> why not low skill workers get paid $1million and the management get paid $1k instead, since workers are out numbers and they can easily win the bargaining fight?

This is explained in the same paragraph. Adam's theory is that the wealthy business owners collude against the workers while at the same time lobbying for laws that make it illegal for workers to combine. He says that these conflicts frequently play out violently and rarely end well for the workers.

This is explained in in Wealth of Nations in Chapter 8, "On The Wages of Labour."

More generally, Smith seems not to have been read by many economists, or at least his theory is rather different from what is ascribed to him by textbooks.