But if a pipe-bending machine has a total cost of ownership of $100 per operating hour, your four pipe bending guys have a job as long as employing them costs less than $25/h. Where before they might be able get a higher wage, their wage is now capped and the cap is decreasing over time.

Of course there's other reasons to employ people (parent mentioned spending power, I would add political influence to the list). But the labor part of the employment decreases in value.