So there you are: continued high levels of employment with weak growth in wages and productivity is not evidence of disappointing technological progress; it is what you’d expect to see if technological progress were occurring rapidly in a world where thin safety nets mean that dropping out of the labour force leads to a life of poverty.
The digital revolution has created an enormous rise in the amount of effective labour available to firms. It has created an abundance of labour. If you’re a company and your workforce is demanding higher pay or being difficult, you have many ways to get the labour you need without adding to your wage bill.
But the scarce factor isn’t capital equipment. What is expensive is the intangible capital that’s needed to overhaul production in ways that use cheap computing power to eliminate lots of jobs. It is complicated to figure out how to get these systems working and operating in a way that generates profits. While labour is cheap, firms face little pressure to make those massive investments in intangible capital in order to automate key processes.