Seems to me (most) unions and old-style corporations reward seniority because they are captured. (Roughly speaking) the old-timers stick together because they

Seems to me (most) unions and old-style corporations reward seniority because they are captured. (Roughly speaking) the old-timers stick together because they can and because there are old-timers. And few people get promoted because there is only a very narrow path upward (say, 6-10 lower to a ground-floor supervisor, 6 of these to a higher rank). That necessarily creates a very thin path up. And there is space up only when the previous person is promoted or leaves. There is respect for the skill of a senior employee when it has been proven but respect will only buy you so much. Mostly that skill is put to good effect without massive salary change. There is nominal seniority-based salary increase because that's affordable and easy to manage - and is captured. That is, this salary scale was designed by the previous seniors. Same for promotion order and layoff order. Seniority then becomes a way to "force" loyalty: If you jump, you may not be one of the top dogs who think they have captured the system. No need for (much) higher salaries if the staff themselves support seniority.