I think a big reason is because that "1% to 2% base pay raise" gets hidden behind bonuses that (usually, but not always) seem bigger, plus stock-based pay that tends to be bigger every year (until it isn't).

For me, it's not as gigantic of a deal because as long as my raises cover the rising cost of rent--which it might not this year due to where I live becoming even more massively popular in the wake of COVID--then I am fine with this trade because I hate interviewing and I hate change even more. I used to spend the bulk of my annual bonus and stock grants and saving a little; in recent years, I've flipped that.