Mechanization eventually — that is, after a couple of generations — led to a broad rise in British living standards. But it’s far from clear whether typical workers reaped any benefits during the early stages of the Industrial Revolution; many workers were clearly hurt. And often the workers hurt most were those who had, with effort, acquired valuable skills — only to find those skills suddenly devalued
I don't disagree with Krugman regarding skilled workers, it actually took a very a long time for skilled workers to regain their previous standing, but the early stages of the industrial revolution rather clearly benefited average workers. People flocked to cities from the poverty stricken countryside. However, this additional competition from unskilled and semi-skilled workers gutted the early-modern middle class of skilled workers. It was eventually replaced by a middle class of non-manual knowledge workers but this took a rather long time.
Of course modern technological change isn't having a similar impact of raising the income of the lower classes like the industrial revolution did. But I do think it is important to point out that the story of the rise of the middle class isn't really all that accurate for describing the industrial revolution, that came later. The early industrial revolution had its largest impact on raising the standards of the lower classes, which is the exact opposite of what we are seeing today.
In the end, however, I don't really see rising inequality as being about technological change. Instead, I see it as being about the political and economic power of modern economic elites.* I don't see any particular elements of technological change that should drive this, instead I see political entities ceding decision making to elites; who predictably do what elites do.
* The power wielded by corporations and employers more generally is a form of political and social power, in addition to economic, even though it is not formally a part of government; a big problem I see in many analyses is the failure to recognize informal forms of power even when it plays a greater role in our daily lives than formal institutions do. Most of us will face far more coercion and petty bureaucracy from our employers than we will ever face from our government; and with far less say and even less means of recourse.