You're conflating ramp up time of business domain knowledge with skill level. Yes, a sr. dev will come up quicker than an entry because they have the wisdom and experience of past companies, but all devs need some sort of ramp up in an environment like that. You don't hold back pay from your sr. staff until they've ramped up, right? Of course not, they would take a better offer elsewhere. As would your entry levels that have now risen to mid-levels once they get the chance.

But all the same, any company should be able to make any dev useful from pretty much the very beginning. Whether it's rote refactoring work, research tasks that are too time consuming for more sr. folks, tasks that are in the domain of data entry that can be automated with simple scripts, low-hanging fruit bugs, etc. It's a failure of the org not to properly utilize the abilities of a smart person who knows how to program.