You seem to believe that Google et al. are overpaying their work force by a material amount

Absolutely!

Show me the incentive, I'll tell you the outcome.

The accounting rules and tax code and financial reporting and management incentive schemes all conspire to make it seem to those not paying attention as if paying with equity is cheaper than paying with cash. But it isn't. Since there is a very large and inappropriate bias in favour of the practice, way too much of it happens.

If all of the ways in which the tables were hugely tilted in favour of equity comp and against cash comp were removed, making it a wash in terms of cost to the shareholder/tax/reporting, then any remaining equity comp would be the carefully considered best decisions of management. They aren't, so they aren't.

Tell the boss he can hire way more expensive people without the full cost ever showing up in the statements or being visible to shareholders or affecting his bonus if only he does it in a certain way, which way do you think the average boss will jump?

Jim