It's like this because of short-sighted profit obsessions.

Employers literally think, "Why should I give them raises if they're already here willingly working for their current wage?"

They extend better offers to new hires because no one will start a job for what they're currently paying people. Most of those people are in a position where they feel trapped. They don't have the savings (or are too risk averse) to move somewhere for a new job, they have leases, medical issues for which they fear a period without insurance (which is why insurance should not be tied to employment). And so on and so forth.

The result is a loss of talent, but since higher-ups so often believe themselves to be the only true talent, they rarely fear that.