Another question I was asked:
How do the salaries of software engineers in the Bay Area and Seattle compare? Are they adjusted for the cost of living and extra taxes?
I am responsible for teams in both places. For large companies, the methods are similar. The short answer to your second question is 'no'.
About your first question: Although Seattle has typically been considered a second tier zone for labor prices in the past, these days it has ALMOST caught up with Silicon Valley.
What that means is that an engineer in Seattle used to be offered a slightly lower (e.g. 10%) salary than those in Silicon Valley. When that was the case, if an engineer moved from Seattle to Silicon Valley, they might get a small raise (e.g. 10%). The opposite was not always the case, though it would mean that an engineer moving from Silicon Valley to Seattle would be a little overpaid and likely get passed over for raises for a year or two.
These days, however, the two locations have largely converged in terms of salaries. So, the smart thrifty person will work in Seattle, where the cost of living is lower!