That salary levels vary from Country to Country and within a Country is no surprise. The cost of living and availability of skilled resources determines the average salary. If I live in city other than Milan and Rome in Italy the cost of lodging is way lower than the one in London or San Francisco. If a company is hiring me to work in San Francisco I would need a salary that is way higher than the one I need in Turin.
What is emerging in this post pandemic era is that remote working is much more common and once you are set for remote working you can basically work from anywhere. I could stay in Turin and work for a company in San Francisco. Clearly, if I need to be at the office every few days, say twice a week, than it would be impossible to operate remotely that far away. But I could surely live in Sacramento and commute twice a week to San Francisco. That makes my lodging way cheaper than having an apartment in Menlo Park.
And yes, this is what is happening, to the point that real estate in what used to be high value locations is plummeting as people are opting for remote working.
It is not just real estate that is taking notice of the different way of life – way of working. A few companies are trying to negotiate the convenience of remote working with a salary cut. Rumours have it that Google is considering pay cuts up to 25% for people working away from their office, depending on your home address. If your office is in NY and your home is in NY than working from home will not put a dent on your pay check, but if your home is on the other side of the Hudson, depending on the place you might see a reduction on your salary.
Does it make sense? Yes and No, I guess. Remote working is opening up a can of worm. Once you are (as a company) set to be profitable with remote working your hiring market becomes the whole world. You can get people from India, actually “in India” and have them part of your teams. All of a sudden competition for a job becomes worldwide and this is going to favour those companies that are set (have processes) to use remote working, those market places that today are in developing Countries where offer exceeds demand and at the same time is going to decrease the negotiating power of workers whose main advantage was to live in the area of the companies seeking their skills.
Once this shift will be complete the salary will return to be based mostly on skill, on the value you can bring to the company. Location will be completely irrelevant.
We are going to find some significant changes in the world market in the coming years.