1. All the bay area companies realize they can employ the best talent remotely from around the country (globe?) successfully. The SF pay premium drops.
2. Bay Area companies pay according to cost of living, many remotely. Some people move, some stay. SF pay premium holds.
3. Everyone realizes the pre pandemic normal was right all along and having a lot of talented people in the same building matters a lot for company success. SF pay premium holds.
If Austin or Denver offer employees at a discount, why not Manila and Bangalore?
Cut too much and it is "pay peanuts and get monkeys". This isn't implying any innate inferiority of foreign nationals but that at large if they could already get $200k/yr instead of $20k/yr of course they would heavily bias the talent towards it leaving the average far worse. Plus businesses around then already should have learned a painful lesson during previous failed cost cutting attempts that IT isn't factory drudge work.
Many of the communication problems are rapidly addressed with constant realtime communication that happens in a shared office but doesn't with teams working separate hours.
Exhibit A: https://www.cnn.com/2020/07/01/tech/cisco-lawsuit-caste-disc...
These would be one pay scale at each office for the workers in that office, and one pay scale for all remote workers.
The pay scales for each office would take into account the cost of living in the area of that office.
The pay scale for remote workers would not take into account the cost of living of any particular employee's location.
This is because as far as the company is concerned, "remote" is one location. All that they need to do is pay enough so that they can fill all their remote openings.
That's already how they do things within cities. Cost of living varies considerable from neighborhood to neighborhood in most big cites but do you often see companies having different pay scales on a per neighborhood basis? When I worked at a company in Santa Monica, for instance, I don't think anyone doing the same job with the same experience as me would have gotten very far saying the company needs to pay them more than me because they lived in Beverly Hills and I lived in Pasadena.
2 comes first (and arguably already exists - many large employers already adjust pay by locality). If 2 is sustained long enough, there's an implied drop in demand within SF/SV (or Seattle or NYC) which leads to 1.
They probably still pay a local premium but that isn’t different from the Bay Area in general.
If you didn't do a basic cost-of-living comparison, then it's probably good that you didn't go work for a bank.