>Your market-rate salary is the salary the market is willing to pay for your labor. Yes, I understand this. I mean that people are bidding lower than they sho

>Your market-rate salary is the salary the market is willing to pay for your labor. Yes, I understand this. I mean that people are bidding lower than they should - they get fewer goods and services than they could have gotten in cheaper locations with their Bay Area salaries. This artificially low bid can be understood as people paying to live in the Bay Area (and therefore take a salary that buys fewer goods and services than elsewhere). In so doing they are granting a subsidy to their employers who would otherwise pay higher wages to location-indifferent laborers. Why they are motivated to pay to live in the Bay Area is a mystery to me.