I've looked at Gitlab's calculator and decided not to apply for a job there as a result. As a potential employee it does feel quite unfair that someone else doing the same job might make twice as much money.

If you put yourself in Gitlab's shoes and imagine hiring people, it does make some sense. A couple years back I remember reading articles about the oil boom in North Dakota. People were flooding into a remote area that was lacking all sort of services, so next thing you know rates shot up, even for mundane stuff like barbers or auto mechanics. Of course, I don't want to pay twice as much for a haircut or oil change just because some folks in a boomtown a thousand miles away are charging those rates.

Of course, my hair can't be cut and my oil can't be changed remotely, but a REST service sure can be implemented from a thousand miles away. It'll be interesting to see if GitLab sticks with their approach long-term, as I do believe (anecdotally) they are missing out on good talent in second-tier cities.