Back to the topic - (not SO) - I'd agree with some of the other commenters on SO that high-turnover isn't the engineers' fault; it's obviously a management issue.
Most engineers that I've worked with would trade a good work environment & office culture for more pay / "room to advance" any day.
Yep, if it's happening many times, it can't be blamed on the individuals. There's definitely a tendency among managers to do this though instead of looking at oneself in the mirror and assessing any shortcomings.
Yes. In addition, I wonder who in that organization benefits from the high-turnover of engineers. For example, in the question, the manager's boss had a theory that three new engineers were worth one seasoned one. Perhaps all of the seasoned engineers leaving is supporting his point, in a bizarre way.
Most engineers that I've worked with would trade a good work environment & office culture for more pay / "room to advance" any day.