I'm reasonably sure that a decrease in CoL would be adjusted into the salary, or at the least, any company in a lower CoL is less likely to give a competitive salary.
Solution: buy a property in a lower CoL area and then rent it out to yourself. It helps if you establish a few shell and holding companies. Charge as much rent as you're paying in SF and then they can't lower your salary based on CoL because your CoL is still high. Win-win-win! ;-)
So if you are living and working in SF and making $150K (plus bonus, stock options etc) and you decide to move to, say, Phoenix and buy a house for $140K, they'll say, "OK, minimaxir, we'll be cutting your salary to $90K to reflect the vastly diminished cost of living, although of course we'll be able to give your desk to a new hire and save money on office space!" -- ??
Seems unlikely. If you're contributing, no rational company is going to suddenly cut your salary. Basically, no one cuts salaries in the U.S. unless it's a company-wide belt tightening move to stave off bankruptcy.
You can't make a statement like that without facts to back it. The truth is that companies do this all the freaking time. Besides that, it has also been common for a decade+ for CA-based employees (both LA & SFBA) to sell their artificially inflated house and quit their job to move a lower COL state (often Texas, Washington, Oregon, or North Carolina, all of which are much cheaper and have lower income tax schedules). If they stay with their existing company, their salaries are frequently decreased based on COL calculations. Otherwise they use the previously mentioned tactic and quit for something different, using their current salary as a negotiating point.
Any citations for this "all the time" claim? It's not against the law, but I would think (and online discussion/blog/advice seems to support) that most people would rather quit, as you suggest.
