The root cause is an open argument but I think one of the causes is that you get a demonstrably lower quality of employee because the pay can't be negotiated, and it's pegged so far below market it's insulting. The salary you mentioned is half that of the median developer salary in the US. If you can get into FAANG as a new grad you're looking at 1.5-2x the median. I'm not super familiar with UW's scaling system but I have to go to what appears to be the top level (ES10?) to get anything approaching a reasonable salary, and it's still less than entry level FAANG.
I used to contract for state government. They used contractors for all the "real development" because the developers on state payroll making $40k/yr were wholly unqualified to write any code. So they paid a contracting firm $80/hr to get someone making $100k/yr to come in and do it while the state employees managed the project and supervised the contractors.
If the government could just negotiate individual salaries for developers, they could pay them twice as much, fire the contractors, and get the work done for roughly the same quality, and cheaper.
I used to contract for state government. They used contractors for all the "real development" because the developers on state payroll making $40k/yr were wholly unqualified to write any code. So they paid a contracting firm $80/hr to get someone making $100k/yr to come in and do it while the state employees managed the project and supervised the contractors.
If the government could just negotiate individual salaries for developers, they could pay them twice as much, fire the contractors, and get the work done for roughly the same quality, and cheaper.