Unlike the slave or serf, the wage labourer is free, tied neither to the slave owner, nor the landlord. They are tied only for a contracted period to a given employer. Outside that period, they are free to sell their labour-power to the highest bidder. In times of labour shortage, competition between those bidders push money wages higher and vice versa. However, because, as a class, workers must sell their labour-power to live, although they can refuse to sell to any given employer, they cannot refuse to sell to all employers as a class.
Competition between workers prevents wages rising above the value of labour-power, and, because capital only employs labour in order to produce profits, the demand for labour-power itself is reduced if wages rise to a level, whereby, they erode those profits. The manifestation of that comes in the form of a crisis of overproduction of capital, whereby, first, the least efficient firms see their profits turn into losses, and they go out of business. But, capital also has the power to control the demand and supply of labour, when those profits are squeezed to this extent. When wages rise and profits re squeezed, capital engages in a technological revolution to replace labour with fixed capital (1820-43, 1865-1890, 1914-1939, 1974-99 periods of intensive accumulation). So, the demand for labour-power is reduced, relative to supply, because any given amount of output can be produced with less labour. The supply of labour-power rises, as population grows, but fewer of them are required to produce any increase in output. A relative surplus population is created.
As the supply of labour-power, relative to demand, rises so the market price of labour-power, money wages, fall. But, also, this technological revolution reduces the value of all commodities, as productivity rises, including the value of wage goods. So, as well as money wages falling, the value of labour-power also falls. For those workers in employment, that may still result in a rise in real wages. In other words, if the fall in money wages is less than the fall in the prices of wage goods, real wages (standard of living) would rise. But, that still means that relative wages would fall. In other words, the share of wages in total output would fall, as output grows by a larger proportion.
This was seen in the 1930's/40's, and 1980's/90's. On the one hand, unemployment rises, and structural long-term unemployment, in specific geographical areas and industries, grows disproportionately. But, for those in employment, and often, now geographical areas, and often also, new industries, living standards rise, as the value of existing wage goods falls, and new types of wage goods become available. On a global scale, that was seen from the 1980's onwards, as industrialisation of economies in Asia, Latin America and Africa went along with deindustrialisation in developed economies. Living standards in the former rose significantly in absolute terms, and relative to those in developed economies.
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