A Shorter Workweek as a Policy Response to AI-Driven Labor Displacement: Economic Stabilization in the Age of Automation

The accelerating integration of artificial intelligence into workplace operations has precipitated widespread workforce reductions across industries, raising urgent questions about the future of employment. This article examines the emerging phenomenon of AI-justified layoffs and argues that these decisions are driven less by technological capability than by managerial short-termism and misaligned executive incentive structures. Drawing on labor economics, organizational behavior theory, and historical precedent, this analysis demonstrates that current corporate responses to AI adoption risk creating a self-undermining cycle: firms reduce labor costs to boost short-term profits while simultaneously eroding the consumer demand upon which those profits depend. The article proposes work-time reduction—specifically, a gradual decrease in the standard workweek—as a pragmatic policy intervention to prevent AI-driven mass unemployment. By adjusting labor supply in response to declining labor demand, governments can preserve employment, maintain consumer purchasing power, and ensure that productivity gains from automation translate into broadly shared prosperity rather than concentrated wealth and widespread precarity. Historical analysis of previous workweek reductions, from the six-day to the five-day week, provides evidence that such transitions are both feasible and economically beneficial. The article concludes with policy recommendations for implementing graduated workweek reductions, including tax incentives, regulatory frameworks, and conditions attached to AI-related subsidies. This approach reframes reduced working hours not as a luxury or lifestyle preference but as essential economic infrastructure for an AI-transformed labor market.