Agreed. At the end of the day you pay X for job Y. Adding a "where you live" variable makes no sense in the context of the work required for job Y.
Common misconception but it’s not how markets work.
You pay whatever it takes to get candidates onboard, but you ideally don’t pay more than necessary. You definitely don’t pay everyone more just because one of your employees lives in SF.
This is more intuitive if you think of any other market you might personally operate in. Would you expect your local car mechanic to charge you twice as much as the other local shops just because they also have a location in San Francisco? No, you’d just go to the next mechanic who charged local rates. You aren’t interested in paying more than necessary and neither is your employer. It’s not nefarious, it’s just rational acting.
Basically: most tech companies don’t adjust the price of their product for the region they are selling it in, but adjust the salary of the people making the product based on the region they live in.
Correct, but you’re forgetting that labor is also one of the product/service costs for a company. They treat it like a market, just as you would if you were hiring someone to work on your car or house.
It’s called the labor market because it’s literally a market. Expecting companies to completely disregard the market aspect and just pay the maximum amount for everyone regardless of their actual cost is wishful thinking.
Some might say there's a power dynamic, and it's just an excuse used by a candidate to negotiate higher - but at the end of the day that is what I heard every single time, without fail, when someone wanted to negotiate their salary.
If that's the case, then it does definitely indicate to me that "where you live" is a variable, and an especially important variable.