Workers also do not want to work cheaper than they can get, and last I checked, there's over 5 million companies in the US, and plenty of evidence that those companies are competing for labor.

So they do bid on labor. If a company does not match it's competitors, employees move. And a company has every incentive to pay more than competitors, up to the break even point, since it gets them better employees.

Even if a few companies collude, it open the door for a competitor to break ranks and steal employees. This breaking of ranks is prevalent in all sorts of cartels around the world - it's nearly impossible to make companies stick to an agreement when by breaking it they can gain advantage over rivals.

The carnival metaphor makes little sense. Employees and employers are in a market trading goods, nothing more, nothing less.