AI, Unemployment and Work

By Alex Tabarrok.

"Imagine I told you that AI was going to create a 40% unemployment rate. Sounds bad, right? Catastrophic even. Now imagine I told you that AI was going to create a 3-day working week. Sounds great, right? Wonderful even. Yet to a first approximation these are the same thing. 60% of people employed and 40% unemployed is the same number of working hours as 100% employed at 60% of the hours.

So even if you think AI is going to have a tremendous effect on work, the difference between catastrophe and wonderland boils down to distribution. It’s not impossible that AI renders some people unemployable, but that proposition is harder to defend than the idea that AI will be broadly productive. AI is a very general purpose technology, one likely to make many people more productive, including many people with fewer skills. Moreover, we have more policy control over the distribution of work than over the pure AI effect on work. Declare an AI dividend and create some more holidays, for example.

Nor is this argument purely theoretical. Between 1870 and today, hours of work in the United States fell by about 40% — from nearly 3,000 hours per year to about 1,800. Hours fells but unemployment did not increase. Moreover, not only did work hours fall, but childhood, retirement, and life expectancy all increased. In fact in 1870, about 30% of a person’s entire life was spent working — people worked, slept, and died. Today it’s closer to 10%. Thus in the past 100+ years or so the amount of work in a person’s lifetime has fallen by about 2/3rds and the amount of leisure, including retirement has increased. We have already sustained a massive increase in leisure. There’s no reason we cannot do it again."

Shellfish, Typhoid, and Private Control of Disease

By Jeffrey Miron.

"According to a recent study, early 20^th c. London fishmongers provided a creative solution for the problem of foodborne typhoid transmission (the study says "Industry-led efforts to mitigate contaminated shellfish reduced typhoid deaths in London from about 1.5 to 0.1 per 10,000 people between 1900 and 1920").

The issue was that shellfish

acted as vectors for waterborne diseases … Once the connection was understood, consumers alone could have substantially reduced typhoid deaths by consuming far fewer shellfish.

Instead, a prominent fishmonger company

used the Billingsgate [fish] market to help high-quality sellers signal the quality of their products by sampling and testing harvest sites, banning sales from known contaminated areas, and requiring vendors to purchase shellfish cleaning services.

This strategy meant that

consumers who were willing to risk their own quality control could purchase shellfish for a lower price from traders who did not transit through Billingsgate, while those willing to pay a premium for third-party quality control purchased shellfish through Billingsgate.

Profit-motivated companies can create public goods." 

The Rise and Decline of General Laws of Capitalism

By Daron Acemoglu & James A. Robinson. 

"Thomas Piketty's (2013) book, Capital in the 21st Century, follows in the tradition of the great classical economists, like Marx and Ricardo, in formulating general laws of capitalism to diagnose and predict the dynamics of inequality. We argue that general economic laws are unhelpful as a guide to understanding the past or predicting the future because they ignore the central role of political and economic institutions, as well as the endogenous evolution of technology, in shaping the distribution of resources in society. We use regression evidence to show that the main economic force emphasized in Piketty's book, the gap between the interest rate and the growth rate, does not appear to explain historical patterns of inequality (especially, the share of income accruing to the upper tail of the distribution). We then use the histories of inequality of South Africa and Sweden to illustrate that inequality dynamics cannot be understood without embedding economic factors in the context of economic and political institutions, and also that the focus on the share of top incomes can give a misleading characterization of the true nature of inequality." 

Allowing Housing Near Jobs Can Unlock Housing Options in Maryland

HB 1137 can expand residential development on underused commercial land

Salim Furth of Mercatus.

"Maryland House Economic Matters Committee

HB 1137: Land Use - Multifamily Developments and Mixed-Use Developments - Authorization (Bring Back Main Street Act)

Chair Valderrama, Vice Chair Charkoudian, and Members of the Committee:

Thank you for providing me with the opportunity to testify on HB 1137, the Bring Back Main Street Act. I am an economist at the Mercatus Center and a resident of Takoma Park, Maryland. The Mercatus Center is a nonprofit, nonpartisan policy research institution at George Mason University.

