Often and without prejudice, people are dissatisfied with their pay when they feel it isn't commensurate with their efforts, or is distributed inequitably, or doesn't reflect the responsibilities of the job, or is out of touch with market realities. If you don't pay competitive wages, people will be unhappy and they will quit. But no matter how much you raise salaries, you won't generate motivation and job satisfaction, because job satisfaction is a function of the content of the job.
Look at it this way! Hire me to wash dirty dishes and pay me chickenfeed and I'll be unhappy and demotivated. But raise my wages to a princely sum and guess what — I'll still hate washing dirty dishes. But I won't complain any more about my crummy compensation. I probably won't quit; and I may even improve my attendance record (if you pay me my munificent wages on an hourly basis). What you have bought with the generous pay increase you provided me was not real job satisfaction. All you have bought is the absence of dissatisfaction. They are not the same thing. If you really want me to be a happy worker, you'd better change the nature of my work. And changing the nature of the work is the true key to motivation.
The message is clear: do everything you can to get rid of the things that generate employee's unhappiness; recognizing that no matter how big an investment you make you'll get precious little in return. All your money will buy is the absence of dissatisfaction. Listen up — you have no choice! You must pay people competitive wages, you must provide a healthy, safe and attractive work environment, you must give at least as good insurance policies and vacations and retirements plans as people could get working for the bagel joint down the street. If you don't, people will quit and you won't be able to hire replacements. But all you'll get for the fortune you spend in this effort is a bunch of people who have to search hard for something to complain about.