That runs completely counter to the basics of supply and demand in a perfect competition market. It would be market with far fewer (labor) suppliers, who could therefore command a higher wage, not lower.
Is the number of suppliers low because demand is also low or is the number of suppliers low because demand is high but supply is constrained?
A field that previously had a supply of labor in it "for the money" who all leave is indicative of the former scenario not the latter.
That does not lead to higher wages. That leads to low wages.
(There are a variety of reasons why this story is too simple and why I remain uncertain about developer salaries in the short term)
There is a broader question of whether having people who are in it for the money leave independently "causes" wages to go down (e.g. if you were to replace all such people with people "purely in it for the passion"). My suspicion is yes. Mainly because wage markets are somewhat inefficient, there are always mild cartel-like/cooperative effects in any market, people in it for passion tend to undersell labor and the people in it for the money are much less likely to undersell their labor and this spills over beneficially to the former.
Note that this broader question is simply unanswerable assuming perfect competition, i.e. a supply-demand 101 perspective (which is why it doesn't make sense to posit "perfect competition" for this question).
It posits durable behavioral differences among suppliers that are not determined purely by supply and demand which do not update reliably in the face of pricing. This is equivalent to market friction and hence fundamentally contradicts an assumption of perfect competition.
All of my developer friends in the gaming industry have had far worse working conditions then what I've had.
Your example runs counter to the laws of supply and demand too. You understand that wages will rise when supply is restricted, but you don't want to accept that supply will respond to the price signal in the form of more people entering that job market.
why then do they all have those interview rounds where you have to talk about what really attracted you to work at this boring company and how you would love to do that kind of work? They evidently haven't gotten the memo.
I’ve gone through the BigTech guantlet successfully. Even then I showed I cared about doing my job well and competently.
I have purposefully thrown nuggets out during interviews letting companies know that I had a life outside of work, I’m not going to work crazy hours and in the latter half of my career, I don’t do on call.