Earlier quoted context omitted.
Just want to point out that there's no rational basis for this argument unless the employee in SF is much more productive. To put it another way, do you currently see pay adjustments based on housing costs for employees living in SF? Have you ever heard of differences across employees simply because one of them has a more expensive house?
"Cost of Living" adjustments are a red herring, what they really are is really "competition density". There are plenty of tech companies paying great salaries in the bay because they have to, otherwise they would just go work for someone else. On the other hand, if you lived in Oklahoma you aren't going to say no to $LOCAL_OFFER+10k just because bay area salaries are $LOCAL_OFFER+90k. As long as this disparity exists…
There is no rational reason for Google to pay bay area salaries for Indiana employees - will they really say no if Google offers 300K instead of the 500K they would get in the bay area? Sure, the person could reject it to make a statement, but most people would gladly take a salary that would buy them a small castle.
All FAANG needs to do is to beat local salaries by a significant margin to get well qualified employees - that would still make these people WAY cheaper than bay area employees.