If there is a pool of labor willing to accept a free lunch and campus-like atmosphere, coupled with cheap imported labor, in lieu of perhaps $100,000 in pay, it depresses wages across the entire industry.
I'd posit that the reason finance pays more for engineers than STEM is because most of us think that the atmosphere at a finance company will suck and as a result they have a smaller labor pool (I've literally never responded to a single financial recruiting email).
And this is the funny part. Do you really believe working somewhere like EA is different than working somewhere like Goldman Sachs?
As far as people who take low salaries screwing up your salary: If they're willing to do the job for that and they're not appreciably worse than you at that particular job, maybe that's what you're worth for that role, too? Almost every industry out there has it much worse than software when it comes to the 'race to the bottom'.
Or there could be a collection of people that decide to enter different industries because of this, causing a labor shortage?
Who can't negotiate? It's your fault if you can't/won't negotiate.
I'd posit that the reason finance pays more for engineers than STEM is because most of us think that the atmosphere at a finance company will suck and as a result they have a smaller labor pool (I've literally never responded to a single financial recruiting email).