Should compensation be tied to where you live? It's easy to say "of course not". I think at a startup today with less than 100 people it's pretty possible to have a single set of compensation bands by role for your entire team. (Even then I'm not convinced why someone would willingly pay more than 5x the local market rate in some places just because they decided to stick to one compensation band agnostic to location). I also feel like it breaks apart at like 1000+ people organizations, where switching over and bringing people to one compensation band has a lot of butterfly effects and probably has to be accompanied by some layoffs. Also another factor is attracting talent. Big companies attract talent by being able to stretch the band and get the high end of an offer.

That said, only legacy companies have this problem of transitioning from their old incumbent compensation practices to this new one. New companies starting up today that are growing fast could totally hold straight to this practice and set a new standard.

I know Airbnb did this so it is certainly possible, but it must be tough, and for even larger companies that are spread across more internationally it's like increasing your OpEx by like 2x. Was reading this earlier which got me thinking about this: https://graphcdn.io/blog/one-job-one-pay