You can use a bonus to cover fluctuations without hurting morale too much.
Plus you don't have to give everyone an automatic raise If you post new jobs at a higher rate. Just give them a new title, and allow current employees to apply for them.
GP didn't say that there are good reasons to underpay experienced staff compared to new staff, he said that there are good reasons that salaries cannot be raised across the board.
No. This is exactly what GP said:
> there were reasons good reasons why salary couldn't just be raised across the board to match new hire rates.
There is not a single company I can think of (other than FAANG or unicorn startups flush with VC money) that can raise salaries across the board, they simply do not have the cash-flow to do it.
I get that the short-term justification is "we can get away with paying the former less because enough of them will be afraid to leave."
But is there another justification?
In my experience, at large companies "cash flow" would not even vaguely register the difference of increasing salaries for experienced people you want to keep, and it would be a marvelous signal to the rest.
I agree, but the reality is that raising salaries across the board would kill the company immediately, while having ONLY inexperienced staff might happen, and even if it did, it only might kill the company.
Another factor is that a lot of the staff just won't move, even if they know they are being paid less.
For most companies, this will make them less resistant to boom and bust as they'll be forced to offer big annual payrises which they won't be able to roll back when the market contracts.