It is absolutely convenient to be able to retain talent for as cheap as possible. Just like it is convenient to pit two suppliers against each other to drive costs down.
Quitting because you don't get a raise doesn't change anything unless you have an alternative that will pay you more. In which case, that alternative is a negotiating piece independent of a coworkers salary.
If you leave, even if you are leaving to a worse salary, you are hurting the former company. If that company considers you to be worth whatever they're paying you (read: they can't find someone better for less) than they will give you the raise rather than let you go. All you need to know is the maximum amount they are willing to pay you, which you can then negotiate for.
Quitting because you don't get a raise doesn't change anything unless you have an alternative that will pay you more. In which case, that alternative is a negotiating piece independent of a coworkers salary.
Long story short, have alternatives.