Not necessarily. Employees aren't always aware of how much other companies pay.
I define underpaying as "other companies in the market would gladly poach these employees". But just because there are tons of companies willing to poach them, doesn't mean that the employees know this information.
That definition breaks down big time though depending on the nature of the business.
I know one of my senior engineers could get more but I know he'd 1) work more hours, 2) have less freedom, 3) have less flexibility.
I can't pay him what others would pay because it's a consulting business and it's getting harder and harder to get the high rates for the work we usually close.
I'm not screwing him. I make it up in other areas which is why he's still with me.
But he's suggested his market rate is like 30% more when I know the hours he'd have to put in for that are at least 30% more.
So other companies would gladly poach him but it's not apples to apples, and I'm not going to play the game of "high salary" and then squeeze my people to make it make sense.
I define underpaying as "other companies in the market would gladly poach these employees". But just because there are tons of companies willing to poach them, doesn't mean that the employees know this information.