That's nuts. You're more proficient and efficient with that experience, which should compensate for the wage difference between you and a less experienced colleague.
The company will eat itself to death, but that will take years, and you'll have left to do the same to other companies, using your "success" at this one to prove you need an insane salary at the new one. Repeat, over and over.
Unfortunately a large part of their business model relies on fulfilling their commitment to seat engineers on programs as promised in the contract they signed with their customer, i.e., the USG. Filling seats is more important than achieving quality engineering outcomes. There are three big-time losers in that equation: [1] the taxpayer, [2] the "lifer" employee, and [3] the warfighter.