Hiring engineering talent is hard

Hiring is hard, it's true, and companies badly want to do it.

But not at any price. At some price level (especially considering said price level has to apply to all employees, not just the marginally-hired ones), it's better to make due with the people you can attract than to up the cost higher to attract more.

Also, it's not clear that the overlap between the people that are most attractive to employers and the people who would be most swayed by remote-from-anywhere-at-SF-and-also-work-20%-less offer is necessarily as complete as the poster assumes.

Also, you still have to filter the group that comes along down to those who you would actually benefit from hiring -- which is actually the hardest part of hiring -- finding the good ones.

That said, if a vaguely-stable employer offered way more money for way less work, they'd probably get a stampede of applicants. So, if you're actually desperate for more applicants, go for it, it'll probably work.