Earlier quoted context omitted.
it's not messed up. Otherwise you're overpaying by 4x compared to local positions. Which means the person will probably never leave if they're unhappy etc.
If it's more than just a cost-of-living bonus for high-rent areas, then yes it is. You're saying "Hey engineer A, you're just as good as B, but we're going to pay you less because people that live near you aren't getting paid as much. If you'd like a raise, move somewhere where engineers get more money." Again, if it's just the cost-of-living bonus (like, all our engineers get $80K, plus $X/month where X is average r…
Let's face it. As an employee, you want to earn as much as you can. As a company, you want to make as much profit as you can, which means that you base your target pay on market rate (be it above or below market rate).
Market rate is set by the competition. Really it's "we're going to pay you enough that you don't leave to work for someone else", and that's it.
If an employer gives you a cost-of-living bonus for high-rent areas, the reason is that they're competing for you against other companies who do the same thing. The same applies to any pay difference based on locality, whether local or remote. It simply depends on who they're competing with for your services.
This isn't evil. It's how the market works.