It hasn't actually always been the case and the real issue is the false advertising that you actually have equity. If my equity of 1% was real then I would get value as the company grew but the reality is that options/shares without some sort of exit is worth 0. Founders and the C suite often (always now?) get 'internal' raises meaning when a new round of funding hits they get to sell but nobody else does. This, to me, completely destroys the concept that equity is an incentive to build the company and means it should -never- be used as part of a hiring pitch since the people pitching it, founders and the upper management, obviously don't believe in it themselves. If you really want to see if the leadership believes in the junk they are telling you then ask them to put in writing that internal raises are available to all at the same percentages or they are available to nobody.

Honestly the dilution thing never made much sense. It's penny pinching your most important employees.

If you don't want your employees holding shares, then tell them to sell their shares during the seed rounds where you will give them a chance to liquidate and renegotiate the shares allocation. Your employees now have a strong incentive to make it to the next seed round and the bigger the round the better.

The current system appears to be suboptimal for both parties. Employees receive options as replacement for a lower salary, but the founders don't actually want to give up control over the company. This means you now have the worst of both worlds. The employees know they will get shafted and value the options at zero, which kills the productivity incentive. The founders have given away options for nothing and now need to engineer a situation where the options are as valuable as the employees think they are.