I agree with most of your comment. One thing to note though is the whole scandal where Steve Jobs colluded with other firms into a non-poaching kind of agreement, essentially distorting the market. So that is a possible outcome as well.
If it weren't for the relentless attack on wages via wage fixing cartels, visa abuses, outsourcing, etc. we would likely be seeing the very top engineers making close to $1M per year.
Far from that "hurting startups" it would be a benefit to all tech workers as wages would rise across the board.
This framing of "hurting startups" is a euphemism for "hurting investors" or "hurting the wealthy". It's roughly the same complaint as when they claim that there are "tech worker shortages".
They want to pay employees pennies on the dollar, full stop.
We are seeing the very top engineers making close (or over $1M a year)... just that the percentage is quite small. Like a handful of people at big 5 tech, and a few in finance.
I would say that it's kind of the opposite. Having high developer costs means that you need investors in order to scale. This helps investors because it means if you want to succeed, you need to get investors, which they can use to their advantage to get more desirable terms for them and their rich friends.
