Two immediate thoughts:

One key there is ‘savvy manager.’ I’ve met too many who would see a line item for interviews and say ‘why is this so high? Don’t the HR team vet these people. I’m cutting the budget for interviews. Hey, Direct Report, I just saved the company another several thousand dollars a year. Aren’t I great?’

And neither way explains a reason one would do MORE interviews if candidates were paid than while they were free. The cost increase for doubling the number of interviewees while we still aren’t paying them is ~$0. You could centuple the number of interviews and 100*0 is still 0. There is still no incentive to do something MORE after it has a cost. If you want to hire the right person, you’ll do as many interviews as it takes, until the cost of interviews grows beyond the expected cost of hiring a suboptimal candidate. That’s true now. Why would it be different then?

Find where the rainbow touches the ground. Or, wait, that’s leprechauns.

Think paintball guns that shoot the absorbent gel balls used to fill vases for cut flowers.

It’s a self-perpetuating system too. Bad managers create awful workplaces, where people who come in wanting to do good things are punished for trying until they become slackers and slackers keep going as long as the managers’ ignorance allows. Then the shmooziest slackers are in perfect position to take the manager’s seat when they go.

How would it make them go up? It currently costs zero, and adding the cost of that pay doesn’t change any other expenses for recruitment contractors. Even if they don’t view it as a significant cost relative to the full HR department, they’d still either ignore it and maintain current rates or view it as an avoidable expense and minimise it. I don’t see a mechanism for increasing them unless the law gave them some backdoors to, say, pay below standard wages while asking candidates to do work as part of the interview, effectively turning them into sub-minimum wage workers for businesses where that might be useful.

The point is the difference between the slacker on the shop floor and the slacker in the back office is just the job title, not the approach. If you can let other people do all the work while you collect a paycheck, you’re winning as a slacker.

Now, you might think, ‘but won’t they just get fired once their direct report gets wind of what they’re doing?’ The answer is yes, but if their direct report is also slacking, when would they see the employee’s work to know they need to be fired?

And if they’re a good liar, the slacker can say ‘Oops, yeah, I fucked up by trusting Soandso with that. I’ve fired them now so it won’t be a problem anymore.’ Then they burn that employee/contractor and keep collecting a paycheck. Depending on how lazy/stupid/gullible their management is, this can be repeated for years.

The world of business is FILLED with people more interested in their own leisure than the company’s benefit at every level. Everyone knows about the slackers making minimum wage but every time you hear a company has hired a contractor, that’s a manager looking at the choice between A) putting in the time and effort to hire an employee, train them, integrate them into the team, and manage and support them as they do necessary work, or B) just writing a check from company funds to the contracting company and taking off early to get a few beers with their buddies, and wouldn’t you know it, somehow it seems like the answer is always to spend the company’s money.

If you aren’t qualified and they have to pay for every interview, either you are being honest on your application and they aren’t interviewing you or you’re lying and you open yourself up to charges of fraud because you took money under false pretenses.

If companies have to pay for every interview, I doubt they’d do as many so you’d have a hard time getting enough interviews to make that viable.

A great many things that would be good for society are not feasible to be the first/only one to do. The world would be vastly safer if there were no nuclear weapons, but in a world where other nations have them it becomes self-negating to not have them. The only way to get the social benefit of all companies doing something is to legally mandate it so there is no disadvantage.