I don't see it as a relic, or a bad one. Some people can't just up and move to a cheaper location for a job they don't know they'll have in a year's time. How do you decide what to pay? Paying based on "experience and merit" needs to be anchored on something, so you just end up either massively over-paying someone in a location that's cheap, or massively under-paying someone in an expensive area. If you want to pay everyone like they live in Zurich, then more power to you but doesn't seem sensible from a business management standpoint and the person in North Carolina would probably be over the moon at half that. Any company with shareholders is accountable first to them (for good or bad) and I'm not sure your board or CFO would agree that paying peak makes sense