Google’s profit clearly has to do with salary because salary is a negotiation between employees and employers, and “my work allows you to make $x more dollars than if I hadn’t done the work” is a basic tenet of salary negotiation.
But this is a negotiation. If Google moved to a lower cost-of-living location, they’d be making themselves available as an employer to new employees, for whom their current locations are undesirable. So if there are other potential employees who are willing to do the work for less salary, Google has the option to hire them instead.
Sure. But negotiating for a piece of the action comes in the form of deciding on stock options and grants. Salaries don't go up and down with profits.
It objectively the case that salaries vary with profits. Are you just saying you think they ought not?
If the company is losing money, you can bet raises will be harder to come by. When Facebook was poaching a lot of Googlers in the late aughts and early teens, base salaries went up a bunch to make the job more competitive. But if Google hadn't been profitable there would have been no headroom to make that change. Those are two (of many) ways that salaries vary with profits.
Salaries are a function of the perceived value of the particular employee to the company. If the salary is too low, he'll be poached by another company. If it's too high, he's likely to be laid off or otherwise pushed out.
For example, if an employee contributes $100 in value to the company, his ideal compensation would be $100 minus the opportunity cost of the money, which is about $15.
This has nothing to do with the profit of the company as a whole.
It is true that companies often have a lot of difficulty computing what the actual dollar value of a particular employee is, but there is no doubt that the company will do badly if it gets it too far wrong too many times.
Companies falling on hard times that try to cut salaries across the board (or limit raises, same thing) do so at great peril - the underpaid (relative to their contribution) employees leave and the overpaid stay. I.e. this can result in a vicious death spiral. A much harder, but far more effective strategy is to identify the overpaid ones and get rid of them.
The problem for the hypothetical KC Googler is that there are substantially no other high paying tech jobs in KC. There's Cerner, but they pay seniors ~1/3rd what Google pays (and it seems to get further from Google comp as you go up the ladder). So if you want to negotiate with Google to increase your pay, you have no credible best alternative to a negotiated agreement (BATNA). If you want to work for any other high paying tech company, you have to leave town. Google, knowing they are the best game in town, would face less upward pressure on wages.
I mean, as a matter of simple fact, Google does not pay the same in different metros. Nor do any other large companies I'm aware of. The pay is adjusted to what is required to attract talent in those metros.
On the other hand this means areas with lower costs of living but strong tech job markets can be a very good deal: Pittsburg is one people often bring up.
Boston isn't as cheap as Pittsburg, but it's far cheaper than the Bay Area with pay that's nearly as high. I'm very happy here.
Also, pegging your salary to corporate profits has its downsides. At Boeing, a good chunk of the worker bees negotiated their bonuses to be pegged to the quarterly profits. They were pretty unhappy about this when the 737MAX problems tanked profits, and the bonuses vanished.
But anyway to me the math isn't about win/win but just supply and demand. If they can afford to pay it and were willing to before, it's not like you can't make the same amount (if not more) and have better future prospects without the stress and cost of moving.
I think a more realistic take would be a more decentralized approach to labor in general and allow many smaller satellites to pop up (which they already have) in many places and allow their people to move freely with minor salary adjustments. That way the costs and benefits even out in the long run, mass relocation to a single location probably isn't great for anyone involved long term.
I have no doubt, likely more unhappy at lost bonuses than the fact they contributed directly to many lives being lost.
People with the 150k-300k salaries FAANG provides would be making a surgeon's salary in Kansas City.