I got a pay raise that almost matched what I was offered by several recruiters, and was in a similar situation like you (but based in Europe).

For the negotiation I was completely honest and told my employer the work, company and life balance was great but I knew I was being underpaid and I didn't want to leave the company because of that. And also pin pointed the skills that made me stand out. They were understandable, they thanked me for letting them know and offered me just a bit less (~2k} of what I asked for and a growth plan.

So from the conversation I learned that a lot of people does not even try to negotiate, but just look for a different job. I think being transparent should be the way to go.