If people were truly paid for what they did and not where they were, this would probably exclude most Bay Area people since they're at the top of the market. Perhaps your company has adjusted to the normalcy of SF rates?

OTOH, location matters a lot. Otherwise your company wouldn't be in the Bay Area. Centers of gravity are a thing. Why not pay for location? Even if an employee is remote only, if they network well where they are, it's worth paying for location.