Is there a good reason why a developer in Thailand or India should be paid less than their colleague who works on the same team, but is based in the US? Many companies believe so - there's a significant difference in the cost of living between those two employees, and employers believe it is fair to adjust the salary to provide a similar quality of life to both.
Equally, a person incarcerated in New York City doesn't have the same living costs as a person who has to live in New York City, so you could reasonably argue that any "Cost of living premium" that a company offers to NYC based employees doesn't need to apply to a person who doesn't experience those higher costs.
What a complete bs. If anything, in India it costs MORE to achieve a similar standard of living than in the USA. In India you can spend 3 times what a US worker gets paid - and you'll barely have enough money to get the same level of security that that worker gets.
Companies don't care, they pay the minimum amount that they think will interest the worker for long-term employment. And since in India or Thailand the workers don't have such a wide choice in work - they will be paid less, just enough to get them. And they pay the Americans just enough to get them, it is just happening that for Americans this amount are several times bigger. That's all here is.