At least one of those two pools exists, because if not it means there are no qualified developers looking for a job, in which case perhaps the issue is with the definition of qualified.
Also, there is the possibility they are getting great applicants that are filtered out before it reaches the individual currently here. It may be possible HR or some automated system is filtering them in such a fashion that good candidates are lost. Maybe HR is demanding 7 years experience in a 3 year old technology.
What we can reasonably assume is that the hiring manager is not finding qualified talent and qualified talent does exist. The idea that qualified candidates are only applying to FAANG or unicorns seems far less likely than something about the position is the reason they aren't getting anyone qualified.
Yes, probably. Why do you need a supply of new front end developers? Is your workplace exceedingly lethal?
Have you considered that paying $2XX/year is a signal? It attracts a certain type of candidate and you can't extrapolate the talent level of the entire market just based on your experience with those that would try to land a $2XX/year job. Where I live, trading firms can pay that much and more, with potential bonuses that would make your eyes pop out of your head. Yet many extremely talented people I know would never submit a resume: "No thanks I like having a life." Many people I know that used to work in that environment think of it as an insurance policy: "at least I know that if I ever need money I can go back."
> We are offering higher than average pay for a job with average requirements
A lot of people will pass you by and assume that something is really wrong at your company to need to offer so much money for an average job.