The problem is then you’re not being paid enough.

That is also true.

It becomes a nasty chicken and the egg problem though -- many companies pay less as a risk management strategy, and that leads to the employee not having enough motivation. Of course from then on he/she does not want to excel and the employer concludes they made the right decision which is of course super wrong.

It's quite tragic on a human level but I stopped caring about that aspect as well. At my age and experience I just shrug and say "You get what you pay for" and I am not interested in trying to school people who would never change anyway.