But that's part of the point, isn't it? If SV companies need to adjust for cost of living in SV, the same salary could attract a better employee in an area where adjustment is not so necessary.
The cost of living in California is high only compared to...the rest of the USA. But if you are talking international, I find San Francisco to be a bargain on everything but rent, and for many cities it is very much a toss up even there.
You should see the ridiculousness in the Santa Barbara/Goleta area... Same cost of living as Silicon Valley, Less Pay. Higher cost of living than LA, San Diego and Seattle but engineers get paid less than those areas.
I know that Montecito was one of the highest priced zip codes in the USA, as of a few years ago. SB is stuck between the ocean and the mountains, with no room to grow.