That's messed up. Unless there's a separate component like local-cost-of-living-adjustment where you get extra for living in a high-rent area.
Cost of living between Mexico to San Francisco probably in the neighborhood of 4x, depending on which part of Mexico. 500000 MXN rounds to $25k, which is 1/4 of $100k.
Someone living in SF will have many high-paid opportunities so they have to match that.
On the other hand they know someone not willing to relocate won't have the same opportunities locally or with remote jobs, so they can afford to pay them less.
Again, if it's just the cost-of-living bonus (like, all our engineers get $80K, plus $X/month where X is average rent and groceries, plus Y% for taxes) then it's fine. Otherwise it's valuing someone less purely on their geographical location.
Edit: Also, really, overpaying so they might be unhappy? "We're giving you less money for your own good!" Presumably if they're a world-class engineer and can work remotely at one place, they can find another remote job, too...
That said, what's stopping remote engineers starting to work in expensive regions (say Vancover/Toronto) and then moving to cheaper regions (Saskatchewan/Manitoba/Alberta) for example - would salaries be adjusted every time someone moves around?
In my opinion, one of the biggest benefits of working remotely would be the ability to travel the world!
Gitlab people on here have previously said yes: pay gets adjusted when you move.
Let's face it. As an employee, you want to earn as much as you can. As a company, you want to make as much profit as you can, which means that you base your target pay on market rate (be it above or below market rate).
Market rate is set by the competition. Really it's "we're going to pay you enough that you don't leave to work for someone else", and that's it.
If an employer gives you a cost-of-living bonus for high-rent areas, the reason is that they're competing for you against other companies who do the same thing. The same applies to any pay difference based on locality, whether local or remote. It simply depends on who they're competing with for your services.
This isn't evil. It's how the market works.
Just saying that, aside from "well, we can get away with it", it's not that defensible.
OK. But I'm saying it's not wrong either. It is exactly how our economy works. Other large scale economic systems have not been successful. We know no better way of arranging things. If companies didn't compete, the economy would not be functional and we wouldn't be able to have nice things.
Our entire economy relies on free actors being able to buy goods and services from their choice of supplier, based on price, quality, or most other factors.
It's clear that this is required for our economy to function. Therefore it can never be "wrong" for some entity to do this unless you can identify some other unfair distortion in a particular case, but you haven't.
An employer not offering more in a particular region is just exercising this ability to choose, the general form of which we must grant to have a functioning economy.
If you want to argue that it's wrong, then the onus is on you to explain why the general case of free market competition should not apply in this case. But you haven't.