It is very simple. If you don't pay people enough or their working conditions aren't good enough they won't work for you. You may only think that the work is worth $X but if people won't work for anything less than $Y then you're going to have trouble getting people to work for you if you only pay $X.

The Alberta government could stop spending $30 billion on corporate welfare and instead spend that paying teachers what they are worth. Of course, ideologues like Smith don't like high quality fact based public education because better educated people tend to be more liberal.