chicago has done all that. california has a unique asset that enables it to enact all kinds of offensive tax etc legislation: climate.
I would have gone to Chicago if the job offers there meant 200k+ at big companies and 100-150 at startups (+options).
Climate matters a ton for me. I live by Chicago but am considering taking an effective pay cut to get the bay weather. Running is my hobby, and running in blizzards is getting old.
People stay in the Bay Area because of climate since you realise you can be outside nearly year-round. And in terms of well-being, if you spend more time outside, there's a good chance of being healthier and happier.
As someone who works for a Chicago based startup I think if you adjust those salaries for the cost of living they are very reasonable.
[1] http://www.bestplaces.net/cost-of-living/chicago-il/san-fran...