Right, people can be flaky, and those that are flaky will continue to be flaky, regardless of the amount paid. But paying more can attract more of the people who aren't flaky.

Those who are good employees are already employed, and probably at a decent compensation level. Whenever this topic comes up, I always ask, "What compelling reason are you giving for people to come work for you?" I never get a satisfactory answer, usually because the people know that they have nothing compelling over the next job.