>By more people working, we created more opportunities for more people to work?
Yes, because more workers = more people with money = more people who stimulate production through spending.
The issue with the "economies of scale" argument is the same issue that the original lump of labour argument has - it assumes that there is a sensible upper bound on the amount of work people want done at any one time.
The only reason more efficient workers would lead to less work per worker is if the work to be done is bounded. What history shows is that instead, more efficient workers work the same amount and produce more, and the consumption of the product of that work is effectively unbounded.
For an example in tech: advancements in programming theory and practice over the last ~50 years have made it so that the modern programmer is easily able to produce the kind of programs that computers used 50 years ago in a fraction of the time it originally took to code them. Does this mean we need a fraction of the number of programmers compared to 50 years ago? No, because the improvements in efficiency have been completely offset by the demand for more complicated programs. In general, there doesn't seem to be any kind of bound on program complexity - the easier the programmer's job becomes, the greater their requirements become.