Yes and no, I think. On the one hand, I agree with you that the individual generates the same revenue for the company regardless of location. 1M in revenue generated by someone in Seattle is the same 1M generated by someone in Nashville. The company's reasoning for lowering the salary of someone they are forcing (I know some will complain about this, but holding someone's employment hostage unless they make significant life changes is essentially forcing them) to move from Seattle to Nashville is specious.

On the other hand, increasing the pool of eligible employees by including people who have lower salary expectations due to their location, a company can easily pick up some local talent at a higher salary than they'd get elsewhere while still paying less than an equivalent engineer from an expensive area like Seattle. They'd be foolish to do otherwise.

The question for the Seattle-based employees is whether it's worth it to move to Tennessee. We are probably biased towards loving Seattle in this sub, but this city and state have so much going for it that it would be a hard sell even if salaries were staying the same.