I think you're missing the point. No one dreams of paying developers $10/hr to live in Detroit. The salaries are high legitimately. But the quality of life per $ in SF is questionable. I have a friend who manages 500 engineers and can afford a 3rd story walk up loft next to an elevated freeway.
In San Francisco, your friend likely manages a sweatshop. The engineers on the floor are the high-tech equivalent of the immigrant women working the rows of sewing machines in a Chinatown clothing factory. The manager is the guy who sits in the little room on the side watching the floor to make sure no one takes too long of a pee break. Today's high-tech sweatshops are clean and have toys in them, but the essential economic relations are the same.