It does in an employee market. If it's an employer market (which it is during economic downturns), then company A will offer your a job with no vacation, and company B will offer you a job with no vacation AND no overtime payment. And there are no other companies, and most people can't start their own.

A free market is an inherently unstable equilibrium. If you don't put protection in place to make it stable, it will quickly stop being free.

Of course, if you put too much protection, you get other unwanted effects, like promoting mediocrity. Extremes, either way, are bad.