That assumes that all money is of equal value. Which on one level it is, but on another level, the relative purchasing power in different geographic areas is a real thing. Normalising based on that means that in effect you're paying people for the same relative quality of life, rather than same absolute value, which can be very different relatively.
The average global relative purchasing power is already reflected in the currency exchange rates.
But generally there is no such thing as a "single" purchasing power. Some local goods may be cheaper in developing countries, but some others can be more expensive. If you don't know exactly what an employee is spending their money on, you can't really tell the purchasing power of their money. A big family with more kids may spend more money on local goods, transportation and housing, but a single person may want to just save-up 80% of their salary for a new Tesla, which costs just the same everywhere. Therefore adjusting the payouts to the local prices level will always be unfair to someone.
If one could get a Tesla at a 70% discount just because they live in a developing country, then the story would be different. But they can't.
Currencies are too broad though; as has been stated, cost of living in SF is a multiple of that elsewhere, and that's just in the EU. It's similar in the Netherlands (where Gitlab is from), where living in the urban western cities (Amsterdam, Rotterdam, the Hague, Utrecht) is unaffordable for the vast majority of people, but that's where all the tech companies decide to settle because that's also where a lot of the tech people have moved to. Somehow. The fact that a lot of people live in run-down overpriced housing or shared student living spaces seems to be ignored there.
I for one would love to be encouraged to move further out to the countryside. That's the long-term plan anyway.
They pay people less not because of "relative purchasing power" or because they want them to have the "same relative quality of life" or some such sentimental nonsense but because they can get away with it.
The cost of life is totally irrelevant, the alternative options someone has in he market-place based on their location are. Did you look at those numbers at all?
I wonder how this works. If someone could work remotely for GitLab, they could also do another remote job for another global player, so local prices don't matter that much. Maybe this strategy can work now when there are only a few remote jobs to choose from. But I guess the coronavirus will accelerate growth of remote jobs when more companies see remote has some benefits.
This is absolutely the case. About a year ago I was looking for new work and, having previously enjoyed managing a GitLab installation, was very keen to interview with them.
It felt like it would be a perfect fit, based on our shared cultural values regarding remote work, transparency, open source and other technology choices.
After seeing the calculator, I decided not to interview at all, and had another remote job a few days later with more pay than I had in Boston and New York. I live in Bangkok, Thailand.
As someone who lives in South Africa, it's quite frustrating to travel when you realise your money isn't worth shit in most developed countries. It financially restricts where you can go for how long and how often. Many imported things, like cars or computers, are actually more expensive here than in the States. Food, housing and other costs of living might be cheaper. It makes somewhere like Cape Town a great place for people with first world savings/income to holiday/retire. In a global economy someone earning local rates don't have the same kind of options.
