If you’re hiring for some specific niches or need very senior people, removing candidates in hcol tech centers from your search pool could make it a lot harder to hire. Like imagine saying you want to hire a great US political lobbyist but you can’t hire anyone who lives in DC. It would be tough right? The dynamics in tech aren’t as dramatic but there’s still some of that effect.
I’m not saying an alternative strategy couldn’t work, but there are good reasons companies want to be able to hire in hcol markets.
Okay, so you'll pay more for those niches or seniority. At whatever price is competitive with the market as a whole.
You don't need to include location. I'm sure people who drive fancy cars need more money too, but I'm not gonna pay more for that.
At the end of the day, it winds up being a choice between
- Pay someone based on their location - People in lower COL areas complain, but are (in theory) being paid an amount with the same buying power as someone in a higher COL area (being paid me) [1]
- Pay the same regardless of location - People lower COL areas are making more buying power, but people in higher COL won't even work for you; because it's not realistic to pay the higher COL amount to everyone [2]
There's no solution that makes everyone happy.
[1] Not really true, since it doesn't account for a lot of factors; such as retirement savings, etc.
[2] Not strictly true but, if you pay the higher COL amount to everyone, then you can hire fewer people for the same amount of money.