When the cost of labor stays the same while productivity increases due to technological advances (e.g. moving from an in-house server farm to the cloud), profit increases.
Not necessarily. I know it is slightly pedantic to point this out, but technical advances does not imply "free technical advances". e.g. you may increase productivity without increases in wages but not increase profits if the technical progress is driven by paid improvements in technology (which tends to me a multiplier on capital).
So, for example, if you get a new versions of excel, which improves your productivity $100/year, but excel costs $100 this year to upgrade, you haven't gained anything in year 1. That will be a multiplier, but, if the upgrades cost a lot up front (e.g changing technology stack causes initial decrease in productivity and obsolescence of some internal IP + change costs, training, etc) and the productivity increase will be small then it may not be obvious that there is an economic benefit for quite some time.
Of course, a lot of companies think this way and failure to just ditch a lot of old tech years ago, ends up massively holding back productivity relative to peers that did make the upgrades. As a result the company sees low per capita productivity and decides not to raise wages.
Note: this is theory I do not have actual academic studies in practice that can demonstrate this explicitly in a controlled environment, but anecdotal experience certainly makes me suspect that this is what is going on.
> So, for example, if you get a new versions of excel, which improves your productivity $100/year, but excel costs $100 this year to upgrade, you haven't gained anything in year 1.
Yes, but this is a tautology (it will always be true that making a capital expenditure of $x/employee/year to augment surplus value $x/employee/year will break even). Productivity itself is scalar (units produced/time), so to arrive at a dollar amount of $100 additional revenue generated per employee would suggest an incredibly small increase in units produced over 1 year.
That’s where the finance industry steps in. If you suppress wages and push a private debt bubble then you get the profit and the government bails out the banks when the bubble bursts.