FAANG doesn't determine salaries based on cost of living, but cost of labor, which maps to your concept of "competition density".

There is no rational reason for Google to pay bay area salaries for Indiana employees - will they really say no if Google offers 300K instead of the 500K they would get in the bay area? Sure, the person could reject it to make a statement, but most people would gladly take a salary that would buy them a small castle.

All FAANG needs to do is to beat local salaries by a significant margin to get well qualified employees - that would still make these people WAY cheaper than bay area employees.

> FAANG doesn't determine salaries based on cost of living, but cost of labor, which maps to your concept of "competition density".

Yep, that's exactly what a Google recruiter told me - they try to pay at the upper end of the _local_ market.

the rational reason would be they want to hire those people. Hiring top talent is a very competitive thing. Your avg dev at a small company in a small town might or might not be as good as that person who made it in sf. If 100k people leave sf and a good number of them keep their high salaries (or almost) then guess what, those companies will hire people from the other companies that cut pay too much.

If you're working remotely, then you just tell <big tech company> you live in NYC/SF. If they still offer a subpar salary, then you get an offer at <big tech company #2> and bid them against each other. Salary negotiation is a two-way street. Companies that hire remote workers care more about results, which has nothing to do with the cost of living in your location.

Are you implying to lie about where you actually live?

If they're doing something as absurd as using it as a negotiating tactic to pay you less, then yes.

But companies report your salary and withhold income for local taxes. How would that work?

For example, my paycheck literally has withholdings for California every two weeks.