Arguments against location-based pay generally assume that all employees would be given raises to match the company's most expensive market.

Realistically, most companies aren't interested in paying everyone more just because some of their employees are in an expensive location. I would expect any location-independent compensation programs to move toward median compensation across locations, not upward toward maximum compensation in the most expensive location.

Existing companies like the FAANGs don't have a choice because they have a lot of customers in those locations, but younger companies adopting location-independent pay would absolutely be targeting median compensation rather than paying everyone top of market in Silicon Valley just because that's the maximum possible compensation they might need to pay someone.