Whether they're in New Delhi, San Francisco, or some no-name town in middle america, if they've got the skills to develop your software and provide a similar value (compared to each other), paying them a standard rate is fair.
edit: I'll also note that "fair" isn't the standard for business these days, but it's interesting to see some companies attempting to do things differently.
There have been a lot of threads recently around salary. I'm pretty sure it is entirely based on your willingness to negotiate to the best of your abilities. Yes, you need to be willing to step up to the plate and negotiate.
Thankfully we work in a very mobile and fluid industry. I know people who live in Oklahoma and work for well known startups that get paid a very competitive wage even for NYC standards. Location is becoming less of a factor in the war for talent.
That's out there.
SFO and NYC have a huge premium attached to hiring developers there. Anywhere else in the country is easily 20% behind (but often makes up the matter on cost of living by far)
I mean, did these startups accept a 40% cut in their valuation or funding rounds because they are based in Portland? Do they pay 40% less to host with Amazon or Rackspace? It's just ridiculous and kind of insulting. I once had someone pull that on me re. a job in Florida. The dude was like "hey, there is no income tax here!" And I was like "hey, bmws cost the same all over the country." (Not that I drive a bmw, mind you. I drive a 129$/mo honda civic. It's just the principle of it all.)
There is a weird valley (which Portland is still kind of close to the "uphill" side of, which SF/NYC probably are the top of) where sufficiently remote or small places are cheaper for a lot of things (real estate, mass market locally produced goods like restaurants and cafes, probably generic developers or IT helpdesk people), but then more expensive for certain specialized skills (if you absolutely must have one of the world's top 100 experts in COBOL working for your remote office in North Dakota for 2 months, you're going to have to pay him more than to have him work from SF).
Also, with no sales tax in Oregon, a BMW is significantly cheaper in Portland in total cost.
It is unfair to blame Portland (as a city) or the companies (who exist to make profit and thus get the best talent for the least amount reasonable). Instead, blame your talent competition who has your same skill set but will accept $10k less than you.
Or, better yet, make yourself worth that extra $10k by proving you are worth it.
I'm astounded more VC money doesn't get deployed elsewhere.
Which is to say: wages do tend to be lower than you'd expect given the cost of living, due solely the number of skilled and educated workers who will accept comparatively lower wages, just so they can live in/around Portland.
As they say: Portland is where young people go to retire. And as long as that's true, I'd imagine Portland salaries will continue to lag 'expectations' and almost certainly trail the Valley.
Also, I'm not sure that everyone who makes the salary trade-off knows that they're doing so. Is a developer earning $35k/year thinking "I could earn more at another company, or in the Bay Area, but I like it here" or do they think they're earning a fairly average wage?
And someone who never thought to question their salary level is by definition someone who couldn't be conscious of any trade-offs that might be in play.
Is everyone aware? Almost certainly not. But if you ever had cause to look at salary data, I don't think you could miss it.
Another issue besides roots in moving is that higher wages always come with higher costs of living. I own a house where I live which has a lower mortgage payment, by far, than a small apartment in SF. Granted that comes with downsides: no decent curry, bars that can't make a manhattan, etc