This is how the wealthy class really keep people from moving up. Your pay is forever tied to what you used to make. It's hard enough to break the circuit in your mind, it's near impossible to do so with your employer.
At my current employer, they offered me a 10% paycut to convert from contract to FTE. I could not afford that, but I also can't afford to be out of work. I pushed back gently and eventually agreed to converting at the same rate. I knew other people in the same job were making at least $10k more.
The next guy to convert, was able to negotiate harder and I believe he ended up with a higher rate, despite making less then me as a contractor. He used the knowledge of my pay (and my name) to negotiate, which I would never do to someone, since I started at the bottom. This impacted my relationship with my boss.
The company did later give me a pay correction of about 5%, after 2 other team members quit for higher paying jobs. One of whom was making more then me and one who was probably making less.