Two years ago, the General Assembly considered, and passed, a bill that attempted to enable housing growth on underused commercial land (HB 538, 2024). At the time, I cautioned a Senate committee that the bill was weakened by incorporating a false choice between abundance and affordability.¹Although it allowed builders to provide homes on some commercial land, this option was, practically speaking, available only to projects already using dedicated affordable-housing funding, such as the Low-Income Housing Tax Credit.

Today, the committee can advance HB 1137, which would build on that small beginning by opening up more underutilized commercial land for housing and welcoming any builder to the opportunity. Homes built under HB 1137 must still abide by affordable housing set-asides. But, as I noted in 2024, recently built apartments in Maryland are generally affordable to working-class households anyway. Increasing the supply of market-affordable apartments, condos, and—in other legislation—starter homes will allow Maryland and her counties to focus housing assistance on those with the lowest incomes.

Many Maryland cities and counties have already embraced, at least in concept, allowing homes on most commercially zoned land. Not all have done so, however, and in many cases there are additional barriers to housing that make it more difficult to build on those sites. And most jurisdictions simply have other priorities. Rather than proactively making land available for housing, they wait for a developer proposal or a small area plan. For example, Howard County does not allow residential uses in its B-2 Office Commercial zone, which is frequently employed in areas directly abutting homes.

With colleagues, I have studied the adoption of residential-in-commercial-zone (RICZ) laws like HB 1137. To date, 11 other states have such laws, which I summarize below.²

• Arizona: Allows residential redevelopment of commercial properties with high vacancy rates.
• California: Allows RICZ subject to affordability and labor requirements.
• Florida: The Live Local Act allows RICZ up to the zoned limit in other residential zones.
• Hawaii: HB 2090 (2024) allows RICZ, but it may be limited to upper stories.
• Maine: LD 997 (2025) allows RICZ, but it may be limited to upper stories.
• Montana: Allows homes in RICZ with limits on local parking and height regulation.
• Nevada: AB 241 (2025) requires all localities to rezone for RICZ.
• New Hampshire: HB 631 (2025) allows RICZ, but it may be limited to upper stories.
• Oregon: HB 3395 (2023) allows deed-restricted affordable housing in commercial zones.
• Rhode Island: Statutes 45, 24, 33, and 37 each allow residential uses in some commercial zones, under differing parameters.
• Texas: SB 840 (2025) legalized RICZ in major cities under clear parameters.

From observing other RICZ laws, I have two technical critiques of HB 1137:

• The bill sets a standard for allowed density based on the county’s highest-density zone. This approach was pioneered in Florida, and it works there. However, Florida has a law against downzoning. Without that protection, counties would likely respond by reducing the density allowed in their densest zones, since that density would implicitly be the countywide density for residential projects in commercial zones. A better approach, which I laid out in a 2024 policy brief, is to set an absolute base standard and allow contextual deviations where the existing regulations or built pattern are more permissive.³
• The bill allows counties to require first-floor retail uses in a highly prescriptive way. That element should be either dropped or given more flexibility on the space that nonresidential uses will occupy and the nonresidential uses that a county can allow, beyond just retail.

Maryland’s housing challenges did not emerge overnight, and they will not be solved by a single bill. But allowing residential uses in commercial districts statewide would be a meaningful step toward attainability, predictability, and market responsiveness.

Thank you, and I welcome your questions.

Notes

[1]Salim Furth, “Market-Rate Rents Can Serve Moderate-Income Marylanders” (Testimony before the Maryland Senate Education, Business, and Administration Subcommittee, Mercatus Center at George Mason University, March 1, 2024).

[2] Mercatus Center at George Mason University, “Housing Policies Highlight: Five Housing Supply Reforms Across the 50 States,” accessed February 27, 2026, https://www.mercatus.org/housing-policies-highlight.

[3]Salim Furth and Eli Kahn, “Office Overhauls and ‘God’s Backyard’: Reforms for Housing in Commercial Zones and Faith Land” (Mercatus Policy Brief, Mercatus Center at George Mason University, May 2024)."

