Well, there is some cause and effect there.
There is no hiding the fact that major businesses will adjust your pay based on where you are living. For example, my company has an office in San Diego and there is an adjustment factor applied to management salaries for COLA. Those COLA adjustments are due to daily living expenses (food, gas, etc), taxes and home prices.
Now, in a complete market driven economy, employers will not pay for value they are not receiving. In the case of white collar employees, employers are willing to up the total pay package due to the value they are getting. But what about the blue collar guys? Are they getting the same proportional bump out as the white collar guys? I don't know the answer for all groups, but for my company, the wage differences don't come close to what the management does. Does that mean the company is evil and is punishing lower skilled workers? Of course not, the market is dictating the wages and their skill set demands a certain level of pay, no more, no less.
So, how does this tie back? If policies are put into place to help out the lower waged workers, the money has to come from somewhere and it is usually tax revenues. As noted above, compensation packages for higher skilled workers are usually adjusted for this, so the net impact is minimal to those individuals (there is a tipping point, which is when businesses leave since they can no longer offer that level of compensation or they attract less skilled workers, which makes them non-competitive in the long run). Gas prices in Cali are higher due largely to their environmental rules. I can go on, but you get the point.
In summary, I think you can see that there is a connection between policies and cost of living and how some of those issues shake out. Now, I will not for a second say it is the sole issue, as the landscape and climate of the city attract outside investors who have near unlimited resources also play a key role as well as other factors. But the policies in place will have disproportional impacts on workers depending on skill level.