OK, as someone who's heard this line before, and as someone who's done hiring at a variety of levels, I have a couple thoughts.
1. This reads a few different ways. Either 'We may be open to talking about what this position is actually worth to us at an undisclosed later date that may or may not ever materialize.' having heard this before, this is usually what is meant. Could also read as 'You're not not going to be paid what you're worth to us unless we like you as a person', or maybe some other, less charitable interpretations.
2. From a hiring perspective this reeks of "we can't find good applicants"/"no one wants to work anymore" mentality. If you want good applicants, decide what the role is worth to the company, shop around with comparable roles and make sure the responsibilities-compensation line up at least in your area(better yet in the industry and comparable industries), then offer that. You'll get more interested people and more qualified people when you ditch the 'we'll start you on a lower wage' mentality. When your workers aren't living hand to mouth you'll find they do better work.
It's YOUR JOB as a hiring manager to determine if someone is going to be a good fit, it is NOT your employee's job to work at a lower wage while you try to figure out if you like them enough or not.