The problem with that argument, as with many others, is that it is focusing on a small part of the entire system, while ignoring the reactions of other parts.

The problem with that argument, as with many others, is that it is focusing on a small part of the entire system, while ignoring the reactions of other parts. In this case the driving factor for automation is the same as the driving factor for higher wages: The prospect of higher profits through more work getting done. A wage increase is only possible when it increases profits over the alternative, including automation. Automation will only increase if that is more profitable than the alternative, including higher automation.