If you were already bought into and budgeting for 4 years of an employee at price X, it seems opportunistic and irrational to then try to cut them to price Y due to an unexpected factor.

As some other CEOs have chimed in, I'll say that my relatively small startup (6 people, but growing) just pays people what they're valued at, regardless of location or business expenses. I budgeted for those salaries - if someone moved to a cheaper area I wouldn't cut their salaries because their location hasn't changed anything for me. Everyone makes enough to live in the bay area comfortably, which means they'll be just fine elsewhere.