You enable a certain amount of profit for your employer, regardless of what you do with your pay. Regardless of how much rent or mortgage you pay, and regardless of where you pay it.
Possible minor exception being employment tax?
Possible minor exception being employment tax?
Then why would companies bother hiring people in expensive locations if they can hire another developer in a foreign country for half the price?
In practice, companies that adopt location-independent salaries don't automatically pin their compensation to the most expensive locales. They pick a midpoint compensation that is good enough to attract remote workers who can't do any better locally, but they turn away a lot of developers in expensive places like Seattle or SFBA who know they can do better locally.