The reason is pretty easy: You understand the value of your workers better than a random employer, because they work here. You know when someone is a bust, and when someone is a star player. If you don't give raises to your best people, they are the ones that quit first, and when people quit, they don't quit one at a time: If I get a major raise by changing youbs, you can bet all the coworkers that I respect will hear about it, and I'll want to take them with me.

I suspect that losing a high percentage of your best employees all at once because you are paying them quite a bit less than what you'd pay a worse replacement is a bad thing you want to avoid.