Which would be perfectly fine if you made this completely transparent and made the same information available to your applicants. Them not knowing the market rates (at least not even remotely as accurately) puts them at a significant disadvantage and you can't expect that most company won't exploit because it would be irrational to do that.
It makes me wonder how it would affect salaries if companies were required to make the salary distribution public for all their roles. So you knew both the range where you were applying, as well as at other companies.
And also how that would interact with unionization. E.g. would it make collective wage bargaining less necessary to some degree? If workers felt they had the data to know they could bargain individually for more money?
When you don't know what the market is paying, you're liable to lowball offers and refuse to raise them, and not get the employees you want.
If you know market rates, you can provide reasonable first offers, or have a more accurate idea of how high you should go.