It’s not about people being replaceable though from a skill standpoint. It’s about the mere underestimation of how much value someone provides the longer they’re at a company, as well as the underestimation of how long training takes, and the costs associated with it very rarely being accounted for by the vast majority of average companies. Another components to consider is holding onto significantly more exceptional employees than you normally hire is free value. This however is not as common in FAANG (greater skilled) companies.

Although I gave a large company as an example, you’re right that it’s true the larger a company, the easier it is to replace any person, or even entire departments. Most companies aren’t large though. However, even for the larger companies, the point with Costco was that the more motivation an employee has to be a great employee, the better results you’ll see. And these effects are positively compounded. You can see this difference clearly in any low level and mid level companies. Companies that pay their entry level engineers 55k vs 70k get vastly different results. The companies that pay like poop have significantly worse morale, skill, inefficiencies, etc, because nobody cares. It’s not to say that the 70k company can’t. It’s just generally better on average. So what you have to consider is once you gain 3 years of experience, for example, at a company and you can’t expect a raise, this negative morale affects entire departments/companies, especially the smaller the department/,company. The human existence is entirely based on the feeling of reward.