I feel like this is a bit of a misconception. Most of the time cost of living doesn't scale alongside compensation increase. And most devs in high paid regions, even if their region has a higher COL still end up with much more wealth in the end.
For example, San Francisco COL will be around 5000$ per month for rent, utilities, food, transportation, etc. Where as dev compensation will be around 150k a year. On which you'll pay about 36% in tax, leaving you with about 100k a year. That's 8333$ a month.
So as an average dev in San Francisco your monthly profit will be 3333$ a month. That's 40k a year in savings.
Now we were looking at a high compensation of 58.4k and a low of 32.5k based on OP about blender compensations. That's an average of 45k. So their COL and tax burden would need to be less than 5k just to make the same amount as the average San Francisco dev. Any higher then that (and it's very likely to be higher), and they are making less than the average San Francisco dev.
Now that's not all. The largest portion of the COL of the dev in San Francisco was rent, 3500$ went to rent. That means, any dev in San Francisco can easily choose to make an extra 1750$ a year simply by choosing to live with a roommate. Or they can easily make an extra 500$ by choosing to rent slightly further out. If they happen to live with a partner that has income, and especially if they also are a tech worker (which happens often since so many people in San Francisco are working in tech), well they both similarly now make an extra 1750$ a month. That's an extra 21k a year, so now that dev can have a profit of 61k a year if they want, which is more than the total compensation of the highest paid blender dev.
And if the San Francisco dev manages to get a home loan and purchase a home or condo, they can expect to make back close to 2500k per month which they were previously losing in rent.
So I'm not saying COL doesn't matter, but most of the time, regions with higher pay, even if higher COL, still leave you in a much better financial situation.
The only real thing you sacrifice is the size of your home or apartment. But for a lot of people, that's a fine sacrifice to make, especially temporarily, say in the first 15 years of your career for example.
Are you suggesting one should pay more because his living expense is higher than the other?
You should pay for how much is being contributed.
The only thing that should lower the pay is developer's own satisfaction. In other words, one would pay more for stuff others don't want to do or incapable of doing.
Well, this simply isn't how it works in capitalism. Garbage truck workers also contribute a lot to society (wait until they go on strike for a month). However, the job is paid badly, since it requires very little education, so almost anyone can do the job.
If you actually take the word "contribute" to a better degree, if a work can be done by anyone even though the society needs it, it's not much of a contribution.
