I think there are two main reasons. 1. Internal process: the budget/process for promotion and pay raises are probably relatively fixed for mid to large compani

I think there are two main reasons. 1. Internal process: the budget/process for promotion and pay raises are probably relatively fixed for mid to large companies, so there isn't much room for managers to navigate even if he/she champions the salary bump. 2. More cynically, there is also friction for an employee to leave their current position (interview, potentially relocate, risk of new job being bad fit, etc). And this friction manifests as the pay gap between market rate and salary. As a corollary to this, for an employee with a competing offer, this friction is removed and the company is forced to re-evaluate the pay. But there may not be anything the manager can do. See #1.