although I can't see how they do entertainment though
It's a lot easier than you think. Creativity will be cracked by algorithms within the next couple of decades.
If a bunch of bald apes can do it then I'm sure super AIs could figure out how to trick us with art they think we would enjoy.
In the future you'll probably wouldn't know if an artists was an simulation or a real person.
why would there be employers who are they employing? machines?
People don't start businesses to hire employees. They create businesses to make money or reach some goal.
In the future capital will still be capital.
You can always trade with other capitalists that own robots if the populace is broke.
It's probably a more efficient system for their needs.