I think this is partly true and partly not. If we view living in a HCOL area as a benefit, then it should offset other compensation. People should be willing to

I think this is partly true and partly not. If we view living in a HCOL area as a benefit, then it should offset other compensation. People should be willing to live in these super-desirable areas at lower salaries than they would get elsewhere. This dynamic definitely exists: rural healthcare facilities have to pay quite a lot to attract doctors who would prefer the big city. But we also see the opposite. The compensation packages necessary to entice e.g. tech workers from the Midwest to the worst coastal markets are like 300% higher. This suggests people are not exactly seeing a huge subjective/experiential benefit to living in those markets and it is more like a localized form of inflation.