I was dumb 20 years ago where I thought exactly like you. Also, this kind of thinking is generally coming from people with lack of self-confidence.
I've been on both sides of this, and I saw in the last 20 years and continue to see how this works. Now, I'm on the hiring side for the last 7 years, and there is no way this push down wages, in fact it is exactly the opposite, this pushes wages up. I prefer pay more to bring someone very good, than pay half to have someone semi competent. If I restrict my hiring locally, I'll mostly get low quality workers, the market is satured of low quality which will push wages down, the very good ones are very difficult to hire.
I've been on both sides of this, and I saw in the last 20 years and continue to see how this works. Now, I'm on the hiring side for the last 7 years, and there is no way this push down wages, in fact it is exactly the opposite, this pushes wages up. I prefer pay more to bring someone very good, than pay half to have someone semi competent. If I restrict my hiring locally, I'll mostly get low quality workers, the market is satured of low quality which will push wages down, the very good ones are very difficult to hire.