Only now you're competing against everyone in the world, not just everyone in your region. I can't see how this is good for the developed world.
Of course that only works if people all do the free trade thing. US/China broke down because the US was globalist and China was nationalist and protectionist.
While wages may drop for the west, that should be more than offset by the rate at which goods and services become cheaper and more plentiful. Protectionists often look at only one side of the equation.
So people are already reaping the benefits of cheaper and plentiful goods and services.
The last 2 years have begun to show the massive benefits of this. The US tariffs have led to a situation where today the US has the largest net trade deficit since 2006 and is paying subsidies of over $40bn simply to keep farming afloat in the Midwest. And there has been no gain in jobs within the US or any benefit whatsoever to those tariffs. The US consumer is only paying a lot more for products they were paying a lot less for a couple of years earlier making everyone here functionally poorer.
In the context of free-trade however: How would you handle the intellectual property issue, can you still have free trade with a state that does not treat IP in the same way?
Many companies have tried to move their development to India for example (I have a second hand anecdotal evidence from one) and it is not as simple as it seems.
There are huge cultural differences, meaning what is considered not acceptable in the west is common practice somewhere else like getting degree for bribes etc. You have to know how to navigate in such environment.
You may think that because your company employs people from multiple cultural backgrounds then the environment of the company is multicultural.
In reality the culture of the company is most likely following the protestant work ethics (it is my generalization, there are of course variations and exceptions).
What's interesting is that there are places where people are paid much less because there's so little demand for labor there- if you're the only employer of software developers in 100 miles, you can pay a pittance. And at the same time, places like Silicon Valley pay a premium for labor because there's a shortage (let's not discuss the reasons around that- I don't feel the need to drink).
When the market is merged, it will be leveled. And I cannot imagine those who stay in San Francisco are going to benefit. But the brilliant developer who has been paid terribly at a small software firm in the middle of no where, who can't leave for other reasons, that developer is going to see their fortune changed for the better.
Places where current wages are low are going to see wage increases (because of higher demand / lower supply), which in turn will lead to an increase in costs of living.
Places where current wages are very high are going to see downward pressure on wages (because of lower demand / higher supply), which in turn will eventually lead to a lowering of costs of living.
Obviously that's valid in the "fullness of time". How long it can actually take for this new equilibrium to be fully realized is anyone's guess.
I'm not sure that there's so many SW people outside of the big tech hub areas so as to make such a difference. If they are more uniformly distributed across the country, their impact on each community will likely be negligible.
Companies were definitely overestimating the need/benefit for this locality but that doesn't mean it is now zero.
If there is any mass movement that is gonna happen, why would it be from big expensive US city with a lot of different entertainment options to a smaller, still fairly expensive US city with almost no entertainment options as opposed to significantly cheaper non US large city with a lot of entertainment options?
Why wouldn’t people move to someplace in Mexico, or Brazil instead? If time zones are not an issue, why not move to somewhere in Asia instead, like Bangkok, Singapore, Kuala Lumpur, etc.