Why is payment tied to location anyway?

It never made sense to me that companies tie the payment to the location where the employee lives.

If anything, discourages top talent from applying to the job openings of said company, because the practice seems discriminatory.

The boss of where I used to work he once told me: "The wages are ZIP-tied." (as in, per ZIP Code related); I asked him why, but he was not able to explain, he attached himself to it like an old adage you don't need to think about or challenge from time to time.

Posts like [0] make me think why isn't this the rule, rather than what it seems an exception.

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[0]: https://news.ycombinator.com/item?id=31601926