So if all us engineers' salaries went up, it wouldn't help. We'd just end up spending even more to out compete each other. (Well, I guess it would help push non-engineers out of the Bay Area, but is that really what we want?)
But new immigrant salaries are as good as american salaries in terms of how much they can push prices up; so hiring H1-B is essentially similar to a pay cut for people (same $$, higher housing costs); following this pay cut some existing engineers will leave.
In the end you just end up with replacing some old engineers with new ones through a costly lengthy process.
This is the kind of absurd logical games one has to play in order to not acknowledge basic economics of supply and demand.
And on the other side, NIMBY's in low-density areas like Menlo Park and Atherton killed the restoration of the Dumbarton Bridge Rail (also victim of a mysterious arson recently) and are delaying electrification of the Caltrain. The Dumbarton Bridge, for example, would allow people to live on the East Bay and take direct rail into Palo Alto, Redwood City or Menlo Park, and up and down the corridor.
I'd guess the answer is, marginally, hiring people is still good for companies. But combined with the lack of housing development, it's slowly but steadily making life worse for everyone in the Bay Area who doesn't yet own a house.
If it continues this way, eventually people won't move here without ridiculously high salary offers, and companies will be forced to expand in cheaper cities instead.