The real story here is how the political conditions of the SFBA have prevented growth of the housing supply. The sad reality is that housing here is now a zero sum game, and any broad based increase in wages would pretty quickly be captured by landlords. The real solution to this issue is not higher wages, but targeted efforts to decrease the cost of living through building a ton of of "missing middle" housing like 4…
My suspicion is that the system serves as a golden handcuff. The elite tech workers feel like they are getting paid a lot more, which they are, but they still cannot retire or pay off mortgage easily. So they need to continue to work diligently at the company for a long time.
This reduces turnover and keeps experienced workers happy and handcuffed.
Downvoters:
Please give your reason why you think the theory is likely wrong. There are many nice, much cheaper areas that these companies can expand to. Many groups can function without always connecting with the headquarters.