Costliest Autism-Therapy Firm—Which Was Barred From Medicaid—Is Closing

A rival provider, which recently settled civil allegations of fraudulent Medicaid billing, to take over operations at Piece by Piece Autism Centers

By Christopher Weaver of The WSJ. Excerpts:

"The nation’s costliest autism therapy provider will shut down by mid-May"

"the state of Indiana said it would bar the firm from billing Medicaid."

"The autism-therapy provider, Piece by Piece Autism Centers, received $340,000 in Medicaid payments per patient in 2023, the highest level in the country"

"Once Piece by Piece—which state officials have said abused the taxpayer-funded program for low-income people—closes, its centers will be operated by a rival autism-therapy provider"

"Piece by Piece extracted its high payments in part by boosting list prices to levels that allowed it to collect as much as $640 an hour from the state"

"From 2019 to 2023, Indiana directly paid Piece by Piece $58 million"

"State Medicaid programs’ direct payments for the therapy grew to $2.2 billion in 2023, from $660 million just four years earlier"

"At first, owner Meghann Mitchell, who purchased a $2.5 million Sanibel Island vacation home, a $600,000 riverfront Indiana getaway and other properties as Piece by Piece’s billings soared, was defiant. She wrote to employees that “Piece by Piece has done nothing wrong and intended to fight this decision,”"

"Mitchell also owns, through a limited liability company, real estate used by the centers—meaning she could remain a landlord for her former business."

"Indiana is undertaking a wider overhaul of how it covers autism therapy. For years, Indiana had paid autism-therapy providers 40% of whatever list prices they charged, leading to ultrahigh payments for some providers. The state set a flat rate in 2024."

"Indiana also plans to seek federal approval for a moratorium on new autism-therapy providers this month"

Related posts:

The Boom in Autism Therapy Is Medicaid’s Fastest-Growing Jackpot: Some companies have found lucrative opportunities to capitalize on a growing need, billing long hours and extracting payments as high as $800 an hour (2026)

Autism-Therapy Firm That Was Paid $340,000 per Patient Is Barred From Medicaid: Indiana officials move to terminate Piece by Piece Autism Centers, cite federal pressure for crackdown after a Journal investigation (2026) 

The Medicaid Autism Racket: Behavioral therapy payments are an easy target for fraud (2026)

A German Official Talks Like Jimmy Carter—and That’s Good

By Joseph C. Sternberg. Excerpts:

"Mr. Klingbeil [German Finance Minister Lars Klingbeil, co-leader of the center-left Social Democratic Party] last week delivered an agenda-setting speech titled “Reforms for a Strong Germany”"

"His central observation is that Berlin must break its habit of responding to serial crises by doling out subsidies and amping up regulations. Resilience is born of strong labor and capital markets, and building that strength requires better incentives to work and invest."

He "would encourage Germans to work longer into their lives. This would entail a combination of tax reforms to allow older workers to retain more of their earnings and benefits and reforms that improve incentives to work longer before claiming Germany’s equivalent of American Social Security."

"Nearly half of working women in Germany work only part-time"

"A sharply progressive tax code coupled with the withdrawal of generous means-tested benefits as incomes rise creates steep cliff-edges in household budgets."

"Mr. Klingbeil wants to make it easier for companies to hire. One of his more intriguing ideas is to allow companies greater flexibility to hire new employees on contracts that make them easier to fire."

"His better ideas [business investment] on concern deregulation and streamlining bureaucracy" 

"Jimmy Carter started deregulation in the U.S., and Gerhard Schröder overhauled German labor law 20 years ago. Mr. Klingbeil now is signaling that he’s willing to try, too." 

Blue states spend 51.4% more money per public/government school student than red states, with no difference in academic outcomes

From Mark Perry.

"Wow, blue states spend 51.4% more money per public/government school student than red states, with no difference in academic outcomes.

Related: Mississippi (red state) is spending between $10-$13k per pupil and has gone from 49th in education to 9th in the nation in 13 years, and they did that by switching to a pre-1990s phonics reading curriculum."