There's such a flood of qualified labor that employers can afford to arbitrarily shrink the pool of applicants without significantly worsening their outcomes. Their behavior indicates that just the top N% of the market is enough to fill the needs of all selective companies. "Top" can be a semi-random filter, since the pool of basically competent people is much deeper than N.

(There's also a much larger flood of people who aren't qualified, which definitely complicates the process.)

All else equal, if employers simply stopped rejecting qualified applicants for arbitrary reasons, they could solve the "shortage" overnight and pay much lower wages that developers would still accept. But all else isn't equal. Their past decisions shaped the playing field, so now external-but-related factors like the housing market and competitors' responses limit their options in practice. They can't just take a bunch of people and drop wages, even though they "could", without disrupting other things that aren't worth disrupting.

Edit: Too late to delete, but this is not a good analysis. Companies are clearly feeling some pressure to do something, but there are too many unknowns in this to draw the conclusion, and a ton of factors I've ignored.