Put very simply, the least productive a worker is, the more of them are needed. So not only are more workers employed, salaries also increase.
For exemple, if everyone in an industry were to work a few % less on average, this might be enough to double the ammount of openings at the time. This would increase competition for hiring, meaning even those being paid the least would have a chance to either ask for more or simply move to a higher paying job.
Another benefit of workers being less productive, is more money goes to them overall, meaning a smaller gap between the top earners (CEOs, shareholders…) and the workers.
So when you see a story about how people are more productive, remember that that is precisely why they make less. More productivity means that less workers are needed, and thus the less they are paid.
AI and automation will change that a lot going forward though, by completely replacing workers.