Exactly, so why have disparate pay by location? I'd expect all remote workers to get the same salary, perhaps a bit lower than onsite workers to account for productivity loss.
In effect though, this is location pay discrimination which only makes sense if you believe the remote people have viable onsite alternatives where they are that drives their market salary.
If they are only going to work remotely (i.e. in a remote market), I don't see how this works steady-state. If there's no benefit to having an employee in SF vs. Austin, I'll just start paying a premium to non-SF residents and pull away non-SF talent from Google. Eventually, this should all equalize to remote workers being paid equally.