Wage labor allows a higher rate of surplus value extraction by turning not just bodies, but labor power itself into a commodity. It also absolves employers of the need to feed, house, and pay for sleeping and non-work time of the person, now only needing to account for their active working hours.
Discovering this seemed to come along naturally with industrialization and more mobile capital requiring more mobile labor. Its part of the stable transition from feudalism -> capitalism, mostly starting in Britain and spreading to the rest of western europe.