If people work less, their productivity goes down.
This... isn't actually true, or at least not necessarily true. Overworking is a thing and tends to lower productivity. Further, there's a very definite and very strong "diminishing returns" to extra man hours, especially in heavily automated workplaces. After a point you just don't get more out of extra hours than it costs to have them. To boot, sometimes productivity is actually a
bad thing -- you might be able to produce a trillion gizmos, but if the gizmo market is only buying up five hundred or so...
Also, if you're talking the states, while we
are still one of the strongest manufacturing economies in the world, industrial production and exports hasn't been then backbone of our economy for years -- the states is a service economy now, full stop. We do some manufacturing on the side, but that's not our primary money maker, hasn't been for a while, and shows every sign of being even less so going into the future. Things are changing, y'know?