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I currently work in a state where my salary is quite comfortable and the Cost of Living Index is quite low. However, if I move to another state, especially anywhere Silicon Valley, I'll need about twice the pay to have the same comfort level.
Are hiring managers respectful and knowledgeable of this situation, or do they equate making $40K in the Midwest US with being worth that much everywhere else?
In my experience, hiring managers are acutely aware of this. When recruiting from out of state, hiring managers and recruiters in an expensive area will be prepared for this topic to come up.
Essentially, "worth" is defined by the success or failure of their previous recruiting efforts:
Specifically speaking, hiring managers in Silicon Valley know it's expensive to live there and salaries are, on average, higher than many other areas to account for it.
That being said, the recruiter is not going to just give away money that they don't feel they need to, as with any negotiation.
They will be prepared to have the discussion — if you say you currently make $40K in a cheaper area, they'll be prepared to hear that you need a significant "cost of living increase" — but you must be prepared to ask and hold up your end of the negotation with real numbers.
You can find out relative salary differences by searching for your job title in the Bay Area on glassdoor.com or on a salary comparison tool like indeed.com - Silicon Valley vs. Nebraska (Nebraska is for example of "Midwest").
For your own sake, you should be in the drivers seat of any salary negotiation discussions. You should be aware of the cost-of-living differences, the demand for your position in the new area, and you should be prepared to cite numbers and justify them when asked (and potentially without being asked, to avoid wasting their time or yours).
Make it painfully clear to any hiring manager that the 40K you make is in a very low cost-of-living area. To really drive the point home possibly mention the rent you pay.
Or better yet, don't mention you're current salary at all; it shouldn't be relevant. The hiring manager should be asking you what target salary you're looking for, and that should be that.
Regardless though, if they're working in Silicon Valley, then they should certainly know that salaries are going to be higher than they are in the Midwest.
Ideally you aren't revealing your current salary to hiring managers anyway, but if you have to, then furthermore you should probably be seeking to work for companies who aren't going to bust your salary down as a result of where you live, especially if you are intending to move to work on location.
A good employer is not going to lower your salary because of where you come from. They might use your previous salary as a reference frame... and of course you may feel compelled to point out to them what the cost of living index is, etc.
I don't work in the valley, but I have to assume that they realize that the valley is $texas compared to many other places.
