My employer takes cost of living into account by multiplying your salary by the numbeo factor for where you live. Base salaries are all calculated for Cologne (HO) and then adjusted by the relative cost of living factor for your locale. (we're entirely remote)
I am personally not a fan of this: early in my career, a colleague moved from the Bay Area to Boston to try to save his marriage (which sadly didn't work) -- and our employer adjusted his salary down accordingly. As you might imagine, the difference between the Bay Area and Boston is minimal -- they adjusted his salary down something like 4% -- but I just recall how dispiriting it was for him to have this massive, stressful (expensive!) life transition exacerbated needlessly. Employers don't factor in other elements of cost-of-living (can you imagine giving someone a pay bump when a kid goes to college -- or a reduction when they graduate?!), and I don't believe geography should be factored in either: pay people for their work, not their ZIP code.
Whilst I completely understand your viewpoint, I have a more nuanced take on it (understandably, as I work there). Firstly, we don't pay peanuts. We have never taken outside funding; it has always been a company goal to grow organically. As such, we don't have as much cash to go throwing around like VC-funded startups. However, as I said we still pay well; yes I could make more by taking a job in London (I'm in the UK), but then I sacrifice so many intangible things. Working remotely has allowed me to be present whilst my 18 month-old grows up, and a 4 day work-week has helped even more too. Unlimited holidays, very flexible working hours and being treated like an adult about how you organise them, a flat company structure, a company which genuinely cares about employees and their wellbeing - all of these things add up. Salary isn't everything. Whilst no job will ever be perfect, this company is by far the best place I have ever (and will likely ever) work. Employee satisfaction is always very high and salary is rarely even a factor (let alone the main reason) if people decide to move on.
Just like Wikipedia and many other information sources. Don't trust one source blindly, do your research and you'll be fine. It gives a good enough general indication. A comparison like this will always depend on too many factors to make it applicable to everyone in any case.
