However, that this not the argument these people are making. The argument I see time and again is that your compensation should be location-adjusted based on cost of living. And by making that argument, they are clearly saying you are—or are not—entitled to a certain degree of living, which is where it gets creepy, inappropriate and inevitably abusive.
And why do I say creepy? Because saying that a person does or does not deserve a certain lifestyle, and saying that they will or will not facilitate that lifestyle for you, crosses a boundary into your personal life that degrades you as an independent individual who is entitled to decide whether or not you do basic things like saving money. Instead of treating you like a person, they treat you and force you to conceive of yourself some sort of "lifestyle consumer." Sure, some people just have no leverage. But normalizing this way if thinking is going to lead us down an even worse labor path than we are on right now. Your employer is not your legal guardian.
Employees have no more reason to be concerned about the value of their work to employers than employers have to be concerned about the value of their pay to employees.
If you want to be logical about it the only thing that matters is the market. But both sides try to bring in irrelevant arguments in hopes of getting leverage in negotiations. Sometimes it even works!
There isn't one market. A remote SV developer should be able to command more if they can sell a connection to SV. Same for a FAANG company.. you can get paided more for being associated with a faang
Pay market rates. If you want people on location in SF, pay SF market rates. If you want people occasionally on location in SF, pay SF market rates. If you want people to travel rarely to SF pay local area rates to the nearest office the person lives by.
SF is neither the center of the universe nor where all the interesting problems/projects reside.
One change. For those you only rarely require to travel to any of your offices, pay the same regardless of where they live. All remote locations are the same as far as the company is concerned [1].
For a company with N offices, there are only N+1 locations as far as pay should go: the local rate in each of the N office's local area, paid to people who are required to be on location there more than rarely, and the rate for everyone else.
On those rare occasions when someone in the everyone else group is required to come to one of the offices, treat it like any other required business trip and the company pays for travel and lodging and food.
[1] to a first approximation. If the company needs a job to be done on a particular daily schedule, then there are two remote locations as far as the company is concerned: time zones where that schedule is reasonable, and everywhere else.
The point is that you as a company do not care where your remote workers are except perhaps they need to be in a timezone close to that of whichever office of yours they are working most closely with.
If you can pay remote workers what would be a good wage in El Paso or Tulsa or Boise and that is sufficient to get you enough good workers from such places to fill your needs, you don't care that it is not enough to get workers from Boston or Minneapolis or Chicago because you don't specifically need workers from Boston or Minneapolis or Chicago.
(i'm being ironic here, btw)
Say hi to Doc Brown for me, thanks.
The market value of your work depends, in no small part, on whether or not that work includes showing your face X days a week at an office in San Francisco.