The basic Econ answer is that there is a limited supply of labor and firms will raise salaries in order to attract labor and capture more profit from the increa

The basic Econ answer is that there is a limited supply of labor and firms will raise salaries in order to attract labor and capture more profit from the increased productivity. From that perspective your question is similar to "My product got 10x cheaper to make but customers still experience the same benefit so why should they pay less?" In both cases the simple capitalist theory answer is markets. You can see a corollary to this across the whole economy in the Baumol effect, where industries with no productivity gains see labor costs rise as a result of competition with more productive industries for scarce labor: https://en.wikipedia.org/wiki/Baumol_effect https://en.wikipedia.org/wiki/Baumol_effect Of course it turns out firms do have a lot of power over employees for various reasons which they use to suppress wages as much as possible but its still bounded. Another perspective is that workers are also consumers and an economy that doesn't increase compensation will have limited ways to capitalize on increased productivity because there will be little increase in domestic consumption. You can't really export a hole you dug so its good for everyone if workers see benefits from productivity gains: https://en.wikipedia.org/wiki/Demand-led_growth https://en.wikipedia.org/wiki/Demand-led_growth