A bit simplistic. The bakery can just expand its product range or do various other things to add work. In fact that's exactly what I would expect to happen at a tech company, ceteris paribus.
A market has to exist for this expanded range and for the expanded ranges of every other bakery. Otherwise the bakery's just wasting flour.
Where is this expanded demand coming from?
This is what I find interesting - the response from most companies is "we will need fewer engineers because of AI", not "we can build more things because of AI".
What is driving companies to want to get rid of people, rather than do more? Is it just short-term investor-driven thinking?