> What do your negotiating skills contribute to an engineering team that they should be affecting your compensation to the same extent as your skill level?

Negotiating comes in a few flavors. One is in the form of a competing offer, which you could just as easily ask the same question: "What does a competing offer contribute to an engineering team that it should affect compensation to the same extent as skill". Of course, the answer is that competing offers don't contribute to engineering teams at all! But, if a company ignores all competing offers, it will not hire anyone who manages to get one. I'd guess competing offers correlate highly with being a successful engineer, so that sounds like a terrible strategy to me. They also serve as another form of vetting (like VCs piling on after but only after the first bite).

I think this question fundamentally misunderstands labor markets. They are, in fact, markets! Employees are not paid by the amount of value they generate (potentially over a million per person at FAANG), but according to supply and demand for the position.