> Why hire a $100K Midwest US engineer when you can hire two good international engineers for the same salary and not have to pay for their health insurance?

As I mentioned in another comment on this thread, engineer salaries are bimodal. I believe this is because labor demand is bimodal. It sounds the company you are describing has this hiring philosophy: we prefer to hire as many mode 1 engineers as we can for the dollar. However, there are also companies that have a counterparty hiring philosophy: we would rather have a smaller, more mode-2 engineer centric organization than a larger more mode-1 engineer centric organization.

What's more, I've noticed that the small, more deliberately leveraged organizations have a strong bias towards the latter hiring philosophy, because it applies not just to their technology divisions, but to the organization as a whole. In finance, it's the boutiques; in technology, it's the startups. Large companies that are able to maintain mode-2 centric culture exist, but generally only when they have high-profit revenue based on R&D.