If all the major employers in the area cut wages down to $80k, wouldn't the cost of housing be forced down too? Who can buy a house for 2.2 million when making $80k. And on a side note, there are many companies in the area that pay $80k and less, oil change mechanics for example. So it's not like you MUST pay that SV wages because cost of living is high.

I have a feeling it is due to high demand for those workers.

It doesn't work that way, you can't control markets from the top down. You are right, it's a supply demand thing. A company needs to hire 100 engineers with a specific skillset in x number of months, so they come here where there are enough engineers to hire in that skillset in the local talent pool, then they make offers to engineers until they get enough engineers, if they don't get enough they need to increase their offers. It's a simple market like any other. It's simple, yes the cost of living on the middle of nowhere Ohio is less, but you can't hire 100 engineers with specific skillsets and experiences, you need to move them there, or build them from students. So a person living here wouldn't accept an offer that doesn't allow them to live and thrive near their workplace. If the cost of living were less they would be more willing to overlook the compensation for other factors, but for most tech workers who are not independently wealthy because the cost of living is so high, it forces us to expect compensation that is aligned with that high cost of living.

Also, SF is already over 60% rent controlled housing, so the cost of living for over 60% of the population is already being artificially reduced beneath the market. It's also interesting to note that the income level to qualify for rent controlled/stabilized housing is 77-160k a year depending on household size.

It's astonishingly expensive to live here compared to much of the rest of the country