On location based pay

There has recently been a lot of articles with titles like "Google plans to slash salaries of staff who refuse to return to desks" and a very common position is that Google could afford the current salary, so it could afford to keep current salaries when people decide to work from a remote location.

This is certainly true, but despite not liking a number of things on current policies, it is hard to disagree with this part as it would be very unfair for other employees based on existing location based strong pay differences.

Imagine you have 10000 employees in city A where there is a strong competition so the average salary is 250k, and 5000 employees in an other office in small city B where the average salary is 50k because life is cheap there and no one pays more than that. Now 100 employees from A decide to work remotely from B.

You now have 100 employees in B paid 250k and 5000 employees also in B, doing the same work, only paid 50k. This is the current situation which is very unfair.

Anyone requesting to work from the office in B has always got a pay cut to align to local salaries, but people working from home have a very different salary based on the office they are attached to but never visit.

How would you feel in colleagues leaving in your neighbourhood where paid multiple times your salary because they started in a better office before moving to your city?

There are two fair ways to solve this: give a pay rise from 50k to 250k to everyone working in B (i.e. not have salaries depend on location anymore) or give a pay cut from 250k to 50k to employees moving to work from B even if they work from a home in B rather than the office in B (people working from home in A would receive 250k).

A few companies were already doing the first one which is great, but most companies go for the second one as they would not be able to justify to the shareholders than they doubled the salaries on average globally so that people can work from their preferred location without taking a pay cut.