Raising pay in the lower pay brackets will increase loyalty (but not enough to compensate for otherwise poor treatment) but once you get above 'comfortably well-off' pay grades, increasing compensation might also be necessary but it's not the answer, and all of the problems with product design here stem from the top. The only real answer is to hire people who drink the kool-aid, who genuinely believe in what you're doing for its own sake and aren't just there to pump their own careers and then cash out.