So yes, it's true that your cost of living in rural Italy is less than it would be were you to move to an apartment in Palo Alto, and that there will remain a surplus after you have accounted for those expenses. But I'd prefer a world where that surplus was captured by you rather than J. Random Software Company.
After all, you're the one who has to tolerate all those walkable streets and good cheap wine day in, day out, to live there. Gotta balance that somehow...
> companies would find equally qualified people for less money
That's where you're mistaken. The software industry has spent the entire time between 1994 and today hiring every one of those people all over the world. There are only so many of them left who haven't figured out their true value. You certainly aren't going to build a Facebook off of the remaining people who are willing to work for $10/hr. Anybody who is any good will demand a market rate. And that market rate is set in the Bay.
Or try applying that at a micro level, and renegotiate your salary every time you move in a city because your rent has changed, or you finished paying your mortgage.
Your living costs shouldn't matter to your company or people who own you money in general.
No, the point is that, obviously, company do try not to pay more than they have to. They know that if you live in a cheap location where there may not be too many opportunities you will likely accept a lower salary so that's exactly what they do. It's a cost cutting exercise.
Obviously the counter point is that if everyone WFH then why would they bother paying SV salaries in SV or anywhere else? Just drop salaries across the board and cut SV people.
What irks me is the ego, people thinking they're really worth a fortune....companies where (and are) fighting for talent, true...but now that remote is unifying the market salaries will raise where they were too low and high salaries will go down where they were too high. We're just hearing the denial phase of the high salaries people.
Therefore the salary should stay the same wherever I am located.
If we do what the egocentric people here want "pay me 250k a year because that's what I'm worth" then only USA based companies would do software and everyone else in the world would be growing tomatoes (as they seem to think).
How would a company in India compete with that?
If you are earning a silicon valley salary and pretend to move anywhere in the world and keep your salary because "that's what I'm worth" I have two news for you: 1) it won't happen, companies are not stupid. 2) you have a big ego problem.