Actually, I started to type "I don't know why a company is willing to pay twice as much for an engineer in Silicon Valley than for one in Houston," but as I was

Actually, I started to type "I don't know why a company is willing to pay twice as much for an engineer in Silicon Valley than for one in Houston," but as I was typing that I had an epiphany. What they're REALLY paying for is knowledge from other companies. A person who has worked at Google and other innovative shops has (hopefully) learned a bunch of great processes, and will (hopefully) implement them at their new workplace. So an area like the Bay Area is filled with collective knowledge because there are great companies there, and all that talent is jostling around.