How is this possible? Wouldn't capitalists willing to take a smaller share (higher wages, better product for lower price) out-compete those that don't? It seems to me that the major advantage of capitalism is protection from this type of situation?
"Job Stability" being a factor in the labor market is a perfect example. People are afraid to leave a stable job for a less stable one even it pays more because they know it takes time and effort and luck to find another job (aka imperfections in the job market). If your unstable job disappears, that might mean there's no money for food or no health insurance. This puts a huge thumb on the scale in favor of the capitalist. If they can offer "stability" then they can also lower their wages considerably.