In the long term, they will lose out. It's like Tinder vs your local dating pool. Why limit your options to a very small subset of people, when better options are just a tap away (ssh tunnel away)?
Employers like control. Relationships (your example) are pretty similar actually.
Why would someone settle for a partner below their standards? Simple, they enjoy having control in the relationship. Why would an employer settle for a sub-optimal employee? Dependability and reliance.