Zillow, Location, and the Beginning of the End of Compensating Wage Differentials?

At grad school a million years ago at Cornell University's ILR School (go Big Red), I took a course on labor economics. In it, my classmates and I learned about compensating wage differentials.

Its premise isn't difficult to comprehend. Because of them, a coal miner earns more than a janitor in the same city or state. The former faces a much more dangerous environment. Ditto for administrative assistants who live in Hawaii compared to their Wyoming and Alabama counterparts. (I thought that I was losing my marbles when looking at salary surveys way back in, er, 1996.)

Ask Mercer and they'll tell you: It's far more expensive for people to live in idyllic environs—and wages need to reflect that reality. Even eggs cost more. Supply and demand, baby.