Also, I'm not sure that everyone who makes the salary trade-off knows that they're doing so. Is a developer earning $35k/year thinking "I could earn more at another company, or in the Bay Area, but I like it here" or do they think they're earning a fairly average wage?
And someone who never thought to question their salary level is by definition someone who couldn't be conscious of any trade-offs that might be in play.
Is everyone aware? Almost certainly not. But if you ever had cause to look at salary data, I don't think you could miss it.
Another issue besides roots in moving is that higher wages always come with higher costs of living. I own a house where I live which has a lower mortgage payment, by far, than a small apartment in SF. Granted that comes with downsides: no decent curry, bars that can't make a manhattan, etc