That makes no sense because, presumably, the alternative is to have no-one. If you don't hire someone because you are worried about the team, you don't need to hire anyone (this risk is, also, not avoidable anyway...if your product is so fragile, the risk isn't making a hiring mistake).

Most small to midsized organizations would prefer to deal with false-negatives during hiring (missing out on good talent) than the issues of false-positives (bad hires). Often times (not always) no one is preferable to a bad hire.

A bad hire can set everything back significantly more. Not only do you have to deal with new missed deadlines or poor quality work, but you often have to deal with the fallout with team members. Plus you're using up a lot of management/leadership hours dealing with it.

The impact is even more important the more senior the role. Hiring a bad manager or lead can impact way more than hiring a bad fresh-out-of-school grad.

I'm leaving my current role due in part to them not hiring other devs efficiently, resulting in a long-term unsustainable workload and everything that it entails.

The final straw was during a meeting when it was brought up that they were using take home projects to evaluate candidates. We're drowning in work and you're delaying us adding resources AND wasting bandwidth on take home projects? Not to mention wasting that candidates time and contributing to the "all hours" mentality that made the job miserable for me to work in.

I think you'd be surprised. For example, with the wrong hire, one person with bad behaviour could frustrate everyone else on the team to the point where no one wants to work on the project anymore. This could lead to the whole team feeling resentment for one reason or another, and eventually leaving. Now you're in need of a lot more devs.