You have that backwards. Better performance/value => higher pay. Why should we pay people more if they suck at their job? They should be fired.
If you fire them and pay is the same why would you expect higher performance from the new person? You said it yourself, the problem exist everywhere now. You get what you pay for.
Yes, fire them and hire better help, even if it costs more. Giving people a raise doesn’t automatically make them better.