If everyone actually is operating at a high level -- or at least enough to make a curve difficult -- keeping people under-titled is just a great way to allow your high performers to become discouraged and leave the company.
Titles, in my mind, reflect duties and responsibility rather then level. Not everyone can be in charge of the same things and have leadership responsibilities...therefore they cant all be staff engineer.
They CAN all be top performers at their responsibility list...
To me, "in charge" is a dominance relationship. It imposes artificial scarcity. Leadership and responsibility, on the other hand, aren't zero-sum quantities. I think one of the best things you can do with junior people is to find things for them to lead on as early as possible.
Salary isn't the only thing people covet. Titles and responsibilities are also coveted since they increase future earning potential. When people don't feel that they can get them, they leave.
Neurotypical humans all crave social status. The higher expected future compensation is a nice bonus, but it's the status that draws people to higher titles.
They CAN all be top performers at their responsibility list...