My employer takes cost of living into account by multiplying your salary by the numbeo factor for where you live. Base salaries are all calculated for Cologne (HO) and then adjusted by the relative cost of living factor for your locale. (we're entirely remote)
I am personally not a fan of this: early in my career, a colleague moved from the Bay Area to Boston to try to save his marriage (which sadly didn't work) -- and our employer adjusted his salary down accordingly. As you might imagine, the difference between the Bay Area and Boston is minimal -- they adjusted his salary down something like 4% -- but I just recall how dispiriting it was for him to have this massive, stressful (expensive!) life transition exacerbated needlessly. Employers don't factor in other elements of cost-of-living (can you imagine giving someone a pay bump when a kid goes to college -- or a reduction when they graduate?!), and I don't believe geography should be factored in either: pay people for their work, not their ZIP code.
- https://handbook.gitlab.com/handbook/total-rewards/compensat...
- https://www.checklyhq.com/blog/open-sourcing-our-pay-calcula...
- https://buffer.com/salary-calculator