> if you are competing against engineers who are willing to accept lower salary due to low CoL in another area, the company would offer less. Of course, that is not how things should be.

Why shouldn't it be? The market uses prices to signal things you should and shouldn't do. This particular price signal is saying, "move away!" If you don't have another, stronger signal that overrides it, it is not an efficient use of resources, and society suffers a dead-weight loss.

Why should all the software engineers all have to cram into Silicon Valley, pay California income taxes, and bid up the prices on a housing supply which remains wholly inadequate for the region? If tech stopped paying the California premium, the companies would see higher profit, their customers would see lower prices, their engineers more disposable income.

I would love for programming jobs to be available in every major city in the nation. Sure, the Mission is pretty cool, but there's hundreds of other cities in the US that have some pretty cool stuff too.

That is how thing should be.

Let say I shop for a gadget. I pay for that gadget not because the value it deliver but the least amount required to get the value it deliver.

Sure, if you think human beings should be treated like disposable gadgets.

Well, if your labour is not, in fact, fungible it won't behave on the market as if it is fungible. You'll see this often for people paid a lot doing a single role for 30 years. Given the probability of a good replacement hire, they can't actually be replaced. Given their unique knowledge of that company, they're worth 50% to another. You'll also see this at startups where people will move from place to place keeping their income. But the median Facebook engineer's labour is fungible. It doesn't really matter which engineer is there so long as there is an engineer there.

And human beings are not being treated as disposable gadgets. Their labour is behaving like any other good in the market. There are some specifics but for the most part it is true.

There's no should to this. It's merely observational truth.

I think it is a mistake to conflate the intrinsic value of a human with their point-in-time value as labor in a business relationship. They are very different things.

In a business relationship both parties need to find a price point that is mutually satisfying. If there is no agreement that doesn't mean that either party is treating the other like "disposable gadgets".

And the system is not static, value from both parties perspective changes over time, which means the mutually satisfactory price point can also change or even evaporate.

Is the price of a disposable gadget not based not the price of the labor that went into it? They're both subject to the same forces.

This is the difference between being an owner and an employee.

As an owner, your work is valued by the income it brings to the business. As an employee, your work is valued by the amount it cost to replace you with another qualified worker.

What's the insight here? Since customers pay the business (read the owners) the least amount it costs them to replace the company with another qualified business.

If you do work as an owner, your work is valued by the market value of the result of your work.

If you do work as an employee, the only thing that matters is the market value of your labor, regardless of the result. It doesn't matter how much business value you add.

How can it be otherwise when it "should be"? I get that it is vexxing to the workers in the high COL area but why would it be done otherwise? How could it even work otherwise within the constraints. The only reason to pay more for higher COL jobs is if they get more utility.

You pay the extra cost to hire people in an expensive market (e.g. a high CoL locale) because you want a part of the talent pool. Now, is the talent pool in SF uniquely amazing, full of 10x developers compared to the 0.5x developers everywhere else in the world? Or is SF simply such a large talent pool that it's hard to staff your business without an office in SF? I'll let you decide.