Why is it delusional? The company should be willing to pay an amount based on the benefit they're receiving. Does a feature developed by someone living in NYC or SF make the company more money than the same feature developed by someone living in Ann Arbor or Atlanta? Offering a premium for people to work on-site versus remotely makes sense. Discounting the value based on expected difficulties with linguistic or cultural misunderstandings makes some sense. But I really don't see why you should be adjusting based on the work location in a more general sense.
wages are not absolute, they vary by location, for the same kind of work. cost of living are taken into account when offering salaries. taxes ditto. this applies to the US as well as Europe.
it is about fairness among workers. there should be no penalty for living close to the HQ or major office hubs, which practically always are in high-cost areas.
counter-example being SAP with Waldorf, but that is ending its lifespan for the inverse reason (no one sane wants to move there).
If you're demanding that the workers live somewhere particular then of course you're going to be paying more when that "somewhere particular" is more expensive. For remote work of comparable quality, it does not make sense to me that it should be adjusted based on where the worker decides to live.
