Would you mind if I told you that you're not even wrong? First, neither Hayek nor Friedman were well known for contributions to labor market research. Hayek wa

Would you mind if I told you that you're not even wrong? First, neither Hayek nor Friedman were well known for contributions to labor market research. Hayek was well known for his critiques of central planning while Friedman was famous for his contributions to monetary theory. But my point is that these guys aren't "labor market economists", so taking an issue with them over labor market issues would be barking up the wrong tree. Plus, I don't see why "pure theory" should push anyone anywhere: constraints on model-building are actually quite weak. On the other hand, labor market models haven't become more like consumer goods market models over the years. If anything, the opposite has happened: labor markets are unique among other markets because of stuff like human capital, efficiency wages, signalling, gift exchange, searching costs, internal labor markets, non-cognitive abilities, poaching externalities, hedonic benefits of work, etc. This list isn't exhaustive. There are very fair and well-documented economic reasons why present day firms might want to put more money into their employees than a 19th century landowner hiring day-laborers during harvest would. Firms benefit from having (and keeping!) a skilled and well-motivated labor force, and so they act accordingly. Trying to look "beyond" economics if you haven't heard of any of those is just looking past it.