This can indeed cut both ways. Instead of needing huge numbers of manual workers to harvest the wheat, one guy can sit in an air-conditioned combine harvester cab for a few hours listening to tunes, and we get the same food. Humans can (and do) eat slightly more food given it's cheap and readily available, but there's a limit. So, the percentage of workers engaged in agricultural work fell.

On the other hand, turns out that once a shirt is cheap humans will buy not just one extra so there's one to wear and one to wash, but a dozen, or hundreds. And they'll throw it away when it's a little worn not when it falls apart. So while industrialisation of fabric and clothing production made clothes cheap, the result wasn't that fewer people were employed in that work but that we just all bought more clothes.