Have you ever watched a movie where the writers treat a computer as a magical thing, a deus ex machina? It's like they have a hazy theoretical idea of what computers do, but no real practical experience. If you're like me, watching those movies is deeply irritating. Why didn't they take the time to learn about the history and practical details of what they're writing about?
I have a similar reaction to your comment here. It is as if you know exactly nothing about the long history of labor markets. We started out with very unregulated markets, and have moved away from that for very specific historical reasons. You could reasonably argue that any given protection was a step too far, or that a particular regulation no longer makes sense given some sort of change in technology. But just handwaving it away? All of it?
When you say you've "always wondered", I have a hard time believing it. There are many books on this topic. Books, articles, podcasts, movies, blogs, everything. You can learn about the history of labor markets, the theory of it, the present-day reality. Your comment shows no sign of having done the slightest work to understand the topic.
Even if you are not inclined to study history, just try thinking about it as an engineer. Markets aren't magic. They are a specific technology for solving specific economic problems. There are conditions under which they work well, and conditions where they work poorly, sometimes so poorly as to fail. Like any other technology, they come in a variety of specific forms depending on need. They need to be properly installed and maintained if they are to serve the purpose they were created for.
Please go and learn something about this.