I have a similar but totally different example from a non-tech field. I live in Texas. We had an office in Bay Area. Sometime we had people in Texas that reported to a higher level people in Bay Area.

For whatever reason, market rate of pay in Bay Area for this field was similar to the market in Texas. However COL had a large variance. We were a pretty tight bunch that knew basic details of each other’s personal lives. It was crazy the amount of subtle strife this dynamic caused. When someone in Texas buys a large home and a new BMW or is traveling all the time. And their peer or even boss in Bay Area is struggling to split an apartment with a roommate well after “roommate appropriate age” by Texas standards.