Loylty is also an issue. Remoteworkers bond less with the employer.

@BernhardDöbler I'm not so sure about that - some companies have done well with remote workers when they've paid similar our equal rates. Again, (good) cheap workers are going to quickly move to where they can make more money.

I think you're wrong (I'm an amazing developer and wouldn't move to California for anyone or anything), but it's almost certainly true that at least some employers think this way, so I added some bullets to my "things employers worry about" list in my answer. Thanks!

"All the developers who are good are either happily working for more money than that or have moved to Silicon Valley, or New York, or London, or Sydney, or anywhere else they can get paid well for their skills." This statement is so absurd, that I can only interpret it as either facetious or genuinely stupid. A large percentage of adults on this planet are married and have children, dependents who may object to being dragged to a different country like luggage, just because their parent/spouse has aspirations as some hot-shot SE.

@Will "are either happily working for more money OR have moved"... The OR is important and doesn't imply that you have to move to make better money than 20% of SV.

@Will as for the fact that people have moved - that's based on actual conversations with developers that have moved from Western and Eastern Europe, South East Asia, and the Indian Subcontinent. They even bring their families with them. In fact, I'm an immigrant myself (UK to Aus). People move, and it's neither facetious nor stupid to say that they do.

Low cost of living, patriotism, family, nightlife, visas -- there are reasons people stay put. Now take the very same developer who could get an offer from FAANG and shop him around in some Eastern European backwater. I think 1/5 will look conservative.

Good developers are doing excellent in their own home countries. They don't have to be in the USA to feel accomplished.

@MaxB: "who could get an offer from FAANG": don't underestimate the number of good developers who do not want to work for FAANG because of moral reasons -especially the ones who are active in data protection movements. Not everyone wants to sell their soul for money.

This is not sufficiently true. The difference in salaries between first world countries and, let's say, Eastern Europe is quite real, and large (depending on the country). And there is plenty of people who don't want to move, because the higher salary they could command in the West doesn't outweigh their existing lives.. So you can have competent people who are working for, maybe not 1/5th but 1/2 of a salary they could make in the US, because the local market can't support salaries like that.

After a certain point, which depends on the person, it's not about the salary anymore. Maslow's hierarchy and all that. If you're already making enough to live comfortably where you are, uprooting your family and leaving your friends to move to a place with a 2.5x cost of living for a 1.5x salary doesn't make any sense. Maybe if you're 22 and have no life obligations, but most of us in the workforce are older than that.