

The outfit also has a practical function, as others have commented. Still, just a few possibilities of why it would benefit one to be a member of the Guild. (although he doesn't need to wear the armor for this). Given the benefits of unionisation, it could well be that being a member of the Thieves Guild grants further dispensation, such as an accommodated leniency (although I'm not sure if anyone has directly compared sentencing for theft depending on a players allegiance) or one has the option to pay off a guard if caught to let him get away with the goods. While they may have been insincere in this promise, they soon found the Patrician knew too much about them for reneging to be safe. The major gang leaders of the city were therefore called to the Patrician's Palace, where they agreed to be held responsible for ensuring a socially acceptable number of thefts.

Lord Vetinari realised that what people crave is stability, and that, while it is impossible to stamp out crime altogether, it is possible to regulate it.

There could be any number of reasons for this, but Discworld (which shares many parallels with Tamriel!) provides a humorous hypothetical, if not entirely plausible example of what may have happened in Tamriel: The fact that the Thieves Guild is by this point an officially recognised entity (see Third Century) supports this, and it seems as though the behavior of the guild is in some way sanctioned, if not permitted by the wider authorities of Tamriel. As the Thieves Guild is a guild, operating like a union, there will be diplomatic and litigious implications of being a member, and identifying yourself as one.
