I've experienced this first hand. Obviously it can happen to the extreme when you work alongside contractors, but that's fair game and to be expected. When it happens with full time employees it can be frustrating.
Back when I used to work for a company in a support role we were a team of 4. One guy had been in the team for years "from the start" as he transferred across during an office move. He was on some "special" pay grade which basically meant he did not fall in to any normal pay structure and was protected. He'd been inheriting pay rises for years and was earning way more than everyone else on the team but did the worst job. He sat there doing the minimum required and was rude to customers. He was also a grass and pointed out to management whenever anyone was late or did something that annoyed him. He felt he was above all of us.
After I had been there just under a year, I went for a promotion as did all 4 of us. I got it and it made him even more bitter. He remained in that role for a further year then went on long term sick for like 6 months. When he got back they finally saw sense and paid him off making him "redundant". They replaced him with 2 juniors who's total salary probably added up to his single one. With the redundancy on top, the company wasted thousands on him. After he was made redundant he never got back into IT. He was a classic example of someone that fell into a roll that he was not qualified to do. He had no interest in evolving or moving with the times. "Not my job". Well that attitude ended his IT career in the end.
The other one was a more recent one. I left a company and during negotiations and talks with other staff, I happened to find out how much one of my team were earning (I was team lead and he worked under me). It was significantly more than myself. He had been there again years, quietly plodding along in the same role (redefined and renamed several times over 10 years or so). He was competent enough (ish), but was very much a work from written procedures guy. Could never think outside the box. Took the mick with time off and "work from home". He'd not had a promo in 10 years. Again he watched me come into the job and get promoted within 12 months whilst watching and not even bothering to apply.
Moral of the story? Some people are just content to get by and do as little as possible with minimal stress. Nothing wrong with milking it I guess and taking those pay rises gradually.
The problem with this approach is you tend to fade away and leave yourself with a lack of skills when you finally end up needing a new job.