At the same time conversely companies like Facebook are threatening to lower wages if people move outside the bay area.

I feel like if you're a remote employee they don't need to have a right to know where you are living, they only need to know your timezone for planning purposes. Your location should be abstracted out of the equation by remote work tools.

As far as they are concerned you are just an amorphous existence on the planet that is online to provide skills from some time UTC to some other time UTC and they shouldn't have a right to know anything more than that.

It’s likely companies may have been willing to pay extra for an employee who can colocate in a specific office, and if that is no longer required salaries may go down across the board since they can hire from a bigger pool. It’s odd that FB would resort to a punishment like this. They should just reduce everyone’s salaries and encourage them to move out of The Bay Area :).

Reducing everyone's salaries could temporarily backfire though as long as there are other bay area companies paying bay area salaries (even for remote workers), as those people would leave.

However, it may be beneficial for Facebook to do it that way, as they can then get decent talent around the world at a lower price.

A lot of people before would give the advice that if you come to The Bay Area to get a job or fund your startup, you'll eventually succeed because you can easily take meetings with people, find connections, rub shoulders, schmooze, etc, and this was largely true because being in this locale gave an inherent advantage. We're more likely to hire the guy that made a good impression at an event or house party than a random cold email from an anonymous person.

Once Bay Area tech engineer moves to some far off corner of the world, there won't be much differentiation except for raw talent, and there's plenty of raw talent out there in the world who were born in the wrong place.

Companies are required to know where you live for tax purposes.