They don't? I was given an 11% raise (without negotiating) this year because the tech company I work for wants me to stay.
I could probably get more by leaving and finding a new job (15-25%) but 11% is more than enough to convince me to stay. Also, there are factors other than money at play, such as not having someone breathing down your neck, having coworkers who are nice, respecting your superiors, and so on.
I have a friend who recently left a position at a startup paying ~200K (which is a lot here, we're not in SF/NY) for a 145K position purely to avoid dsyfunction, stress, and incompetence.
Your anecdote proves the point. If your friend was paid more, they might not have left.
But in essence what you highlight also shows why companies don't pay to keep people to stay. Instead of paying someone money who hates their job, they might prefer paying less money to a new grad who isn't burnt out on their culture yet.
I could probably get more by leaving and finding a new job (15-25%) but 11% is more than enough to convince me to stay. Also, there are factors other than money at play, such as not having someone breathing down your neck, having coworkers who are nice, respecting your superiors, and so on.
I have a friend who recently left a position at a startup paying ~200K (which is a lot here, we're not in SF/NY) for a 145K position purely to avoid dsyfunction, stress, and incompetence.