I am not sure what are you arguing here. If you have people reporting to you then you are a manager and your manager, who manages managers might know your and your reports salaries. All I said that the first level manager, whose reports do not have reports of their own is unlikely to know anyone salary but his own.
>How's it supposed to work when someone comes to their manager and asks for a raise
Every where I worked, you (as an individual contributor)go to the higher up, who knows your salary with the recommendation from your manager, saying that you're doing excellent job or whatever.