> If a business derives $X profit from a laborer and agrees to pay a given % of $X to the laborer as compensation, it should not matter if the laborer is in a high cost or low cost of living area

That would be true if that were deal the business had with their employees. However, you made up the percentage thing by observation and are working from the assumption that because you can represent a wage as a percentage of a profit margin, that means the business agreed to share a fixed percentage of profit with the employee. This is incorrect reasoning.

Businesses generally don't contract with their employees to share a percentage of revenue or profits, with the narrow exception of commissions for people in sales. With regard to developers and almost all other employees, the contract both parties agreed to is almost always a trade of specific amounts of time for specific amounts of money and possibly some flexible additional benefits. And to the employee's benefit, the amount of pay does not flex based on whether the company is even producing a profit from the sale of the the products of their labor, only how many hours they put in. Caveat all manner of fuckery in labor relations, of course. Which is a giant caveat, I agree in advance.

However the fundamental agreement is still time for money without the employee having to worry whether the products of their labor can be sold for more than their hourly wage, that's the business's problem to deal with. The employee expects their paycheck to show up on time all the time, or the deal is off.

With that sort of agreement, it is absolutely expected and reasonable that the business keeps any profit from selling the product of the labor after the agreed upon fees for said labor have been paid. That was the deal.

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If you'd like a different deal for most people, as I would love to see more of in the world economic future, then most people need to change over from needing a job to needing some form of income to support their long term future growth as they live currently off of savings.

Instead of expecting someone else to ensure there is a buffer of money to pay you so you can pay your expenses, you will have to keep that buffer yourself and be okay with the fact that sometimes you will get paid a lot and sometimes not so much, but you will then be getting that percentage of the profit you wanted and it will be totally reasonable to expect the same percentage regardless of what the cost of living is.

You also won't have to worry about layoffs as much because the company's costs now also scale directly with it's profits, so there is no need to cut head count when things get really bad and the company's buffers run low.

But again, that also means you will be responsible for keeping a big enough buffer yourself to deal with the fact that your income fluctuates with both short an long term market swings. Otherwise all you have done is trade the annoyance at seeing the company profit massively from your fix-time-cost labor for the annoyance of being broke even though you have a job whenever the market takes a shit.

Most people still don't want to deal with that, even in super wealthy countries like the US. In fact most people in wealthy countries actually scale their own living expenses in step with any increases in their income such that they can be living paycheck-to-paycheck even at $200k+/yr.

So the balance of things present day is that most people take full-time or even part-time contracts as employees and hope they don't get fired at the wrong time in life.

This is possible to change though, for yourself and for others if you like. So if you think your current deal is bullshit, feel free to change the deal.