My argument is that if you pay less than your competitors, you can't expect to hire and retain the best people.

edit: More to the point, I think this idea that people don't work for money is one pushed by management at the expense of the workers, and when I hear employers putting that out there, I assume those employers are... bad to work for, because they think that by being manipulative, they can get you to work for less.

Usually, those employers have less pleasant cultures and pay less than employers who simply pay more than their competition.