In my experience (nearly 30 years playing in bands, mostly originals, everywhere from bars to major venues), there are three basic motivations for playing bar-type gigs. These are not mutually exclusive and many bands may be motivated by more than one of them, but roughly speaking, this is why people put in the time and energy it takes to do a bar gig:
1. Enjoyment/artistic fulfillment/meeting chicks/hanging out with friends, regardless of financial reward.
2. Skill development, making connections, getting exposure, with the hope of long-term financial reward, but not much concern with getting paid for the specific gig.
3. The fee for the specific gig.
Bar owners, of course, don't care which of these three factors is motivating any particular band. They just want folks to come in and drink. So naturally, all else being equal, they will book bands in categories 1 and 2 who are likely to be willing to play for less. You can't blame the bar owners for that.
Similarly, it is pretty silly to criticize the bands in categories 1 and 2, or accuse them of "stealing" gigs, just because they have different motivations from the bands in category 3 and, therefore, are willing to work cheap.
Also, as a side note, in terms of quality music, I'd guess (although obviously I can't prove) that the bands in categories 1 and 2 are more likely than the bands in category 3 to produce interesting, original music.
Now, to be fair, all of the above applies to original bands. I've never been in any kind of cover band scene, so perhaps things are different there. Although, even in the cover band scenario, the fact is that some people do cover bands for a hobby. If you want to get paid for what others do purely for enjoyment, you are facing an uphill battle.
Keep in mind, most people in the world have jobs that nobody would do for free because their jobs are not a whole lot of fun. If you are lucky enough to do something inherently fun for a job -- like playing music -- then you just have to deal with the fact that you will be competing with hobbyists. You need to get good enough and popular enough to make it worth paying you rather than booking a hobbyist for free. Nobody owes you that and nobody said the world was fair.