It's really both effects happening at once. AI is just like the invention of the assembly line, or the explosion of mass produced consumer packaged goods starting from the first cotton gin. Automation allows a massive increase in quantity of goods, and even when quantity comes with tradeoffs to quality vs artisanally produced goods, they still come to dominate. Processed cheese or instant coffee is pretty objectively worse that the 'real' thing, but that didn't stop cheap mass production still made those products compelling for many million/billion of consumers.
You can still find a tailor who will hand make you a bespoke clothing or sew your own clothes yourself (as even the boomer generation often did growing up), but tailored clothing is a tiny fraction of the amount of clothing in circulation. Do tailors and artisanal cheese makers still exist? Yep, they are not extinct. But they are hugely marginalized compared to machine-made alternatives.
I’m not sure if your statements are actually correct. What you are implying is that there are fewer tailors today than in the past. And I’m not sure if that holds. I’m not even sure that their relative position on the income ladder has deteriorated.
In the time before automated T-shirt production, almost nobody bought clothes. They were just far too expensive. There were of course people that did. And those paid extremely well. But those kinds of tailors still exist!
At the same time, I do think that the comparison is less than apt. And a better one would be comparing it to the fate of lectors and copywriters. A significant amount of those have been superseded by spellchecking tools or will be by AI “reformulations”.
Yet even here I’m not sure if those jobs have seen a significant decline in absolute numbers. Even while their relative frequency kind if obviously tends to 0
the crazy thing is, I can get locally-roasted beans that are single-origin microlots from all over the world, in part because of the coffee boom that was a result of instant coffee and the desire for better.