Yes, and it's the same point I'm trying to defend against a communistic idea of some kind of universal "value" of labour which is equal regardless of location or circumstances.
Some people think that employees should be paid somewhat proportionally to the amount of value they provide to their employer. If you accept that, then a good engineer should always get about the same amount of money, regardless of the cost of living, because they always produce a similar amount of value for the company.
Value is subjective: it's determined as agreement between seller and buyer. Engineer of the same ability is more valuable for an average SF company than an average Chicago company.
That was the point that was made upthread. Lower demand -> no shortage -> no need for H1B.