If I right click on the mixer system tray icon (officially this is called "volumeicon") and open alsamixer, I can see "MM" so it really is muted.

Ultimately the problem is caused by our good old friend, a race condition, between PulseAudio and volumeicon upon logging in.

The fix is to run the commands below:

pkill volumeicon
sed -i 's/^card=default$/card=pulse/' ~/.config/volumeicon/volumeicon
setsid -f volumeicon

Basically ensures volumeicon always connects to the correct audio card no matter if it started before or after pulseaudio. Yay!

Disclaimer: I have only done basic testing on this but it seems to have fixed the problem for me.