Couldn't disagree more. Want to see employees work hard and be motivated? Give them equity that is a meaningful amount. I know it works for me... I work 10x harder for my current job where I have equity and stock bonuses than at previous jobs that were all salary.
You are right - there is no reason to prefer equity over cash. Cash is better, if the company could afford it. But many employers cannot afford it now, and they offer equity instead.