The one flaw with regional cost of living adjusted minimum wage is that it discourages people from the most efficient economic migration patterns.
Why optimize purely for economic efficiency though? I'd consider allowing people to keep living where they grew up a good thing in and of itself. What you're suggesting is actually incredibly neoliberal: Something as fundamental as a person's surroundings, their family, their friends, all that should be subjugated to market forces.
+100000000
We've created cities no one can afford to live in, but that's where all the jobs are. Hence, urban sprawl and people having two-hour commutes (because fuck mass transit, right?). Oh, the rich can afford to live there in their mixed-use condos where they don't even need a car anymore. Meanwhile their housekeeper has to live a country or two away and spend a fifth of her paycheck on gas.
I'm suggesting that that is a self-fulfilling prophecy.
It's the same as paying half of people's rent is "nice" in the short term but just means in the long term that the market adds however much the government is willing to subsidize rents to the price. Sure, in that situation you can argue "oh no don't take away the rent subsidies" and of course ... nobody wants that, so it won't happen. But in the long term it's a major driver of rent prices. The total market price will rise by the exact amount that the government pays in subsidies.
For the minimum wage thing I was actually arguing that allowing poor states to undercut federal minimum wage because they're poor is a
driver of the region staying poor. Because with low wages, the money doesn't stay in the economy.
Also, the added minimum wage won't even be a major driver of business costs. It'll
still be way cheaper to set up a factory in Alabama if they have to pay federal minimum wage instead of $2 an hour less or whatever. It just means more money stays in the local economy. And
that might mean in the long run that people might not
have to go to the city to get those good jobs.