I'm in a company that doesn't do this—everyone gets paid the same amount, which is way above average for most of the country—and some of the Californians are actively lobbying for location-based pay.
I don't think they realize that they're actually lobbying for most of the company to get a pay cut so they can get a greater percentage of the total salary budget, but that's what it would amount to if they got their way.
The company is fully remote and only a tiny fraction of us live in CA. Most are distributed throughout the lower-density regions of the country and are very happy with our pay rates.
I don't think they realize that they're actually lobbying for most of the company to get a pay cut so they can get a greater percentage of the total salary budget, but that's what it would amount to if they got their way.