Yes and not everyone can get married, and have a partner to share the load with either. So does that mean a bachelor and a married man should be paid different salaries?
Not everyone can find the time to run a side business. So should those who can be penalized?
You pay your employees what they are worth to the company and forget entirely about what they are and are not capable of doing outside of the company because it's really none of your business. If that means you can't find employees because you aren't willing to value an employee correctly than your company will fail, end of story.
You've sort of dismissed my point, though. The dilemma is that salary choices create friction within companies. It's not as simple as "pay what it takes to get someone" and "it's none of your business" because it does, in fact, have repercussions on how well a company works.
They get paid differently, or they cost their employer differently?
“Costs the company more” means they are both paid a salary of $100k, but the healthcare insurance for the employer with a family costs $50k extra.
Maybe another way to think about it is when some innovation drove the price of a car down by 10% (because production costs are lower, the car maker makes the same profit). Would you say "Hey I was happy paying the car full price for the value it provided me, so let me pay its old, full price, I'd be happy to do that"?
As someone who's run two remote companies now, I have struggled with this dilemma as an employer. Because I agree with you, if a person is worth $x to the company, their location doesn't change that.
The flip side, though, is that I also want people to be on relatively equal footing. Not everyone can move to optimize their relative adjusted income, and the problem with a salary number is that it doesn't reflect status. An entry level SF salary will get you a house + a lake house in Oklahoma. A person who owns a vacation home is living an entirely different life than someone with a roommate in Oakland.
If you _don't_ adjust salaries for cost of living it makes that even worse, because suddenly you're probably paying less than someone in SF or NYC needs, more than what most people need in other states, and paying a crazy high localized salary to someone in Vietnam.
All that said, we're doing the same salaries regardless of location. And I'm still not sure that's the right choice.