Unemployment today in the USA is 3.7%. Practically speaking this is near the bottom. It's literally not possible to get to 0%.
We have had decades, if not more, of automation and there's no affect on employment. So there are no jobs lost so far due to automation. So why exactly would I expect this trend to change?
>For example, I'm a construction worker building houses. Then let's say a technology completely replaces my job because it's 10x less expensive than hiring me. I've lost my job. However, as companies compete using that technology to build houses more and more efficiently, the cost of housing would theoretically go down.
The cost to construct a house is nowhere near the value of a house.
>1.Does automation actually reduce cost of living? (in an economy where competition is allowed)
What is the cost of living in an inflationary environment. Cost of living won't ever go down, the purchasing power of your time will go up.
Imagine living in san francisco and detroit.
You can live in detroit, have your mortgage paid off on a detached home with garage and pool. You can go eat whatever you want. You can sign up for any service. You can buy any gadget.
To do the same in SF would require a salary whole orders of magnitude different compared to detroit.
>2.Is the cost of living reduced enough to compensate for the people losing their jobs?
If someone is automated out of their job. They go find a new job. So far we haven't run out of jobs. Yes the stableboys and horse trainers are out of a job today.
>3.How much does the PACE of automation play a factor relative to other possible factors?
The world is a big place. You can imagine the fastest rate of automation using automation and tesla's new humanoid robots and boston dynamics robots.
No matter how good all that is... you can never automate many other jobs. Artisans, artists, etc.