Because they don't have to. Peoples' expectations of salary are likely in line with their local job markets, so even great developers living in a rural area will likely either accept the average base salary for their locale, or move to SF for the larger payday (and all of the expenses that come with it).
The only real reason for zip-code adjustments would be some labor-related, CONUS, or state laws that I'd be unfamiliar with.
If I deliver the same business value as a Silicon Valley engineer, and you're paying me less, I'm getting arbitrage'd.
We have a few options. 1. Negotiate better salaries. This is only possible when the purchasing price of the next best developer also increases. This already happens in the Bay area market. It is happening slower outside the Bay. 2. Start own our business. We hire the best developers at a higher rate which raises the market rate for a developer. This is happening in the Bay but much more slowly outside. 3. Move to a better geographic market. A lot of people who can chose this.
Developers probably can't exploit/correct this market because we have no way of directly/quickly making profit from the price difference.
I would love for developers to capture a larger share of the value they create. Does anyone have any ideas on how to restructure the incentives of the market to make this happen? (Cooperatives?)
I mean companies that you don't transition to remote but start off as remote and are treated as a first-class employee the whole time and that the workflows are remote-friendly.