> GP said they couldn't raise wages compared to new hires,

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.

OK, but then what is the long-term business justification for paying more-experienced staff less than less-experienced staff?

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.

It's downright silly to pay new employees more than experienced employees for similar jobs. If you can't afford to raise wages for the experienced staff you'll soon have a bunch of inexperienced staff that costs you more.

> It's downright silly to pay new employees more than experienced employees for similar jobs. If you can't afford to raise wages for the experienced staff you'll soon have a bunch of inexperienced staff that costs you more.

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.