This question is not as open-and-shut as the accepted answer suggests. There IS evidence that hydrocolloids, of which xanthan gum is one, improve flour water absorption:
As for why it didn't improve your bread dough, here are some quotes from Handbook of hydrocolloids, edited by G. O. Phillips and P. A. Williams, that may be relevant:
To hydrate properly the gum particles must be well dispersed. Poor dispersion leads to clumping of particles during mixing which results in formation of partially swollen lumps of gum (sometimes called `fish eyes'). Severe lumping prevents complete hydration and reduces functionality. Ideally, the xanthan should be dispersed and hydrated under high shear mixing conditions. Equipment such as a colloid mill, dispersion funnel or high speed paddle mixers are all suitable for preparation of xanthan gum solutions.
To this point, Cook's Illustrated gives more practical advice for home cooks:
Prehydrate the powder to create a gel that you can simply whisk into liquid in easy-to-measure amounts.
To make gel: Pour 2 cups water into blender. With blender running on low, slowly add 1 tablespoon (9 grams) xanthan gum to vortex. Increase speed to medium and process for 2 minutes. Transfer gel to airtight container and refrigerate for up to 1 month.
Another relevant quote from Handbook of hydrocolloids:
Salt concentrations greater than 1±2% in the water slow down the hydration of xanthan gum and so it is therefore recommended to hydrate the gum in the absence of excess salt.
In my experience, bread doughs are typically around 1% salt so this is probably not your issue.
In the end, there's probably no substitute for a controlled test, like you said. Feel free to report back and include your flour type, hydration level and salt level.