> the entire contract labor market that involves specific payment for customers hiring workers off of the contact would die as customers would just ignore the “unenforceable” restrictions and hire desired employees without the contracted payment to the intermediary firm.

I've seen this happen over and over again, and I've even been in this situation myself. One of my first subcontracting jobs ended with me being contracted directly by the company I was was subcontracted to, and there was literally nothing that anyone could do (or really even care to do).

This doesn't mean the contract labor force is going to die off- generally speaking people who hire contractors want contractors, not employees, for a variety of reasons (financial commitment, not having to manage the HR aspects of the employee, knowing that you can let the contractors go without having to notify the state of a lay off).