Seriously, what are you expecting workers to do exactly?
The only difference is the benefits of non-remote tech-hub work that have been driving the high wages in tech - concentration of talent, face-to-face communication/team-building, advanced urban infrastructure - are now gone. So tech workers will have the same amount of company choice, but can no longer benefit from tech hubs; tell me why companies are going to continue paying the same high wages again?
Concretely, if your work adds $300k/year to company revenue, it will at most pay you that much.
Of course, it prefers to pay you less, and to get close to that number it's best to be part of a big enough labor market that you can get job offers from several employers.
Here's the thing: In a mainly remote programmer labor market, that we seem to be entering, all employers in the entire US are in your local labor market, so that should work out fine.
What I just described is "supply and demand", with a bit of detail.
The bigger the labour pool, the worse deal you are going to get. You're now competing against the guy in Nowhere Town, this guy can do your job and he's willing to do it for less because he's never experienced an expensive reale estate market.
I run a small consulting practice. We are highly skilled and very experienced. We can often charge much less than our competitors because we don't have the overheads our competitors do. A 1 million dollar deal for my practice is worth a lot more than a 1 million dollar deal for Accenture. We can go down to 700,000 and still have over 90% profitability, Accenture will walk away at that price point because it's not worth their time.
If this was true, big cities would pay the lowest wages, while remote rural places would be where to go for really high pay.
I think the main thing missing from your model is that the employer pool is also growing.
The main thing missing here is that this is the tech industry where there was previously no demand in rural places, which makes the low supply in rural places irrelevant. Before the aggressive lockdowns across the country, tech companies didn't care about rural areas because the increased labor pool wasn't worth the compounding gains you get from a concentration of talent, face-to-face communication, and advanced urban infrastructure. Now they literally can't have that, they will give you a worse deal because they have access to a larger labor pool.
It's kind of absurd to suggest that increasing the labor pool alone will lead to higher wages. It's strictly worse for city dwellers who already benefited from an increasing employer pool, which is now offset by an increasing labor pool.
I think you’ve made a bigger over sight here though:
> In a mainly remote programmer labor market, that we seem to be entering, all employers in the entire US are in your local labor market, so that should work out fine.
What you would expect from this is a new equilibrium prices that is a) lower than the current highest paid region, and b) higher than the current lowest paid region. Which is a situation that doesn’t benefit anybody currently working in the large metros.
A worse (but likely inevitable) outcome would be if wages started trending towards a price somewhere in between San Francisco and Manila.