Im not entirely sure this cost disease goes against classical economics. The value of a teacher increases as the children's expected economic value in the future increases in productivity.
In any case, the restriction of how much people should be able to work could affect workers positively or negatively, but its not the solution to the problem of productivity and distribution.
Problem is that not all sectors of the economy are uniform. You may have dramatically increased the productivity and reduced the cost of forks. However, health care can't be done by fork makers. Higher education can't be taught by fork makers. The supply of these goods is fixed by skilled labor, who can now demand more money because their BATNA is going into the fork automation business rather than working for a competitor. End result is that the world is awash in forks, but the people who make forks can get plenty of forks but no health care or education.
Most of the problems with classical macroeconomic models can be traced back to the fact that we don't live in a 2-good model, and the economy comprises thousands of markets that all have different productivity stats and levels of competition. If all markets moved in unison, then yes, rising productivity would be an unambiguous benefit for everyone. Not all markets move in unison, and so when essential goods are in markets with low productivity, large portions of the population can find themselves unable to afford those essential goods.
[1] https://en.wikipedia.org/wiki/Baumol%27s_cost_disease