of corruption: No other U.S. president has ever used the office to generate billions of dollars in personal wealth while in power. And his contempt for working people is oozing out of Trump’s “One Big Beautiful Bill.”
What can you say about a regime that takes away health care (Medicaid) from more than 11 million people, cuts food assistance for 22 million people and saddles working people with thousands of dollars per family annually in payment for tariffs — while including trillions of dollars in tax cuts for the rich over the next decade?
Some have expressed concerns that unemployment will result from the productivity increases that AI brings. The most important economic policies that could prevent unemployment from rising as productivity increases will be fiscal and monetary policies that promote full employment.
Unfortunately, these policies do not get the well-informed public debate that they so badly need. Right now, the Fed should cut interest rates due to the slowing of the U.S. economy and some weakening of the labor market. The Fed has historically been wrong about monetary policy; most of the U.S. recessions since World War II were caused by the Fed.
However, Trump has made a reasonable discussion impossible by trying to bully the Fed Chairman Jay Powell, with name-calling and insults. Even worse, right now, he is trying to fire Fed governor Lisa Cook. This firing is illegal. And it is a form of lawfare, a political persecution.
This is part of the authoritarianism that adds to observers’ fears of what the Trump administration will do with AI if advances are made, as they collect and abuse private data under their control.
In the Oval Office on Aug. 25, while answering questions about his military takeover of Washington, D.C., Trump offered a chilling confirmation of many people’s worst fears: “A lot of people are saying maybe we’d like a dictator,” he said.
